One dollar of every eight in the US is invested in socially responsible companies. In this interview, Paul Herman, the CEO of HIP Investor, explains how company sustainability metrics are tied to profitability.
In addition to risk and return, many investors today are seeking social and environmental impact. HIP Investor calculates a HIP score using 30 different sustainability metrics to identify companies that generate positive impact, and positive profits.
As of the end of 2010, the HIP100 index has outperformed the S&P100 after fees. The HIP100 is Herman’s reweighing of the S&P100 using sustainability metrics such as GHG per million in revenue and staff diversity. Other leading indicators that have real impact on the financial bottom line include ratio of women on the board of directors, and CEO pay versus average employee pay. Herman’s team draws from resources such as company sustainability reports, academic reports such as the University of Michigan’s customer satisfaction index, Fortune’s best 100 companies to work for, OpenSecrets.org which tracks political contribution, and government and OSHA tracking of safety performance. New indicators specific to sustainability are also emerging.
Check out this interview of Herman by Mario Vellandi last year about how GRI Reporting can be used to assess company sustainability. Herman’s experience and research, effectively demonstrates that businesses with diverse talent, who operate transparently and with sensitivity to ecology are also the most sustainably profitable businesses. The time is ripe for socially responsible investing. What are you doing with your money?
Connie Kwan is a GreenTech Marketing professional based in Silicon Valley, CA. She is pursuing an MBA in Sustainability at Presidio Graduate School and blogs about sustainability and business at Sustainable Thinking: Applied. Follow her on Twitter @ConnieMKwan.