How to Invest for Social Impact While Making Money
Investing shouldn’t have to be so complicated. That’s my belief.
You should be able to simplify your investment business strategy in your personal and business life so its clear and understandable, and it works for you.
Social Investing to Leverage Your Social Impact
I’m also a firm believer, that while entrepreneurship can provide social impact, investing can also do it too.
As social entrepreneurs, you can and should leverage your investment portfolio to provide you with both social and environmental returns, while making you profitable returns, too. By doing this, you’ll be dramatically increasing your impact: While you work in your social enterprise as an entrepreneur, your money will also work for you via social investing.
R. Paul Herman, in his latest book, The HIP Investor: Make Bigger Profits by Building a Better World, shows you how to invest to maximize social impact and profit. For Herman, HIP stands for Human Impact + Profit. His book argues and demonstrates that companies which provide social impact perform much better than their competitors in terms of profit. A recent interview with the author is conducted by Katie DeRogatis, and can be found here.
Herman on Human Impact + Profit Investing
“HIP investing is having every part of your portfolio – cash, stock options, bonds, real estate – generate a positive human, social and environmental impact while also making money…We look at things from a pragmatic, not purist, perspective. Traditional social investing kicks out ‘negative’ companies from investment portfolios. At HIP, we’re inclusive of all companies. We believe that even companies like Philip Morris and Halliburton and Exxon can improve and create better jobs, be more eco-efficient. We don’t kick them out of the room; we just put a little dunce cap on them in the corner.”
You can even watch a video of Herman describing the HIP methodology below:
3 Features of a World Full of Social Impact Companies
From Herman’s interview with DeRogatis, I like the vision provided by Herman of a hypothetical world where all companies are driven by both human impact and profit. He concludes that there would be 3 major aspects to such a world.
“At least three things will be in place.
- First, the majority of companies’ revenues will come from products that do good as well as make money – things like microfinance, healthy organic products, or eco-efficient transportation. This is good business strategy common sense.
- Second, companies will not just be looking at profits, but eco, social and human impacts. And there will be performance measures. Muhammad Yunus says there might even be a section of the Wall Street Journal dedicated to this.
- And third, companies will embed this approach into every decision they make, every new product, every way of allocating people or money inside the company and every performance review.”
Check out The HIP Investor book today to learn more.