 Welcome to Sustainable Investing that benefits nature and people. If you need close captioning, you can click on the little button at the bottom that's marked with a CC and it says show captions. San Francisco Public Library acknowledges that we occupy the unceded ancestral homeland of the Ramaytush Aloni peoples who are the original inhabitants of the San Francisco Peninsula. We recognize that we benefit from living and working on their traditional homeland. As uninvited guests, we affirm their sovereign rights as first peoples and wish to pay our respects to the ancestors, elders, and relatives of the Ramaytush community. Please visit us on the fourth floor of the main library. If you are unable to visit us in person, you can reach us by chatting with us virtually through our website. You can email us at bizcitech at sfpl.org. That's B-U-S-S-C-I-T-E-C-H at sfpl.org or give us a phone call at 415-557-4488. April is National Financial Capability Month. Formerly called National Literacy Financial Literacy Month that Biden administration changed the name this year. So that's why we're giving it this full on mouthful title. We have a great selection of programs for you to help you support you in your wellbeing as a citizen and financially fit citizen. The URL for our landing page with all of the listings and links to each programs is listed above, which I will share with you after the program is over. So don't worry about trying to memorize anything on this very busy page. Oops, went forward. And if you have our recorded programs, you can find them on San Francisco Public Library's YouTube channel. You just type in that Google San Francisco Public Library YouTube and then scroll down, go to Playlist and scroll down to Work It programs. That's our brand name for all programs pertaining to jobs and careers, personal finance and small business. And at that, I'd like to introduce you to our speaker today. This is Paul Herman. He is the CEO of the HIP Investor and the author and co-editor of Two Books, the Global Handbook of Impact Investing and the HIP Investor, both available at the San Francisco Public Library and used in teaching sustainable finance around the world. Please welcome Paul Herman. Thank you, Leah. Thanks everybody for joining today, either live or watching on YouTube afterwards or watching at a later time. I'm Paul Herman from HIP Investor and I've been delighted to be part of Leah and the San Francisco Public Library's program for multiple years now and super energized that the Financial Capability Month has a full slate of programs to learn about investing, saving, insurance, Medicare, retirement. So today we're going to kick it off with sustainable investing for nature and people in your portfolio. Feel free to ask questions in the chat and we'll try and answer them along the way. And what you'll learn today are ways and methods as well as reasons why a portfolio that focuses and supports nature and people as well as trust not only is better for the world but can be better and more resilient for your portfolio. So I'm going to share my screen here and we'll get started and these slides will be available afterwards. So let's get started and dig in. I like to kick off with this visual here and what you see sometimes is very scary to people. We almost use this for the cover of our last book but some people reacted that it was a little too intense but these are the choices in front of us. Living closer to the right where the skies are blue and the grass is green and people are treated well or on the left where the sky is orange or black like it was in San Francisco a few years ago with the wildfires when the smoke poured in and the sun didn't get light until about 1030 in the morning. This is the future we need to avoid on the left and the future we want to achieve is on the right. So I see already one question what to do with $1,000 to support nature and make money we're going to get to that. I'm going to share some fun names with you in just a little bit. Just a reminder that HIP Investor is an investment advisor registered in California as well as other states that everything we're going to talk about is for your education. All investing has risks. I'm not offering you any securities and the past is not indicative of the future just like the climate of the past is not indicative of the climate of the future. In this month of financial capability one of the resources on the San Francisco Public Library website are 67 books that you can look at going all the way back to 2009. Here are two books that are ours that are part of the 67 books. One is the HIP Investor from 2010 published by Wiley and that's a how-to guide. Everybody can read it. I wrote it in a very easy to understand language. And on the right hand side is the global handbook of impact investing. That was produced by 50 authors and myself and Elsa Sarmanto edited the 50 authors as well as contributing several chapters to the book. So both of these are in the library and can be accessed and they're part of the 67 books of financial capability month as well. And the topics that are covered there in the global handbook investing include nature and climate, investing with a gender lens so that women are supported as well as men that we can measure impact in many ways which we're going to show you and that there's impact experiences around the globe, China, India, Italy, Finland and more. Here are some other books that have been written recently. You can see Activate Your Money with Janine Furpo. She's local to San Francisco. You see Bill Gates writing about the climate potential disaster as well as Alex Edmonds talking about how people can be a great investment and grow the pie. All right, who are we at HIP? Just so you know, we were founded in San Francisco. We're still based in California though our team is virtual around the world. Our clients are investors like you. Fund managers like Van Neck, for example is a fund manager with an exchange traded fund co-branded with HIP. We also work with investment indexes. So some of you may know ICE. We have a co-branded investment index with ICE and we work with