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Investing in Sustainable Communities with R. Paul Herman of HIP Investor

28 September 2021


In this episode, I speak with R. Paul Herman, CEO and Founder of HIP Investor about the risks that climate change pose to our communities, and the growing demand for investments in sustainable projects. We discuss his firm’s approach to rating corporations and municipal issuers for their impact across a plethora of sustainability metrics.

Climate Change and The Municipal Bond Market

Paul and I begin our conversation by discussing the growing demand and need for investments in sustainable projects. In particular, we discuss what makes for a sustainable community and what goes into evaluating the sustainability of municipal bonds.

As the effects of climate change seem to be more frequent and destructive, investors have increasingly turned toward opportunities to direct funds not only for profit, but for good. Sustainable mutual funds and ETFs, as tracked by Morningstar, have seen inflows of $46 billion year-to-date through July 2021. This is well on the way to surpassing last year’s record flows of $52 billion. Similarly, municipal bond mutual funds and ETFs saw $75 billion of inflows year-to-date, which is already past 2020’s full year flows of $57 billion. These two trends converge into the main topic of the discussion I had with Paul about sustainable munis.

H.I.P. refers to Human Impact and Profit, which very succinctly alludes to HIP’s unique approach of measuring future risk, return potential and net impact on society. Paul explains how HIP Investor prioritizes quantitative data of actual results, and how evaluating performance can be more powerful than only adopting policies.. Paul explains how HIP Investor produces ESG impact ratings, ratings on UN Sustainable Development Goals, climate threat resilience ratings and opportunity zones to assess overall sustainability. As an example of how these considerations play out in communities, Paul compares and contrasts the cities of Seattle and Memphis.

The municipal bond market plays an important role in the fight against climate change. Not only is this market a destination for investors seeking potential tax-free income, but for all of us, the projects they finance will impact how they live and thrive.

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Important Disclosure

For informational and advertising purposes only.

This information originates from VanEck (Europe) GmbH which has been appointed as distributor of VanEck products in Europe by the Management Company VanEck Asset Management B.V., incorporated under Dutch law and registered with the Dutch Authority for the Financial Markets (AFM). VanEck (Europe) GmbH with registered address at Kreuznacher Str. 30, 60486 Frankfurt, Germany, is a financial services provider regulated by the Federal Financial Supervisory Authority in Germany (BaFin). The information is intended only to provide general and preliminary information to investors and shall not be construed as investment, legal or tax advice. VanEck (Europe) GmbH and its associated and affiliated companies (together “VanEck”) assume no liability with regards to any investment, divestment or retention decision taken by the investor on the basis of this information. The views and opinions expressed are those of the author(s) but not necessarily those of VanEck. Opinions are current as of the publication date and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index.

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