7th in a series of excerpts from the book “The HIP Investor” (Wiley, 2010) See previously published articles in series here.

Companies are now realizing the value to be gained by optimizing earth’s resources, not just extracting or mining them. One leader is Kohlberg Kravis Roberts (KKR), the famed private equity firm that owns over 45 companies including Toys ‘R’ Us and mattress maker Sealy. Since May 2008, KKR has partnered with the Environmental Defense Fund (EDF) on the Green Portfolio Project to develop metrics and test which eco-efficient initiatives are most valuable to the business. As of February 2009, EDF/KKR’s collaborative initiatives at Sealy realized $16 million in bottom-line benefit and saved 25,000 metric tons of greenhouse gas emissions, including reduced mattress scrap and advanced trucking efficiency. EDF is taking the lessons learned from these initiatives to other firms in the KKR portfolio, constructing a “how-to” guide.

Public companies are increasingly tracking earth-related metrics, from waste to water to carbon and energy. As a HIP investor, you will see improvements in reporting these metrics over time, and will be better prepared to identify leading companies who will have higher profits and shareholder value.

Companies focused on optimizing earth’s resources can benefit from lower material, energy, and water bills. They can earn tax savings from renewable energy investments, spur new revenue from customers seeking eco-efficient products, and enhance the value of the brand. As HIP Investor’s calculations have shown, a portfolio of these top performers in Earth metrics can yield higher returns and are positioned for lower financial risk.

HIP Earth Metrics

HIP investors can use four quantifiable metrics to evaluate companies on their usage of nature’s resources:

1. Waste Re-usage
2. Water Efficiency
3. Energy Efficiency
4. Greenhouse Gas Emissions

1. Waste Re-usage, Re-cycle, and Re-sale; Resource Efficiency

Limiting waste is an obvious benefit: It reduces costs and lessens the amount of resources used. So, how are we doing? About 6 percent of all the material inputs going into a manufacturing process come out the other end as a finished product while 94 percent are un-used or wasted, according to INSEAD professor Robert Underwood Ayres.

Eliminating waste can even boost top line revenue through what can be called “trash to cash.” Waste Management Inc. (NYSE: WM), a traditional garbage removal company, now considers itself a materials manager: It seeks out innovative ways to generate revenue from collecting and moving garbage. Today, it operates almost 300 landfills with associated collections and transfer points across North America, serving 20 million customers. Those landfills gestate gases like methane that can be recaptured and turned into energy. Since methane is equivalent to 21 units of carbon emissions, capturing it can power new energy-generation while reducing emissions. Furthermore, Waste Management’s recycling revenues account for nearly 10 percent of its total revenue. Cost centers, like trash, are becoming revenue centers for cash.

2. Water Efficiency, Re-capture and Re-use

Water is a precious resource that is increasingly strained. The planet is 70 percent water, but most of it is salt water. Fresh water is increasingly at risk and becoming scarce, as evidenced in the Southeast United States in 2008.

Both Ball Corp. (NYSE:BLL) (46 percent water recycling) and Devon Energy (NYSE:DVN) (80 percent water recycling) avoid taking new water from river systems and instead re-use existing water for manufacturing and production. The ecological and financial benefits are pretty straightforward; by reusing such a scarce resource, these companies leave more water for the planet to flourish, and by reducing inputs they reduce cost and increase bottom line profit.

3. Energy Efficiency and Renewable Power

Energy efficiency clearly contributes to lower costs and lower environmental impact. A HIP investor will recognize that the power of eco-efficient initiatives amplifies when a company designs for more than one goal. For example, cosmetics maker Estee Lauder converted 54 percent of its disposable waste to energy in 2007, saving costs in hauling waste and purchasing new energy. Estee Lauder (NYSE: EL) has also become a renewable energy leader by partnering with DomeTech to install 3,200 solar panels at a fragrance factory, which supplies half of the plant’s daytime energy needs—at a projected savings of 10,000 tons of carbon emissions over the life of the system. This installation is one of the largest solar energy systems in the United States outside a utility.

A HIP investor can estimate energy intensity and compare among industry peers. Some companies report energy usage (in gigajoules); others report kilowatt-hours of electric purchases—dividing either measure (usage or purchases) by revenue, you can compare energy intensity. You can then use that measure to compare across companies within a sector or to look at trends over time. Remember renewable energy eliminates the need for fossil fuels, the attendant pollution, and the risks associated with volatile price swings — an eco-efficient triple play. We look for this metric not only to reduce risk, but to increase top line sales (as consumers incorporate efficiency into their shopping habits), as well as bottom line revenue where reduced costs equal higher profits.