investment advisors. So we are an investment advisor and we work with other investment advisors. We talked about the books. We do a lot of speaking in the media to help educate everybody and we're even part of the Newsweek Green Rankings for a while. So what we do is we rate investments on nature, people and trust and we give it a score, a zero to 100 score and then we invest in strategies and portfolios including those that are fossil fuel free. I see a question about which local foundations we work with. Sierra Club Foundation is one of our clients. So we help them invest in sustainable real estate. I also see a question about the pros and cons of gift annuities. We're not gonna get into those today but that's something we can follow up on later if you like. All right, so meet Kristen Magnuson. Kristen is based in San Francisco. She's an architect. She works for a San Francisco company called Stoke STOK and Stoke helps companies, large, medium and small become more sustainable. It helped their real estate become more sustainable and Kristen, who's worked there for more than a decade has a sustainable life. You can see her kayaking. You can see her with her dog. She's sustainable at work advising companies and real estate companies how to be more sustainable. But about eight years ago she came back to work after a conference and said, I heard how investing can be sustainable. How can our 401k plan at Stoke be more sustainable and how can my portfolio in general? So you're here just like her right now and what Kristen started was essentially the move to get the whole company options and suggestions which we'll cover in a few moments options for investing. And in addition, they wanted it to be fossil free. So this is a toolkit available at an Oakland nonprofit called as you so. As you so.org has a website called Fossil Free Funds which is a great site. It shows you what's inside the mutual funds and exchange traded funds that you invest in. And we with Timothy Yee of Green Retirement and as you so wrote this step-by-step guide. So you can find that on as you so. You can search for the fossil free investing guide and that's a tool available for you. So why you're here today and why I'm here every day is people want to invest in a way that reflects the future and that just like Wayne Gretzky in hockey said go where the puck is, you know, skate to where the puck is going don't skate to where the puck is. We want to skate towards a future that has blue skies and green grass that is fair and just to everyone. And that is ethical and not corrupt. So what you see here are a variety of pictures of investments in either companies or uni bonds in mutual funds or exchange traded funds that have that potential. So why, what are some additional reasons we want to do this? The world has industrialized we're now more than eight billion people with that eight billion people we're generating a lot of carbon, a lot of greenhouse gases and we're reaching the physical limits of how much we can produce by driving in our cars, riding in a bus, being on electric scooter, being in a building that may or may not have energy efficiency that and so those limits are starting to be reached and these limits were identified 50 years ago by NASA and James Hansen and talked about by Al Gore in his movie and book but we are getting to a dangerous time right now where we have to do something. And a way to talk about this is you hear a lot about climate change and the temperature the temperature that they talk about is usually in Celsius because the world is usually taking temperature in Celsius which sounds a little less intense than in Fahrenheit. In general, you can double Celsius increments of Celsius in the Fahrenheit. So all of our body temperatures usually are about 98.6 Fahrenheit degrees. And the way I like to talk about the risk of climate is if the planet warmed one and a half to two degrees Celsius that's like our body's warming, two and a half to three and a half degrees Fahrenheit. And from 98.6 that would mean we would have a fever of about 101 to 102 degrees. If we do nothing today, our fever risks the world's temperature or our fever risks being 105 to 109 degrees. There aren't many people who survived that and if the planet were to do that, it's not only us humans but also species and nature and bees and water and climate. So the time to act is net. So when you next talk to people about climate try and use those measures if you can. When you apply this to the 3000 counties across the US and we're not showing Alaska and Hawaii here but they're analyzed as well, you can see that the climate risk ranges from this green to yellow to orange to red. And you can see a lot of that. Some of that is in California, including around the Bay Area but a lot of that is in the South and Southeast. And so the risk of everything from sea level rise to hurricanes and tornadoes to flash floods. This is an intense risk to be managed. It's not a hoax as some people talk about. It is a real problem that more than 95% of scientists around the world agree. So when you're looking at investing and if you're investing in real estate this is a chart you wanna study. If you're investing in companies, for example, some pharmaceutical companies are based in Puerto Rico when the massive hurricane hit Puerto Rico there was a disruption to pharmaceuticals and pill production, which are things that we need for healthcare. In earlier days when there'd be hurricanes in the South Walmart usually would be one of the first companies stocking trucks with beer and pop tarts which are two of the things that go fast when there's a weather risk. So the worser risk on this chart just answer that question, red and orange is more intense risk and less resilience. Those are either states or counties or cities that are not preparing for climate because there's conservatives who don't believe in climate or say they don't believe in climate. But as we see in Florida, you still have the governor wanting to solve the problems of climate even if they say they don't believe in climate risk. So greener is better. So if you're thinking about moving somewhere