Investing in Human Impact and Profit: How To Become a 'HIP' Investor
An internationally recognized expert in impact investing, Herman invented "HIP = Human Impact + Profit" to show the strongest portfolios can source much of their competitive advantage in quantifiable human, social and environmental impacts.
By resolving needs in five categories of sustainability, companies end up running more efficiently, according to R. Paul Herman, CEO and founder of HIP Investor. Mapping the measures of sustainability to financial statements, HIP has shown when a company does better in sustainability they also see greater profitability.
Herman starts by asking people: “Do you want to breathe clean air – yes or no?” When they reply “yes,” his firm will look at customizing their portfolio based upon their values and belief systems.
HIP Investors chart human impact by looking at a company’s human, social and environmental initiatives. Then, going further, HIP allows you “to vote with your money.” The HIP Portfolio features over 3,000 companies making money while doing good in the world.
Quantitative Empowerment and Disruptive Opportunities
There are five main ingredients – health, wealth, Earth, equality, trust – that make up a HIP Portfolio. A person can customize their portfolio by ‘voting’ or weighing an ingredient higher than the others.
Proving doing good can be good business to sustainability contrarians, companies in the HIP Portfolio have remained strong and increased investment returns. Sustainable companies have now historically proven to be more efficient and better investments than traditional funds. In many cases the HIP Portfolio companies increased in value by 20% during the 2009 economic downturn providing a safe haven for investors with a conscience.
Looking into the future, Herman takes a peek at disruptive opportunities such as featuring resources as services; e.g., software as a service referencing Salesforce (CRM), transportation as a service as seen with Zipcars (ZIP) and energy as a service, which in the short time looks like natural gas, with the long term opportunities pointing to innovative battery technology.
In this Noble Profit interview, Herman proves being sustainable is cool and ‘hip’ investing offers an easy way to transfer wealth to what matters most—us.
R. Paul Herman founded HIP Investor, a fund with over 3,000 sustainable companies. Learn more at hipinvestor.com.
Companies can use the HIP Scorecard and HIP as a consultant service to compare themselves to others. You can also buy his book, The HIP Investor, a true how-to-guide to impact investing to learn more about his approach and his increasingly HIP financial models.