4. Greenhouse Gas Emissions, Intensity, and Reductions

Tracking carbon is an emerging discipline. It has sprouted into a new field of managerial accounting. Companies that track their overall carbon emissions, from GE (NYSE: GE) to Dow (NYSE: DOW) to Walmart (NYSE: WMT) understand their carbon “footprint” and consequently know how to manage it. Reducing carbon leads to reductions of energy, cost and pollution.

The Carbon Disclosure Project (CDP), a nonprofit based in London, is a clearinghouse of information on these greenhouse gas (GHG) emissions. The CDP involves 475 institutional investors representing $55 trillion of assets.

A HIP investor will want to know if a company is tracking its emissions and reporting that data. As of year-end 2008, two in three companies of the largest 500 in the United States have neither declared carbon reduction goals, nor time frames for potential reductions. HIP investors value the companies that disclose their emissions, set specific time tables for reductions, and benefit from the lower costs and risks associated with this path. HIP’s analysis indicates that a portfolio that highly weights the leaders in emissions reduction can generate both a positive Earth impact and increased opportunities for higher profit.

We have all heard the moniker, “REDUCE REUSE RECYCLE.” When we safely reduce waste in our product or service development, we have more for all parties involved: More for the consumer who spends less, more for the company to produce more products, and more for the Earth and its stakeholders to live and grow into. Now that is HIP.

In our next feature, we will explore how Equality in the workplace can drive performance through nurtured creativity and enhanced market understanding. By investing with these principles, we can foresee a better world, built on a fair and balanced workforce.

R. Paul Herman is CEO and founder of HIP Investor Inc. [http://www.HIPinvestor.com] Herman is the author of “The HIP Investor: Make Bigger Profits by Building a Better World,” [ http://bit.ly/HIPinvestorBook ] published by John Wiley & Sons in 2010. Herman is a registered representative of HIP Investor Inc., an investment adviser registered in California, Washington and Illinois.

NOTE: This feature, excerpted and adapted from the HIP book, is not an offer of securities nor a solicitation. The information presented is for information and education purposes, and is NOT an investment recommendation. Past performance is not indicative of future results. All investing risks loss of principal. The author and his clients may invest in the companies mentioned above, including in the HIP 100 Index portfolio. Details and full disclosures are at www.HIPinvestor.com

6th in a series of excerpts from the book “The HIP Investor” (Wiley, 2010) See previously published articles in series here

Healthy, wealthy and wise, said Ben Franklin. Leading companies seek out strategies to build wealth and health for employees, typically resulting in higher customer satisfaction and productivity. The last feature highlighted Health. Wealth is the second metric in our discussion of the five categories of quantifiable metrics that can drive financial performance (Health, Wealth, Earth, Equality, and Trust). Leading companies boost the income and assets of their employees, resulting in stronger financials for everyday employees and for their long-term bottom line.

Three Core Metrics to Building Employee Wealth

There are three groups of quantifiable metrics a HIP investor can use to evaluate companies on Wealth:

1. How a firm provides for employees’ savings and retirement
2. The level of employee pay relative to industry peers
3. The CEO’s compensation relative to average staff pay

1. Wealth Building and Matching for All Staff

For customers to be truly satisfied, employees need to consistently perform well; and to achieve that, employees must be satisfied with their employers. HIP companies seek to align their goals with employee goals through wealth-matching programs. These programs can vary from pensions, to 401(k) matching, to access to company stock, and options to buy that stock. Offering ownership in the company is an effective tool for aligning employee and employer interests.

It is not easy to compare wealth-matching programs across companies. They vary not only by investment type (pension, 401(k), stock grant) but also by the rate of matching employee contributions. The best plans typically match 6 percent of employee contributions, whose simplest form can be a dollar-for-dollar approach.

At Whole Foods (Nasdaq: WFMI), more than 13,000 staff received stock options from the company. “Leadership grants” of these options recognize team member performance, and “service hour grants” recognize employee actions in the community (these totaled nearly half of WFMI’s stock grants in 2007). In addition, more than 2,000 staff typically choose to buy Whole Foods stock quarterly at a 5 percent discount, collected through payroll deductions.

Companies applying an inclusive approach, like Whole Foods Markets, cultivate strong staff loyalty and lower turnover, leading to higher customer satisfaction. Whole Foods shareholder value consistently grew in the early 2000s until its erosion in 2006 to 2008 from competitive pressures. Whole Foods commitment to employees’ compensation and benefits may have helped contribute to its 2009 out-performance against the S&P 500.

2. Employee Pay Relative to Industry Peers

If people flock to the highest pay, then why doesn’t everyone work in financial services, health care, or technology sectors that exhibit the highest pay rates? And why would anyone work in retail or food service sectors characterized by the lowest pay rates? In fact, absolute pay levels do not alone provide the necessary information. Indeed, leaders in each sector may not necessarily pay the highest. For example, Disney (NYSE: DIS) historically pays under the average compensation for the opportunity to work with the “Magic Kingdom.” Top-paying firms, especially in investment banking, typically want staff to put in extraordinarily long hours. But the level of relative pay within an industry or sector does tend to be a contributing factor for a HIP portfolio.