in the future Seattle, Minnesota, Maine are more isolated to some of these risks but there's risks everywhere, various forms. Okay, so what does that mean for your portfolio? So I hope you've at least heard the term greenhouse gases. Some of you may know that it's made up of carbon and it's also made up of methane. These are all terms from chemistry. So you can see CO2 that's carbon dioxide that comes out of the back of your car if you have a gasoline powered car or a diesel powered car. CH4 is methane and then you have things like nitrous dioxide, chlorofluorocarbons which were addressed a few years back in terms of air conditioning and refrigerators and the like. But these are all pollution going into the sky from 40% of it comes from buildings, 40% of it comes from transportation and then the rest from a mix like food supply. And there's a suggestion in the chat box about reading about donut economics. That was one of the books we showed you at the beginning and Linda says, please read Kate Raver's donut economics. I agree, it's a great book to give you context about this. So there's three types of greenhouse gases and I'm gonna show you why this is important in a second. Scope one, which is what's inside the company. Scope two, which is what comes from energy production that you purchase from Pacific Gas and Electric or other sources. And then scope three, which is your customers and suppliers. So a car company like Ford or General Motors or Tesla has scope one of building the car, scope two of the energy used to build that car and scope three of all the pollution that comes from that car for the rest of its life as well as all the pollution from the suppliers that went into that car. So you can see how these can become very large numbers and it becomes difficult to change. So one of the things that you see on the left hand side is something called science-based targets. So in science-based targets, there's more than 2000 companies around the world that have subscribed to say, hey, nature has limits and we need to invest, we need to reduce our pollution to stay under those limits and we need to make investments to be more efficient and find ways to get to lower and maybe even zero carbon. Okay, so here are some examples. These are actually the stock tickers. So you can take a screenshot of this, the slides will be available later. So who are companies that are pursuing aggressive carbon or greenhouse gas reduction? In that green box, you can see three of them. UL is for Unilever, they make a lot of consumer products. Like soap and cereal. HASI is hand in arm strong. They finance and produce renewable energy for large governments and states as well as some companies. And then Novo Nordisk and VO, which is a medical company seeking to cure diabetes. They're committing to eliminating all their carbon by the year 2030 from a base year, usually somewhere around 2020. That means if you have a hundred percent reduction over 10 years, you have to do 10% a year or if it's compounded, you only have to do 8% a year. You have to do that every year. eBay and the Gap and Heinz are also companies that have these aggressive goals. And then on the right hand side, you can see F for Ford and G for General Motors. Car companies have to adhere to laws from California and from Europe that say after 2035, you can't sell a gasoline-powered car anymore. So the climate is changing. We're reaching limits of what we can support without risking our global fever and body temperature. And companies are starting to take action. Now, what you see on this slide these companies are ahead of their target. Etsy, say a Brown Bavarian, Jones Lang LaSalle. Some of these names you might not have heard of before, but these are companies who are aggressively reducing their carbon. And so someone to consider for your portfolio. Another company is Intuit that you can see there. Intuit has said they not only want to reduce their own carbon, but they want to help reduce their customers' carbon. So if you're using QuickBooks or one of their products, you might start to see tools to help reduce your energy in your pollution and your carbon. All right, so a lot of you, I see some of you say, what can I do at Vanguard or what funds might be able to help me invest in nature? Whoops, sorry. So here are some names and ticker symbols along with some carbon metrics of what you can consider for your portfolio. These are funds that we invest that I personally invest in. So I'm invested in these. We invest our clients' money. So when we manage money for clients, they're usually doing what I do first. I'm not trading in first, but we're picking the selection and we're investing together. And there are various mixes of these funds because if you're investing for the longer term, you might want more stock-based funds. If you're investing for the shorter term, you might want more bond-based funds. So this is what goes in 401K plans as well. So these are possibilities for your 401K plan at work. Okay, so let's talk about water that makes everybody wants clean water to drink. So one fund to look at, you can see in the middle there is Invesco Water Resources. The ticker is PHO. When you see a short ticker like that, that's an exchange-traded fund. You can buy and trade it like a stock. Whereas some of the longer tickers, like NextX, which is a fund from Shelton, now called the Shelton Sustainable Equity Fund, that's a mutual fund. And mutual funds just trade at the end of the day. So mutual funds were invented first to group stocks together. So a mutual fund is a group of stocks, 30, 50, 100 or more stocks. And you invest in that fund. And by investing in that fund, you're investing in those stocks. And then you might own different stocks over time based on what the fund manager chooses. ETFs, or these typically shorter tickers, those trade throughout the day. So as computers became more powerful, it became potential to trade them during the day, not just at the end of the day. One of the others we like to talk about is Portfolio 21. That's more than they started in 1999. They started in Portland on the West Coast. They're now owned by