Are women taking the lead in the transition to sustainable investing?

The world of finance has been a male-dominated arena for a long time. Although the conversation surrounding gender…

The world of finance has been a male-dominated arena for a long time. Although the conversation surrounding gender equality in the workplace has been increasing in volume for decades, the playing field is yet to be level.

Research by global management consulting firm McKinsey illustrates that whilst women and men begin their careers in relatively equal standing, women face barriers on the career ladder which render them significantly underrepresented in higher levels of financial services companies, accounting for only 19% of C-suite positions such as senior managers or directors.

Alongside female underrepresentation, there is also the gender pay gap. HSBC reported a 47.8% median hourly pay gap between men and women. The Responsible Investor and Sustainable Finance Network survey also found that men are twice as likely than women to be in roles commanding over $197,000 on an annual basis.

Statistics like the above are not hard to come by. There is a great deal of commentary lamenting the dismal state of gender equality in the workplace and issuing rallying calls to action. However, the growth of impact investing over the last few years represents a space in the financial sector in which women can assert themselves on the same level as men.

“Impact investing”, or ESG investing involves considering not only the rate of return but also the environmental and social impact of one’s investment. It has grown to become a central factor for both responsible investors and businesses, as companies face increasing pressure from stakeholders to use resources to tackle climate change and other issues such as diversity and corporate governance. Moreover, it is no longer occupying a marginal position in the current world of finance: impact investing is indeed a significant player. Statistics from the Global Sustainable Investment Alliance indicate that $23 trillion of assets were managed using an ESG approach in 2016, representing a 73% increase from 2012. Finance giant Blackrock’s CEO, Larry Fink, has also committed to redirecting $7 trillion in assets towards environmental sustainability and has predicted a “fundamental reshaping of finance” in his annual letter.

Unlike the financial industry in general, women are much better represented in this particular realm. Data from recruiter Acre Resources indicates that 44% of top ESG jobs went to women in the past five years. This statistic starkly contrasts the state of general finance, where women only represent 17% of senior managers or investment advisers in the UK.

The green finance sector seems to offer better quality career opportunities for women, as it appears to be inherently more diverse and equitable. The shifting of green finance into the mainstream will allow women to play a critical role in leading the movement.

Moreover, women are taking the lead on impact investing not only in financial services. Women control $14 trillion in personal wealth in the US, and almost half of the estates valued over $5 million. With an increasing amount of wealth in the hands of women, investments will increasingly reflect female interests as much as male. According to a Morgan Stanley study, 84% of women are interested in sustainable investing, as opposed to 67% of men. As such, women are poised to become a driving force in the deployment of money through an ESG lens and accelerate the transition into sustainable investing.

In addition to female investors pushing money into green finance, female business executives and entrepreneurs are considering ESG factors when running business operations. The Credit Suisse Gender 3000 report, which surveyed 120 family-owned companies found that more than half of female-founded enterprises incorporated the United Nations Sustainable Development Goals into their business strategy, in comparison to 22% of male-founded enterprises.

With women equipped with influential positions in financial services and enterprises, and wealth to invest according to their interests, it seems they are poised to lead the economy into an era of responsible investment.

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