HIP investors don’t have an easy job figuring out pay levels. Despite the detailed financial statements issued by companies, it is rare to find in the financial statements a total compensation number to divide by the total number of staff to calculate an average pay per employee.

However, employees can self-report pay at Web sites like PayScale, SimplyHired and JobNob. Yet these are not very reliable—the number of respondents is a small fraction of the entire company, and the pay rates reported tend to be those of higher paid managers, scientists, and executives. Some of the websites have features to adjust for geography, years of experience, and role, which can help yield a more reliable estimate.

For a HIP portfolio, proceed with caution. Check to make sure there are enough respondents to make the information comparable. Be careful in calculating averages, as the number of employees who reply varies by years of experience, job type, and geography. A HIP investor can calculate a weighted average adjusting for those factors to make the numbers more comparable. This research can help set the stage for identifying companies with pay policies consistent with balanced wealth creation for employees, not just executives.

3. CEO Compensation Relative to Average Staff Pay

You would expect higher levels of CEO compensation to correlate to increased shareholder value. But does the ratio of CEO-to-worker pay correlate with higher financial performance? For an overall portfolio, HIP has calculated that a lower ratio of CEO pay to average staff pay correlates to higher levels of financial performance. However, results for individual companies may vary widely. HIP investors realize that CEOs can be paid relative to increases in long-term shareholder value, but that overall lower CEO-to-worker pay ratios connote more employees sharing in the wealth, which fosters higher employee dedication and productivity resulting in financial success—for the CEO, the workers, and you as an investor.

According to The Corporate Library, the average compensation for an S&P 500 CEO was $10.4 million in 2008. The average worker’s compensation is just over $40,000, according to the Bureau of Labor Statistics, based on a 40-hour work week and median employee wages of $20.62 per hour in 2008. Therefore, the average CEO makes more than 300 times the average worker’s pay.

As a HIP investor, you can research these figures easily at the Web site for the AFL-CIO (http://www.aflcio.org/corporatewatch/paywatch/), the largest union organization in the United States. You can also view the differences in calculations compared to the Securities and Exchange Commission (SEC). The AFL-CIO calculates what the stock and option grants are worth at fair value.

To calculate a score, take the CEO compensation from the AFL-CIO database, and divide by an estimate of the average worker’s pay. About one-sixth of the S&P 500 score under 100 for this ratio. Some include CEOs who already own plenty of stock like Steve Jobs of Apple (Nasdaq: AAPL) and Marc Benioff of salesforce.com (NYSE: CRM). The highest ratio companies score over 500, many of who are in the financial industry. Some even score over 1000 (in 2008), like Bob Simpson of XTO Energy (acquired by Exxon Mobil, XOM, in 2010) and Eugene Isenberg of Nabors Industries (NYSE: NBR), whose companies beat the S&P 500 during years of rising oil prices, but have been more at parity when energy prices stabilized.

Companies that help staff build income and assets while maintaining fair pay can deliver bottom-line productivity and profits, which of course is HIP. In our next feature, we will examine how Earth metrics align closely with drivers of profit, highlighting a better environment for investors and stakeholders.

R. Paul Herman is CEO and founder of HIP Investor Inc. [http://www.HIPinvestor.com] Herman is the author of “The HIP Investor: Make Bigger Profits by Building a Better World,” [ http://bit.ly/HIPinvestorBook ] published by John Wiley & Sons in 2010. Herman is a registered representative of HIP Investor Inc., an investment adviser registered in California, Washington and Illinois.

NOTE: This feature, excerpted and adapted from the HIP book, is not an offer of securities nor a solicitation. The information presented is for information and education purposes, and is NOT an investment recommendation. Past performance is not indicative of future results. All investing risks loss of principal. The author and his clients may invest in the companies mentioned above, including in the HIP 100 Index portfolio. Details and full disclosures are at www.HIPinvestor.com

Private investments in green companies and technologies since 2007 now total more than $2 trillion globally, according to a new report.

Ethical Markets Media says the figure is significant because many studies indicate that investing $1 trillion annually until 2020 will accelerate the Green Transition worldwide to the necessary levels. This updated 2010 finding--noted in the Green Transition Scoreboard (GTS)--puts global renewable energy investing and countries on track to reach the $10 trillion in investments goal by 2020.

The figure represents non-government investments and commitments for all facets of green markets.

"This new total is remarkable in spite of economic uncertainty. It indicates that the global transition away from the 300-year fossil-fueled Industrial Era is accelerating toward the cleaner, greener, information-rich economies of the 21st century," Hazel Henderson, president of Ethical Markets Media said.