a fund called Trillium based in Boston. And so they look internationally. So when we're talking about Unilever and Novo Nordisk and other companies, they look for international companies as well as US based companies. There's a firm called PAX that is owned by IMPACs. So you can see their global environmental markets. Those are companies working on water efficiency, energy efficiency, products to make buildings more efficient and make cars more efficient. Cars have fuel injectors, for example. Just a reminder, 40% of all greenhouse gases come from transportation, moving people and food and goods around, and 40% come from buildings. So when you think about yourself, like what kind of car do I drive? Can I drive an electric car? Can I drive a hybrid car? Can I take a bus? Can I take public, can I take BART or Muni or ride a bike or an electric scooter? That is changing your greenhouse gas profile. And when hundreds of people or thousands of people for a company do that, a company called SAP, which makes software, they actually use their human resources department to let people know who lives next to you. So when you do go to the office, you can carbon. And that can reduce 50 to 75% of carbon emissions. So there's a lot of exciting actions going around in products, in process, in human behavior. And then you can see companies like Etho, which is based in California. Etho climate leadership. So many of you might be in the S&P 500, but the S&P 500, as you can see on this chart at the bottom, has almost 9% of the investments are in oil, gas, and other fossil-based production. What all the funds in the green show is there's no investment in oil, gas, Haliburton, Chevron, Exxon, ConocoPhillips. The US economy and the global economy is built around oil. And so these are investments that are moving to the future, like we said, skate where the puck is gonna be, not where it's been already. And so these funds have committed to focusing on nature beneficial investments, at least less nature damage and potentially more. All right, let's take a pause right here. We're talking about a lot of funds and I see some questions. So I see somebody ask about managed accounts at Schwab where they don't have control over the investments. Can I get more input in managed accounts? Yes, call whoever's managing it. You either have an advisor allocating to managed accounts or you have fund managers that are doing that. Find out who they are, contact them, feel free to send them this presentation if you want or this webinar link. And the books in Financial Capability Month and let them know this is what you want. And they may already have an option. They just may not know yet that you want it. So you have to speak up. The number one rule is speak up. If you have an advisor or fund manager, let them know. Give them time to change. But if they don't change in a short period of time, maybe look for a new advisor and maybe look for fund managers. I see a couple of questions here about saving or investing for college kids as their balance might be small. You can pick one or two of these funds. You might have a 529 plan. Some of those plans have sustainable investing choices. There's different 529 plans by state. So you can research the states to see which one. They are changing, but they may not have sustainable options yet. You might open up an account for minors at a Schwab or a Fidelity or a Vanguard or your broker. And so you can pick one of these fossil free funds. If you like it, you can research it and see. And so that's something you could put into the investment pool for your kids. Some mutual funds have minimums, $500 minimum, $1,000 minimum. And some of those have a minimum increment. So these exchange traded funds, I mentioned ETHO or PHO, you can buy a share of it. And so a share could be $20, $50, $75. And that's lower than a $500 minimum. How to give kids incentives to save and invest. The kids probably know this already. The kids are worried about climate. The kids are worried about making a better world. They have lots of access to it. Encourage your kids to research these, give them these short list of companies that I'm sharing, funds that I'm sharing here and have them research it or have them like I just showed you who are the science-based target companies, research those and see. So kids like to be involved. And this wasn't in my intro bio, but my first company before HIP, I've been doing HIP for now 17 years. My company before that was helping kids, teams and families manage their money, invest, save, donate, and we built a parental permission electronic wallet. So kids like to be engaged. So definitely engage the kids if they're old enough to do so and they may even have school projects that are looking at this. I see another question about Vanguard. My portfolio is with Vanguard. How do I ensure my investments are in focus and sustainable? Again, call them up. If you call the call center, they might have a script they read from. Vanguard recently pulled out of the net zero alliance for fund managers. And the reason they did this is we're living in California. Most of us on this call are probably progressive. Some of us might be conservative, but what's happening in conservative states like Texas and Florida and Indiana and Utah and about 20 other states is they are passing policies and laws to, A, band financial companies, band fund managers from their pension that are investing in this way, investing in this fossil free way. So what they say in Texas and Oklahoma is, oh, you don't wanna support fossil fuel companies, you can't manage our pension. So Vanguard, either A, being afraid, or B, being opportunistic said, oh, we're dropping out of the net zero alliance. We're not gonna aggressively move towards climate action. So that's a reason to consider if somebody is for Vanguard, whether they're gonna be as attentive to this issue, but something to be aware of, but whoever you're dealing with at any company, you need to ask them. All right, so let's see. So funds that we've mentioned, just in case you're listening and not seeing, these slides will be available afterwards so you can research