The HIP Investor Book

The HIP Investor:
Make Bigger Profits by Building a Better World
by R. Paul Herman

Published by John Wiley & Sons (April 2010)

Capitalism used to be easy. Discover, acquire, and defend a unique resource. Pay people the least you can get away with. Off-load as many liabilities and risks to government as possible. And, of course, collect the profits in as short a time as possible. These captains of industry used to be called robber barons. Today, they are simply called Capitalists.

The super-majority, about 7 in 8 dollars, of assets managed focus on a purely capitalist approach, which typically prioritizes short-term financial gain. However, this traditional approach has accelerated the number and intensity of societal problems.

To counter that, investors have allocated about 1 in 8 dollars managed to “socially responsible” investing — typically excluding “bad” companies from their portfolios. This has relieved some consciences, but in many cases the majority of these funds have failed to beat the typical benchmark. (Most mutual funds of the capitalist approach don’t beat their benchmark either.)

Now, there is a new investment approach – one that seeks bigger profits that capitalists pursue while building a better world that do-gooders desire. The goal is to generate human impact and profit, or “HIP,” simultaneously.

  1. The New Fundamentals of Investing: Building a Better World Drives Potential for Higher Profits

  2. What 4 Global Trends Will Drive 21st Century Investing?

  3. 5 Product Categories Seeking Billion-Person Markets and High Revenue Growth

  4. 5 Metrics You Probably Won’t See in the 10-K (But Wish You Did)

  5. How Measuring Health Can Strengthen the Bottom Line

  6. The Wealthy Employee: Why Money Ought to Go Below the CEO

  7. Reduce Waste, Energy and Water – and Boost Your Bottom Line

  8. Does Your Company’s Diversity Match Your Customers?

  9. Which Firms Should You Trust?

  10. Practices Make Perfect: 5 Aspects of Sustainable Management

  11. How a Compelling, Human-Centered Vision Inspires a Company

  12. Metrics That Matter: How Quantifying Good Can Lead to a Better Bottom Line

  13. The Greenest Part of Your Business Can Be Your Financial Statements

  14. Who’s in Charge Here? How Bottom-Up Empowerment Still Needs Top-Down Accountability

  15. When Seeking Long-Term Profit, Consider Long-Term Environmental Risks

  16. How to Boost the Bottom Line with Sustainable Products and Initiatives

  17. What Secrets Are Hiding Off Your Balance Sheet?

  18. Paying Attention to Risks Pays Dividends to Sustainable Investors

  19. How HIP are Your Holdings? Score Them for Human Impact + Profit

  20. How to Be Sustainable Across All Assets in Your Portfolio

  21. Where Does Your Cash Sleep at Night?

  22. Loaning Your Money for Impact Can Also Generate Income

  23. Venturing into Growth Industries with High-Impact Capital

  24. Rooting Your Portfolio in Positive-Impact Farmland, Real Estate and Housing

  25. Give Money, Get Impact, Save Taxes – the Power of Social Entrepreneurs for Your Portfolio



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Global Handbook of Impact Investing


“For investors and entrepreneurs seeking a positive global impact, the HIP approach provides a compelling architecture for realizing both impact and profit.”
William H. Draper III
General Partner, Draper Richards L.P.; Managing Director, Draper International; Co-Founder and Chairman, Draper Richards Foundation; Founder, Sutter Hill Ventures

“Paul Herman has written a book that is both powerful and empowering. Powerful in that it describes a global economy increasingly driven by social, environmental and human factors that affect everyday profits. Empowering because it provides a detailed roadmap for how you can participate in – and lead – this global transformation. The HIP book highlights how readers can earn both financial rewards and personal fulfillment in the process.”

Nancy Pfund
Managing Partner, DBL Investors (a double bottom-line venture capital firm); former Managing Director, J.P. Morgan

“Today’s financial markets demand a focus on the long-term, and forward-thinking investors are seeking portfolio choices that can benefit the world as well as secure their retirement needs. The HIP Investor book is a blueprint for Wall Street and Main Street investors to create positive human, social and environmental results that lead to strong long-term investments.”

Jim Moody, PhD, Economics
Senior Financial Adviser of major Wall Street firm; former U.S. Congressman (Wisconsin), served on Ways & Means Committee; former CFO, International Fund for Agricultural Development (United Nations); visiting professor, University of Maryland

“With real insight and clarity, The HIP Investor offers next-generation thinking for the growing field of impact investing. HIP’s data-driven, results-based methodology makes the case for how we can and must begin to link impact and practices to profits. I suspect that The HIP Investor will end up in the hands of every business school student interested in social enterprise and every conscious consumer who recognizes that today’s societal challenges require a whole new approach to doing business.”

Dr. Cheryl Dorsey, MD, MPP
Executive Director, Echoing Green; founder, Family Van health service; Vice Chair, President’s Commission on White House Fellowships; former special assistant, U.S. Dept. of Labor

“Herman delivers a compelling message: Societal value need not be sacrificed to create shareholder value. Better yet, enlightened managers and investors can create a virtuous cycle where social value drives shareholder wealth, and vice versa. Now that’s a killer app!”

Chunka Mui
co-author, “Billion-Dollar Lessons” and “Unleashing the Killer App”; Managing Director, The Devil’s Advocate Group

“It’s my direct professional experience that extraordinary profits are realized when companies embed positive environmental and social benefits in their products and operations. Customers, employees, suppliers, shareholders ““ and society ““ all do well in this HIP approach to business and investing.”

Karyn Barsa
CEO, Coyuchi; former CEO, Smith and Hawken; former COO and CFO, Patagonia

“The key to both profits and positive impact is service to people. Herman shows how investors can benefit by encouraging these two pursuits that naturally go together.”

Professor Iqbal Z. Quadir
Founder and Director, Legatum Center for Development and Entrepreneurship at MIT; Founder, Grameenphone

“As an investor, executive and entrepreneur, I have seen first-hand how successful commercial models can be an effective method for solving human needs. The benefit of the commercial model is that it allows us to reach the scale needed to tackle the huge needs that have not been met by society. The best managed companies and successful leaders usually manage organizations that focus on the mission of positively impacting society. This HIP book shows you how the Human Impact + Profit approach is a powerful combination that can create great value for your portfolio, your business and your world.”

Alvaro Rodriguez Arregui
Co-founder and Managing Partner of IGNIA Partners LLC, and Chair of the Board, Compartamos Banco

“Herman’s book provides forward-looking investors with unique tools to help build a compelling portfolio.”

Robert Safian
Editor, Fast Company magazine

“This book is a how-to manual for creating business ventures and investment portfolios that are both profitable and good for the world.”

David Bornstein
Author, “How To Change the World” and “The Price of a Dream”

“For those who want to do good and make money, this HIP book shows you how to do so through your work, investments, and shopping. Herman helps readers learn to have a truly positive net impact on society, and their portfolios.”

Liz Maw
Executive Director, Net Impact