Timothy Nash, M.Sc., Senior Advisor to Ethical Markets Media, adds, "This over $2 trillion total does not include nuclear, 'clean' coal or CCS, nor biofuels from food or agricultural sources, which we consider unsustainable."

The figure also does not include deals under $100 million, which numbered in the thousands, according to Rosalinda Sanquiche, Ethical Markets Media's Executive Director and editor of the Green Transition Scoreboard report.

Photo by noellium/flickr/Creative Commons

Reprinted with permission from Sustainable Business

by Jennifer Kaplan

Skyline Solar, a manufacturer of High Gain Solar (HGS) arrays, is a company to keep your eye on. Not only is Skyline beginning to generate a good amount of traction in the media including Silicon Valley/San Jose Business Journal, Reuters,CNET and as well as several renewable energy publications, but their system was innovative enough to attract $24. 6 million in venture funding along with a $3 million grant from the DOE.

The secret sauce: Their arrays incorporate tracking, reflection and cooling technologies to reduce silicon needed by 90 percent. Not only that but they embrace a clever supply chain strategy:

With scalability in mind, Skyline designed the majority of the system out of widely-available commodity materials, primarily stamped out of existing auto-manufacturing facilities. With this strategy, Skyline has quickly moved from prototype to shipping of its first commercial product in less than three years.

Some of the more notable installations include an 82-kilowatt project providing more than 80 percent of energy needs for Nipton, CA. And while the town only has twenty residents, its still the highest per capita installation of solar of any town in the state. And then there’s Skyline’s first elevated HGS installation for Metcalf West, a leading Kona, HI based construction company. The installation went above a parking area at company headquarters with the goal of saving money and having a demonstration projects to show off. And then there’s the installation at Santa Clara Valley Transportation Authority (VTA) in San Jose, CA that  was completed only eight months after the company received its Series A financing.

Most recently, Skyline Solar announced their contract with the DoD under their Environmental Security Technology Certification Program (ESTCP) initiative, with the goal of working toward great energy independence. Under this initiative, Skyline announced that it is only the second company selected to complete solar power plants on military bases. Skyline’s HGS rapid megawatt deployment, upgradeability and performance all were distinguishing factors in securing the contract to validate the product’s performance in hot and sunny climates.

Reprinted with permission from Ecopreneurist

LED maker Lighting Science Group Corporation (LSG) (OTC Bulletin Board: LSCG) has filed for a $150 million intial public offering on the Nasdaq.

The Florida-based company is one of a handful of US companies with consumer LEDs on the market. 

Majority ownership in the company belongs to Pegasus Capital Advisors--the same fund behind the IPO of rare earth company Molycorp.

Following last week's IPO for biofuel company Gevo (Nasdaq: GEVO), some industry watchers are suggesting this may be a big year for cleantech IPO's.

Other potential debuts on the horizon inlclude solar thermal company BrightSource Energy; smart grid company Silver Spring Networks; and algae company Solazyme.

Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC will act as joint book-running managers for the LSG offering.

Photo by Lighting Science Group

Reprinted with permission from Sustainable Business

5th in a series of excerpts from the book “The HIP Investor” (John Wiley & Sons, 2010). See previously published articles in series here.

When coal-producing giant Massey Energy (NYSE: MEE) announced its sale to Alpha Natural Resources, Inc. (NYSE: ANR) recently, it was the end to a long tumble downhill. Ten months earlier an explosion killed 29 of the 31 miners at Massey’s Upper Big Branch coal mine in Montcoal, West Virginia. Foreshadowed by more than 500 safety violations in 18 months at Massey, this disaster brought to national attention how an unsafe culture can destroy lives – and impact the bottom line with million-dollar fines.

Investors can discover information about potential risks to the companies in their portfolio from public sources, such as the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) website (http://bit.ly/7DqHpl). Obviously, companies that ignore safety find themselves at risk for lowered morale, higher turnover, increased accidents and damages, and potentially large lawsuits – all of which can affect the bottom line. Leaders in safety tend to boost their profitability by valuing and training employees to avoid those risks.

HIP Health Metrics

Solving human needs – Health, Wealth, Earth, Equality and Trust – can be profitable. This feature delves into metrics of physical and mental health that can be leading indicators of financial performance. As with each of the five needs, you can evaluate a firm across customer, employee, and supplier perspectives.

There are five groups of quantifiable metrics a HIP (“human impact plus profit”) investor can use to evaluate companies in Health:

1. Customer satisfaction

Customers who are happy – and thus mentally satisfied – return to buy more, and tell others about their positive experience. They could be satisfied by the innovative applications that run on the Apple iPhone (Nasdaq: AAPL), the accommodating customer service at Nordstrom’s (NYSE: JWN), or the breakthrough eco-efficiency of the Toyota Prius (NYSE: TM).