them on your own. Etho, E-T-H-O, it's an exchange traded fund that you can buy on most brokerages. P-H-O, which is Invesco water resources, water efficiency, water production, sometimes desalinizing water, that's done very well over 20 years. It's been a great fund in the past, potentially in the future. Portfolio 21, there's a P-O-R-T-X is the everyday version. You might have access to P-O-R-I-X. Some of these funds, mutual funds, have institutional shares that are available to you, sometimes in a 401K. Whenever you can get a lower expense ratio fund for the same holdings like P-O-R-I-X versus P-O-R-T-X, same thing for PACs and impacts. See if your 401K can get the lower cost version. How much money should you set aside before you start investing? You should always start investing as soon as possible. You want it to compound as much as possible over time. It's difficult to put money in the market these days. There still may be some more trauma. There still may be some more healbacks of 10, 20, or more percent. Over the long haul, investing usually goes up, usually. And the longer the timeframe, the more likely, but there's no guarantees. If you invested in the 1970s, it took you a long time to survive the volatility of the 70s. But in general, what we usually tell advise investors to do is what money do you need in the short term? What money do you need in the medium term? And what money do you need in the long term? And the original title of this, I think was called Tax Deferred Sustainable Investing, but we just called it Sustainable Investing. And so when you invest in an IRA, tax deadline is coming up on April 15th slash April 18th. California returns have been delayed because of the floods and other weather, climate change. Climate change is at an effect where you have to elect over in some cases to file your October taxes for your state taxes for California. Start early. Some of you may have 401K plans or 403B plans at work. Some of those may have matching. Matching is free money. So if you have a match of 1% to 100%, usually it's 100% for the first couple of percent. At one point, Visa had a 5x match. So if you worked for Visa, the credit card association, you put in one, they match you four to five more. But usually it's 100% match for three, four, five percent, sometimes a little bit more. The bigger the company, the better the match usually, the smaller the company may not have a match. At HIP, we actually have a match. We do 100% match up to 3% and we do another 50% for the next 2%. Start as early as you can. Pick investments that you believe in and you like. Like Warren Buffett says, just pick companies that you like. He likes Coca-Cola. He likes Wells Fargo. He likes Apple. That's worked out for him. You can try and copy what he does or you can just buy a Warren, you can buy a Berkshire Hathaway share. Or he's not investing as sustainably. So we've covered some companies and we've covered some funds for you to research and look at, bring to your advisor, ask your fund manager about. All right, I see another question about, I was told by a financial advisor that green investments would be slower to have returns, making them less desirable for older investors. What do you think? Well, I'm in the green investment business. I'm in the investment business first. But the reason why we're in the green investment business is it's lowers future risk. So remember that temperature chart, that is future risk. We're not doing a lot to rush towards that world. So do I believe that funds like these have a better chance than the S&P 500? I do. Do I believe that a diversified portfolio of sustainable companies and sustainable bonds is better than a non-sustainable? I do. Now, as an older investor, you didn't say your age, the shorter the timeframe you have, the more conservative investor you should be. When I say conservative, I mean lower risk, lower risk investor, so we don't confuse this with politics. The longer the timeframe you have, if you have 40, 50, 40, 30 years, you can invest aggressively and over time it should work out. Especially if you invest in indexes or funds. But remember, if you invested in Apple or I bought my mom Tesla at 20 bucks a share, she's very happy about that. But not all stocks win and not all funds win. So the closer you are to retirement, it's a little bit risky right now because with interest rate rises, bonds are going down as well as stocks are going down, not by as much. So as an older investor, depending on what you're trying to do, you might buy a certificate of deposit at a sustainable bank. Sustainable banks like Amalgamated Bank. There were the, that's what acquired New Resource Bank in San Francisco. You can look up the global alliance for banking on values. And so I'll just put that link right here in the chat, GABD.org, the global alliance for banking on values. Okay, and if you're 66, you need to understand when you need the money. So you might start beginning social security, you might already be on social security, you might have started, you might be waiting to 67 where you get a little bit more or you might be waiting till 70 where you get a little bit more. There's also something known as iBonds right now, which if you go to treasurydirect.gov, if you go to treasurydirect.gov, you can buy inflation protected bonds. Currently they're paying 6.89%. That will change every six months, but it is meant to mimic inflation. So until two years ago, it paid zero. So if inflation goes down again, it might pay less, but that's another possibility. I see somebody say I'm 73, I invest not only for myself, but for future generations. This is a forward-looking point of view. If you think that not only for yourself, you're gonna 73 live to 83.93, or your kids are gonna inherit, then you can invest more aggressively. As long as you know that you have the cash you need for healthcare, for medical care, maybe you're paying tuition for kids. So it's a personal choice. So just think about how much do I wanna put long-term and higher risk? How much do I wanna put short-term and lower risk? And there's different choices for each of those. Okay, so each