In my opinion a 1% expense ratio isn't the end of the world. Saving the money to begin with, and getting an equity return are both huge wins vs. not doing it.
That said, if you're a US investor anyway, you could certainly do better I think. For example, the Vanguard FTSE Social Index Fund Investor Shares (VFTSX) have a .29% expense ratio. It isn't the .17% or lower expense ratios you can get with the broader index funds, but it isn't too shabby if it's important to only own socially responsible companies.
If I were in your situation I think I'd compromise with the Vanguard fund or similar funds/ETFs with lower expense ratios, it isn't worth the fight for .12% lower expense ratios. I might also look into local real estate investing as an option, certainly it's not as passive as stock market investing and there is work and knowledge/skill requirements, but it avoids all the social responsibility issues and can offer similar returns (assuming you don't consider landlording evil too!). You could start with real estate investment trust (REIT) funds if you like, or stick with the socially responsible indexes, and then use the funds to buy a rental property when you have enough and have found a cash flow positive situation.