Consulting firm Bain has measured that the most profitable customers of a firm are its repeat customers. Once a customer finds a product that solves a problem, they tend to buy again, as long as the company keeps them happy. When customers become net promoters (i.e., willing to recommend a company to others), the firms experiences the highest revenue growth. Where can you find data on customer satisfaction? Try www.TheACSI.com, which covers many companies in the US, UK, Sweden, Singapore and Mexico.

In its book "Satisfaction", the consultancy JD Power showed that increasing and high customer satisfaction typically drives higher levels of top-line revenue, bottom-line profit and thus, shareholder value.

2. Employee satisfaction and retention

Employee satisfaction is linked with good customer relations and with overall increased productivity. To head off employee turnover and to promote high staff engagement and retention, financial software company Intuit (Nasdaq: INTU) proactively addresses employee engagement and managerial competence. Intuit comprehensively surveys its 8,000-plus staff annually in November about overall satisfaction with the work environment and managers. Intuit typically gathers a phenomenal 92 percent response rate with its online survey. The results scores are then used by managers to start a dialogue with employees about ways to improve the workplace. Sometimes this leads to clearer manager communication or improved focus to address important issues. For the manager’s senior leaders, the scores can also indicate opportunities for leadership development, coaching, or a role change. Intuit’s investment in high retention has kept turnover—and the associated costs—lower than competitors.

3. Wellness programs for staff

Employee health and well-being has a direct effect on company well-being and profitability. HIP investors should look for companies that provide health insurance coverage for the majority of its employees. Higher HIP scores flow from companies that go further and invest in wellness programs that promote healthy lifestyles.

Safeway’s (NYSE: SWY) innovative health-insurance pricing schedule has saved it money and improved the health of their employees. Since its inception in 2005 until 2009, overall wellness initiatives at Safeway have kept health care costs for the company flat on a per capita basis, while most American companies’ costs have increased 38 percent over the same four years, according to its CEO Steve Burd. By encouraging healthy action by reduced premium payments, Safeway employees have reduced their obesity and smoking rates to roughly 70 percent of the national average. This, coupled with a 78 percent employee satisfaction with healthcare rating, makes a HIP, happy, healthy – and potentially more profitable – workforce.

4. Employee safety

Like employee health and wellness, a safe work environment has many financial benefits to companies—more consistent productivity, high staff morale, lower medical expenses or insurance premiums—and it produces a positive return on investment for a group of the company’s most valuable assets: its employees.

Alcoa (NYSE: AA), shares real-time accident ratios. (http://bit.ly/bYRbdT) In January 2011, 91.7 percent of Alcoa’s 212 locations globally had zero recordable injuries, and 99.5 percent of those sites had zero lost workdays.

In the 1980s, CEO Paul O’Neill made job safety the core metric on which senior executives were measured. For shareholders, his focus on human impact and profit multiplied Alcoa’s shareholder value by 10 times from $2.9 billion in 1987 when he started, to $29.9 billion when he retired in 2000.

5. Stakeholder and community health

Corporations can both benefit their bottom line and reduce their overall operating risk by engaging the communities in which they operate. Many non-U.S. markets (think India, China and Brazil) provide high-growth opportunities for creative corporate approaches.

For example, in Rio de Janeiro, the health care firm Johnson and Johnson (NYSE: JNJ) has partnered with Mobile Metrix, a nonprofit, to investigate the needs of the low income, base-of-the-pyramid communities. The nonprofit pays locals to collect the information with handheld digital devices, which create jobs as well. “We can help increase access to health care, boost income for those collecting the data, and create a new market for corporations,” says Melanie Edwards, founder of Mobile Metrix. J&J can then target the right products to the right customers—something not possible without this census-type data. It also can generate new revenues and profits while the community’s health profile increases with access to affordable health care products, the wealth from income-paying jobs goes up, and more Equality is realized.

Next time, we will explore how Wealth metrics for employees and stakeholders can spur potential profit as well as positive impact. By investing with these principles, you can reduce risk, seek increased returns – and reward firms who build a better world.

R. Paul Herman is CEO and founder of HIP Investor Inc. [http://www.HIPinvestor.com] Herman is the author of “The HIP Investor: Make Bigger Profits by Building a Better World,” [ http://bit.ly/HIPinvestorBook ] published by John Wiley & Sons in 2010. Herman is a registered representative of HIP Investor Inc., an investment adviser registered in California, Washington and Illinois.