of these portfolios has a different profile and not only in nature, but in people. So as you can see here, these sustainable funds actually have women portfolio managers or teams of men and women portfolio managers or teams of different ethnicities, race and diversity. So that's another benefit of this type of investing is there's a wider perspective. It's more diverse not only for its own goal, but because of that thinking of how do we help people? How do we help nature? How do we advance trust? I see another question about newer renewable technology startups that haven't yet IPOed or been acquired. Are there funds that provide venture capital type investment that small investors can access? That takes some research. It also takes some minimums. From time to time, there'll be a public stock company that does venture capital or even IPOs. There is a ETF. There's one where founders are running called BOSS, B-O-S-S. That is volatile. There's one that invests in IPOs. They get some right, they don't get others right. You can check that out. There's an IPO based ETF. There are private equity stocks like KKR Kohlberg, Kravitz, Roberts, where they've taken the private equity firm public so you can invest them. Remember, those are companies and there's farmland stocks too. Some of those are starting to go sustainable. So that takes more research. There's no easy, fast answers to that. There is a group called Impact Assets based in San Francisco and Impact Assets highlights fund managers, a dozen or two fund managers every year that are sustainable and that have some potential. So check out Impact Assets for private investment, private fund managers, including VC. Okay, great. I've tried to answer as many questions as I can along the way. We are gonna share this. So you're gonna see slides that we may not have presented. I'm just gonna scroll up to see other questions. Okay, so there's new laws. So one of the other investment trends when your friends or investment advisor or fund manager is like, well, I'm not sure about that. The money funnel is turned on. So the new Inflation Reduction Act and the Bipartisan Infrastructure Bill, which is here are bringing billions of dollars to electric vehicle charging, to ports and airports, to roads, bridges. If any of you invested in solar, you can see this reflected in some of the solar stocks in the past year or two. The money is starting to flow, both from climate, which we're not gonna, climate's gonna win. So who either we can adjust our behavior to climate or climate's gonna win and government laws. So not only US government laws, but today one of my fund manager clients wrote me and said, here's what Europe regulation is asking for. How can you help us satisfy the regulations from Europe? So the world's globalized European regulations on climate as well as biodiversity. There's some of that starting to happen in San Francisco and California as well. So there are many crises of our time. There's crises in healthcare and COVID. There's crises in wealth disparities and CEO pay. There's crises in the earth and climate. There's crises in inequality. There's crises in trust and corruption and holding people accountable for doing things against the law, which we're talking about today of course. So your portfolio can harness trends that will solve these problems. And those will come from new metrics. That's part of what we do at HIP is quantify these through investment possibilities that we've reviewed some possibilities with you and through multi-sector solutions. So that's where cities and companies work together. The new Apple headquarters down in Sunnyvale worked with the city to source water because it's a huge complex. And so using rainwater and recycled water and other water solutions, Google works with the rail companies and the bus companies to move people around. So multi-sector solutions are also part of our future. That's a whole, I built a whole course on that for MBAs and MBAs and that's a topic for another day. Okay, so just a quick review of metrics. When you see a stock price, that stock price is based on the future cash flows. That's not based on historical profitability. It's based on future profitability. That's why stocks move so much. The future outlook has changed. Now what fundamentally has changed is back in the 1970s, most of the stock market value was how many factories you had, how many warehouses you had. Today it's on a lot of non-physical assets which are not on the balance sheet. So those non-physical assets used to be 17% of the stock market value and now it's more than 80% of the stock market value. So you can't easily find people on the balance sheet. Sometimes you'll hear CEOs say people are most important asset, which they are, but they're not on the financial statements except as a cost. So the next time you hear a CEO or any executive say people are most important asset, please ask them or say, my friend Paul wants you to answer this question. Where are people on the financial statements and where they are is usually cost. But as you can see, the great places to work, this is another San Francisco-based organization, the great place to work institute is downtown San Francisco. And so they rate companies and we operate a portfolio on this methodology as well that the companies that are better places to work outperform over time. And the reason is if you pay people a fair wage, first they're gonna stay, they won't quit. You don't have to rehire new people, but second they're gonna innovate. And so do you wanna invest in people or do you wanna grind people down? So great places to work can outperform over time. So this 84% is people as an asset. The metrics include employee satisfaction and employee retention and employee turnover, natural resource efficiency, how much oil, water, gas and pollution are we producing. Governance, what is the diversity of our team? Again, diversity is a positive goal in its own, right? But the ripple effects of diversity are, hey, we don't all think alike. Hey, we have different experiences. That means we're gonna think of different risks. It also means we're gonna think of