NOTE: This feature, excerpted and adapted from the HIP book, is not an offer of securities nor a solicitation. The information presented is for information and education purposes, and is NOT an investment recommendation. Past performance is not indicative of future results. All investing risks loss of principal. The author and his clients may invest in the companies mentioned above, including in the HIP 100 Index portfolio. Details and full disclosures are at www.HIPinvestor.com

by Andy Sullivan

More than 60 programs would be eliminated entirely, including Obama's effort to build a network of high-speed passenger trains.

Birth control funding, the Americorps volunteer program, public broadcasting, the community-oriented policing program and a "weatherization" program to insulate homes and office buildings also would be eliminated.

The proposal has virtually no chance of becoming law because President Barack Obama and the Democrats who control the Senate are certain to oppose it.

But it will frame a debate over federal spending that is likely to dominate Washington this year.

Republicans in the House of Representatives aim to impose immediate cuts averaging 15 percent on domestic spending programs to narrow a budget deficit projected to hit a record $1.5 trillion this year, and show conservative voters that they are serious about scaling back the size of government.

"We have taken a wire brush to the discretionary budget and scoured every program to find real savings," said Republican Representative Hal Rogers, who as chairman of the Appropriations Committee is leading the effort.

Republicans congressional leaders emerged from a White House lunch with Obama voicing optimism that they would be able to work with the president on budget cuts.

But with Obama pushing for targeted increases in scientific research and other areas, consensus will not come easily.

"This is all a political statement to try to appeal to a relatively narrow base, and I suspect when they finish their work that it's going to be an even narrower base," Democratic Representative Jim Moran told Reuters.

The plan would eliminate 60,000 jobs, said Moran, who sits on the Appropriations Committee.

LARGEST CUTS

Congress will have to agree on spending levels to avoid a government shutdown when current funding expires on March 4.

The $32 billion in cuts prepared by the Appropriations Committee would amount to the largest budget cut in U.S. history. But they would spare entitlement programs, such as pension and health insurance for the elderly, and military spending that account for the majority of the $3.7 trillion annual U.S. budget.

The final package that passes the House is likely to be even deeper as newly elected conservative members push for an additional $26 billion in cuts.

House Republican leader Eric Cantor said it likely will deny funding needed to implement Obama's landmark healthcare reform, which Congress passed last year.

It is not clear if the package that the Appropriations Committee is putting together will include those cuts, or if they will be added during debate on the House floor next week.

The committee is expected to finish work on the package on Thursday.

The package would apply to a fiscal year that is nearly halfway through, meaning that many agencies and programs would face immediate, sharp budget cuts.

Among them:

- A 30 percent cut to the Energy Department's Office of Science, which funds basic scientific research. Obama called for renewed emphasis on scientific research in his State of the Union speech last month.

- A 5 percent cut to a program that provides food for low-income mothers and children.

- A 2 percent cut to the Internal Revenue Service, which faces increased duties under the new healthcare law.

- Sharp cuts to several programs that help local governments upgrade drinking-water and sewer systems and fund improvements in poor neighborhoods.

- Eliminating outright the $1 billion set aside for Obama's high-speed rail network.

- $2 billion in cuts from the government's $18 billion in job-training programs.

- A 32 percent cut to the Environmental Protection Agency, which aims to regulate carbon dioxide and other greenhouse gases over Republican objections.

- Cuts to an array of energy programs, from efforts to boost efficiency and renewable energy programs to nuclear and clean-coal programs.

Photo by JD Hancock/flickr/Creative Commons

Reprinted with permission from Reuters

4th in a series of excerpts from the book “The HIP Investor” (John Wiley & Sons, 2010). See previously published articles in series here.

In 2010, the BP oil gusher was not a surprise to those investors tracking safety violations. Over the previous three years, BP (ADR: BP) was cited for 760 “egregious” or “willful” breaches by the U.S. Occupational Safety and Health Administration (OSHA), leading the industry by two orders of magnitude (the next companies, Sunoco and Conoco Phillips, had 8. Exxon Mobil had 1). Risk-aware investors factor these metrics into their portfolios, which enabled forward-looking metrics-driven investors to avoid the 40 percent rapid erosion in stock value after the BP disaster.

What gets measured gets managed, but currently many corporate metrics tend to be narrow, short-term and exclusively financial. This creates added risk by not properly accounting for true leading indicators of performance. More profit is possible when investors and leading companies look comprehensively at the business, to build both more profit and a better world.

Five types of metrics – Health, Wealth, Earth, Equality, and Trust – are frequently ignored in financial reports and by traditional stock analysts. These metrics are seen as “soft” when they actually relate to “hard” value. Leading companies appropriately measure their impact on overall society, including the environment, and how it relates to the bottom line.

1. Health: Protecting the Core Asset

Employee Safety – A safe work environment can have many financial benefits to companies – lower insurance premiums and medical costs, and potentially higher sales due to increased staff morale. Thus, a positive return on investment for the company’s most valuable asset: its employees.

John Deere (NYSE: DE) is a leader in workplace safety and health. Last year, its business units received 43 safety awards from the U.S. National Safety Council. An example: in 2010 the company's Cylinder Division in Moline, Illinois, had operated for more than 15 years without a lost-time injury. Although these training programs require investments of money and time, in the long term they increase productivity and reduce risks to legal and medical expenses. From a long term perspective, this metric can drive increased profit.

2. Wealth: Building Employee Worth

Wealth Matching – HIP companies seek to align financial goals with employee compensation through wealth-matching programs. These programs include pensions, 401(k) matching, and discounts to purchases of company stock. For example, financial software company Intuit (Nasdaq: INTU) promises to grant stock options to all employees – it also earns very high employee engagement scores, a likely driver of satisfied and returning customers, which should boost top line revenue and can contribute to growing bottom line profit.

3. Earth: Reducing Emissions

GHG Emissions – When any form of fossil energy is used, carbon is a natural byproduct. Thus as fuels like oil, natural gas, and coal are used to power planes, trains, and automobiles; generate electricity and heat; and as a feedstock for chemicals and plastics; carbon becomes embedded in our global economy.

A HIP investor recognizes that companies lowering its carbon intensity can outperform financially due to lower energy usage – and decrease its potential liabilities from not polluting. Carbon-efficiency products can generate top-line revenue too; in 2007, DuPont earned $65 million revenue from products that reduce GHG emissions, accounting for 55,000 metric tons of GHG emission reductions. In the future, it is targeting $8 billion in revenue from eco-efficient products. Operationally, DuPont (NYSE: DD) seeks 100 percent of its company fleet of vehicles to be fuel-efficient; in 2008, 22 percent of its U.S. vehicles were hybrid, flex fuel, clean diesel, or E85 octane powered. Leaders like DuPont can realize lower costs, better manage risks, position for fewer liabilities, and generate revenue from customers seeking products with zero- or low-emissions products.

4. Equality: Increasing Diversity

Board Diversity – Most consumer-focused companies serve a wide variety of customers across gender and ethnicity. However, the management of those companies is not always representative of the customer base that it serves, nor the workforce it represents.

One shining example in board diversity comes from an unexpected industry, Ryder (NYSE: R). With more than half of its board either ethnic or female, Ryder has a much better opportunity at understanding their diverse clientele than a more traditional trucking company. This diversity provides a much better chance of understanding the customs and nuances of multiple customer segments and niches, and increasing the likelihood of boosting revenue and market share.

5. Trust: Revealing Political Funding

Lobbying – A HIP investor examines the cost of lobbying, as it may reveal a company strategy towards fairness in the marketplace. Why is it an important metric? First, the lobbying amounts overall tend to advocate for narrow corporate interests rather than a balance with society as a whole, creating risk of a backlash. Second, calculating the amount spent relative to revenue – and compared to industry competitors – may be indicative of a firm overspending on “protecting” old ways while potentially under-spending on innovating new products and services. For example, AT&T (NYSE: T) spends record amounts of money on lobbying and political donations. According to OpenSecrets.org, AT&T has spent more than $43 million on lobbying since 1989, funds that could go to R&D, such as creating the next iPhone network.

Across five elements of HIP – Health, Wealth, Earth, Equality, and Trust – these data-driven metrics can be used by investors. Each metric relates to quantifiable business value – from higher revenues to lower costs, from optimal taxes to premium stock values. The resulting financial performance can lead to a portfolio that realizes higher human impact and profit.

In the next five features, we will delve more deeply into each of these categories. Next time, the focus will be on how Health can drive Profit – companies making your world a healthier place to live while seeking to make your portfolio a healthier investment.

R. Paul Herman is CEO and founder of HIP Investor Inc. [http://www.HIPinvestor.com] Herman is the author of “The HIP Investor: Make Bigger Profits by Building a Better World,” [ http://bit.ly/HIPinvestorBook ] published by John Wiley & Sons in 2010. Herman is a registered representative of HIP Investor Inc., an investment adviser registered in California, Washington and Illinois.

NOTE: This feature, excerpted and adapted from the HIP book, is not an offer of securities nor a solicitation. The information presented is for information and education purposes, and is NOT an investment recommendation. Past performance is not indicative of future results. All investing risks loss of principal. The author and his clients may invest in the companies mentioned above, including in the HIP 100 Index portfolio. Details and full disclosures are at www.HIPinvestor.com

by Woody Tasch

“When is enough enough?” Bernie Sanders asked during his filibuster against the Lame Duck tax bill in December. During the speech he referred to Bill Gates and Warren Buffett, two of the world’s richest three people. (If you haven’t been paying attention, they’ve been pushed down to the number two and three spots by Carlos Slim Helu, the Mexican telecom tycoon who is now worth $53.5 billion.)