different opportunities. And so when a diverse group of people come together in a company by age, by gender, by race, by where you grew up, by how much money you made in the past, your income track, those people when put together will come up with more diverse and creative solutions. And as you can see, there's a lot of problems we need to solve. And then transparency, one of the most important pages to read when you do research on a company, this is one of my favorite tests. We almost built a whole portfolio on this one metric. Who is suing the company? Every company that's listed has to file a 10K. That's an annual report every year. When you look it up online or on paper, open it up to the legal section. That section can either be a paragraph or it can be several pages. What we have found over 17 years at HIPAA is the companies who get sued more are usually riskier and the companies who get sued less are usually stronger. And so just by looking at who's suing you for how much and why are customers suing you because you gave them a bad deal? Are employees suing you because you discriminate? Is the government suing you because you polluted the river? Companies that treat people, nature and trust right do better over time with less risk. All right, I'm gonna share all these slides with you. Time is moving fast, but I wanna cover some other topics that I want you to think about. The good news is if you own an S&P 500 index, most of those firms have diversity targets. The bad news is that diversity policies, sorry, diversity policies, we have a policy of not discriminating. That's easy to write, but very few of them have diversity targets. They don't measure their progress towards diversity. In addition, women who are half the population, slightly more than half the population, 51%. And very in workforce, a lot more women put the workforce in COVID, but before COVID it was about half men, half women on the workforce in many industries. This shows about 40%. But the number of women in managerial positions is lower and the number of women in executive positions lower and the number of women in boards is lower. So those, what we've found over 17 years at HIPP is companies with more gender diversity actually are lower risk and typically have stronger returns. So I wanna show you some of these. So sustainable investing is going up because of these trends that we're talking about and questions that you're asking. It's sustainability is being applied all across the world. We rate 11,000, not 12,000 companies and 85 countries around the world. We give it a rating. So more sustainable, blue skies, green grass is a higher score, less sustainable. And what we find is this, most public stocks are destructive and extractive, whoops, sorry, are destructive and extractive to society. So the key is to figure out who are the leading companies, which ones have science-based targets, which ones are treating people right. And so to be a publicly listed company is not easy and to be a sustainable public listed company is super difficult, but that's part of what we do. We analyze companies and we analyze funds and then invest, I hope investors and guys. Okay, so let me just answer a few questions, keep this interactive so much to cover. So excited that you have so many questions. This recording will be sent out if I talk too fast and you'll get the slides. And then of course you have the books in the library, including the hit books. What's the best place to read and stay up to date on sustainable investing? Well, first, San Francisco Public Library, this month's program of events, but there's different publications. Bloomberg has a newsletter, Bloomberg Green, I think they call it now or Bloomberg ESG and they acquired Business Week, which usually does a good job of covering. There's a website called ESG Today. And then we, if you track us on social media, if you track hip on social media, you'll see us promote different articles and sources. Okay, what about greenwashing? There's a lot to say about greenwashing and the short answer is look at the data. Now, what we've found from 17 years so far is most companies don't lie when they publish data. I handful do and run, for example, but most companies don't because there's a big downside. So if you care about greenwashing, see if companies are reporting their greenhouse gases. See if companies are reporting their employee satisfaction or employee pay. And when you do, you'll get a sense of, is this doing well or not? Another question, what's the prospect that age diversity would be addressed in the near future? This is a great question, especially on boards, because one of the things you can see on the board is they list their ages. And very frequently, unless you're a founder, it's a lot of people in their 50s, 60s and 70s. Now, there's a positive support for that is they have a lot of experience, but there should be advisory boards with young people. In Europe, there's employees on the board and labor unions on the board. So there can be more age diversity in the future. Somebody said, what's the name of the form filled out regarding who is suing the company? So the document is called a 10K. It's an annual report filed annually with the SEC and the SEC, the Securities and Exchange Commission has a website called Edgar. And I think you can even access it at the library and Leah and the team at the library can help you. But every public company, Tesla, Ford, General Motors, Unilever has to fill this out annually and quarterly. But there's not a lot of detail quarterly. The most detail is annually. So the 10K read the legal section, it'll be eye-opening even about companies who think might be doing well. Okay, so those are the latest questions that I see. Oh, okay, and then hedge funds. Let's see if we can skip ahead here. By the way, this is what happens. Higher rated companies generally have higher returns as a group. Each individual company may not comply and lower rated companies generally have lower returns with more risk. Okay, and overpaid CEOs. This is one of the things we do with the nonprofit as you just letting everybody know. You can go to