The reference to Gates and Buffett in a speech about “Enough” was a result of their project called The Giving Pledge, which encourages billionaires to give away more than half their wealth. And while this may not seem immediately relevant to life in the hills of Hardwick or the dales of Dorset, it raises important questions about the meaning of Enough, about ways in which we might, as a society, secede from the cult of He Who Dies With The Most Toys Wins and, maybe, just maybe, about ways to put back into the soil – the soil of the restorative economy and the actual soil – what we take out.

Ask any earthworm. Here are a few data points from Earthworm Economics:

- There are some 1,000 billionaires on the planet, 400 of them American.

- In an acre of fertile soil there are 50,000 to 2 million earthworms, none of them American. (Estimates range widely, conditions vary from hummock to swale, from Butterworks Farm to Lucky Penny Farm to Full Belly Farm. There is no Earthworm Department of the Census or Forbes list of the richest 400 earthworms.)

- Ninety million acres of American cropland is devoted to corn. Seventy-five percent of this goes to feed livestock and cars. Since 1776, a third of America’s topsoil has eroded.

The story of Enough is told in chapters of money, food and soil.

In the 20th century, our food and our money became fast. Our farms became factories. The erosion of our soil accelerated, as did the erosion of our sense of connection to one another and collective purpose. Our money zoomed around the planet with ever accelerating speed, increasingly complex and abstract. We raised children to think food comes from supermarkets and investors to think investments come from computer screens. We filled our land with chemicals, portfolios with zeros and our heads with financial speculation. We ignored the dead zone in the Gulf of Mexico—not the one caused by BP’s oil, but the one caused over decades by billions of tons of agricultural run-off coming down the Mississippi River. In the 20th century, the idea of Enough became as rare as an earthworm under an ethanol plant.

In the 21st century, can philanthropy, even radically generous philanthropy like that of The Giving Pledge, come to the rescue? Can it rekindle an abiding sense of Enough?

Yes and no.

Yes, because the idea of giving away more than 50 percent of your money helps us all look in the direction of putting back as much as we take out. The act has about it both an air of ageless morality and a sense of modern urgency. The Giving Pledge may or may not contain, but is consistent with, an implicit recognition that facing the global predicaments of climate change, financial volatility, social inequality and political inertia, neither economic growth based on consumerism nor philanthropy as usual will be sufficient.

No, because if we are going to build a restorative economy, an economy that values preservation and restoration as much as extraction and consumption, an economy that heals broken social and ecological relationships while creating wealth and commercial opportunity, we are going to need billions and billions of dollars of investment capital. We are going to need investment capital and investors of an entirely new kind.

We need to move beyond philanthropy as usual. Perhaps even more urgently, however, we need to move beyond investing as usual.

This recognition has led thousands of us to the Slow Money Principles, which ask:

- What would the world be like if we invested 50 percent of our money within 50 miles of where live?

- What if there were a new generation of companies that gave away 50 percent of their profits?

- What if there were 50 percent more organic matter in the soil 50 years from now?

In Part Two of this post I will propose a Slow Money Pledge, the reasons and some specific ways it can be carried out.

Woody Tasch is the founder of Slow Money, an NGO catalyzing the flow of investment capital to local food systems. He is Chairman Emeritus of Investors’ Circle and author of Inquiries into the Nature of Slow Money: Investing As If Food, Farms and Fertility Mattered.

Photo by bfishadow/flickr/Creative Commons

Reprinted with permission from CSRwire

Fuel cell maker Bloom Energy today announced a new business model that will allow companies to purchase electricity as a service, rather than purchasing an expensive fuel cell outright.

The service model could give Bloom Energy a new income stream, as it works to lower the $800,000 price tag on its signature "Bloom Box" technology. The company emerged on the scene last year with high-profile customers like eBay (Nasdaq: EBAY) and Coca-Cola (NYSE: KO).

The company said 200 new systems will initially be deployed under the new Bloom Electrons service. The service allows customers to lock in their electricity rates for 10 years, delivering fixed predictable costs. Bloom manages and maintains the systems on the customers’ sites and the customers pay only for the electricity consumed.

Bloom Energy said under the new service plan customers can immediately save up to 20 percent on their energy bills. Furthermore it allows them to scale deployments more quickly to increase their supply of cleaner electricity.

The Bloom Box converts natural gas or biogas into electricity without combustion and its related emissions.

The company said new customers such as California Institute of Technology, BD (Becton, Dickinson and Company), and Kaiser Permanente plan to take advantage of the service.

Bloom Energy hopes the service will open the door to new types of customers such as non-profit organizations, educational institutions, and utilities.

Bloom Energy is headquartered in Sunnyvale, CA.

Photo by Bloom Energy

Reprinted with permission from Sustainable Business