hipinvestor.com. My email is paul at hipinvestor. The overpaid CEOs usually aren't worth the money that they earn. In fact, the more times you're overpaid according to the past nine years of us doing this report, you lag the general market. So there's a whole series of reports that as you sow.org, you can look those up of the past nine years and companies who don't overpaid their CEO usually do better and companies who overpaid their CEO usually do worse. Okay, so we're talking about hedge funds. This is all the different types of ways that you can invest. You see low risk on the left, high risk on the right. Cash is low risk. Fixed income like bonds, green bonds, social bonds, muni bonds, that's a little less risk. It's felt more risky the past since interest rates have gone up but in general, they're stable. And remember in investing, you only lose money when you sell. Now you still may want to sell but you don't lose money until you sell. Then you have income generation like dividends. There'll be a session on dividends at the end of the month as part of this program. You have equities, some of which pay dividends, just smaller ones. Global international stocks, we talked about a little bit, venture capital on private equity and you have things like alternatives which include hedge funds. Some hedge funds are lower risk, some hedge funds are higher risk. Hedge fund just means it's an independent private pool. Some of them are fast turnover, high transaction, micro second stock trading. Some of those are very solid strategies based on private credit. There's also things like sustainable forestry like there's a company called Farmland LP. That's one of the highest hip rated organizations. They offer, it's a private company that supports that essentially manages the farmland that produces some of the berries. That you have in stores and renewable fuels. Muny bonds could be a way to help manage your risk and get a tax advantage. Remember it's tax time. So muny bonds are usually tax deductible for federal and usually for state. Though there's some states that don't like Illinois. And in Puerto Rico, there's city tax deductible usually too, so triple tax advantage. There's more muny bonds that are impactful than there are companies. So this is something that you can look at. And then there's a whole category of green bonds, social bonds, sustainability bonds, including things like affordable housing. And I'm gonna show you, here's one right now. Capital improvements for water and wastewater. And they're designated as green bonds and seeking to comply with the Clean Water Act. There's solar panels that are part of green bonds in Ohio. Look at that. And there's green bonds that are financing bridges or downtown Kansas city. So there's an increasing number. It's still single digit percentage, but an increasing percentage of green bonds, social bonds, sustainability bonds. Those might be right for you in your low risk portfolio or if you're older or if you need tax. So one of the charts you'll see, I know we have to wrap up in a couple of minutes here, is here are different impact themes and different asset classes. This is produced by a group called Align Impact. They're an investment advisor in Southern California. Some of the people who used to work for HIPP actually moved over to Align Impact. So they're building out, somebody had asked about venture capital, private equity, other private investments, as well as public funds. That's something that HIPP does. That's something that Align Impact does. All right, and then the SDGs, the Sustainable Development Goals, before the SDGs there was Millennial Development Goals. These are alerts for solving problems like poverty and hunger and gender diversity and sanitation and life below water and climate action. So you'll start to see companies report on these and you'll start to see funds report on these. All right, I will wrap up here. Here's the final call to action for today. You're all here or you're listening or you're walking or you're exercising or you're sharing this with friends, it's up, it's your money. So demand action from the people who are touching your money. If you have an advisor, tell your advisor if you haven't yet. If you have fund managers, they have publicly contact information, contact them. If you have a 401k manager, talk to them. If they don't listen, talk to your CEO. It's your money, it's your future. So align it with the future. Remember, Wayne Gretzky going to the puck in the future. Be conscious of climate, getting warmer and all the volatility around that. Some of the worst weather we've had in a while is related to the increasing pollution. Having diverse teams adds value. Having a great place to work is usually a good strategy and engage the people around you. The more you get your friends, family, coworkers to all ask for it, especially at work. If you've got a group of 10 or 20, good companies and organizations pay attention to make this happen. So I'm Paul Hermann from Hip Investor. We covered a lot in a short time. I really appreciate all the questions that you asked. Feel free to email me at Paul at Hip Investor or engage on social media. I'm super excited that you are here and that you're thoughtful about taking action on your portfolio and hope that you can learn more during this Financial Capability Month. I'll learn from all the other presenters. I want to thank Leah for her leadership over multiple years in putting this together and the San Francisco Public Library for making this globally accessible. It's your money. Invest it for higher impact. We're here to help if you need us. And there's multiple books in the library, online resources in the library to help you and feel free to follow us on social media if you're interested. Thank you so much, Paul. That was a great presentation. And we look forward to having you back as one of our speakers in the future. Paul, he presents for us on a fairly regular basis, probably quarterly. So you can learn from him, continue to learn from him and check out all the other programs that are happening at SFPL. And thanks for joining us today. We'll see you soon.