Women today are taking on the challenges of this millennium with uncommon vigor and creativity by managing family, career and education in ways that are transforming how we live and work. Not surprisingly, as they begin taking a more active role in investing, the feminine footprint is making a notable impression on wealth management as a whole and on impact investing in particular.
The Investment Clout of Women
Women control nearly 30% or $39.6 trillion of the world's wealth and 51% and $14 trillion of personal wealth in the United States. By 2020, that amount is expected to rise to $22 trillion in the United States alone. Over the next two generations, women are anticipated to inherit 70% of transferrable wealth. (For related reading, see: Socially Responsible Investing: How Millennials are Driving It.)
Whether they've created their own wealth, are managing what a spouse has made or are recipients of inherited wealth, women have investment clout. And women invest differently. Sheila Herrling of The Case Foundation asserts that, "Women are emerging as a driving force behind (the impact investing movement's) growth - as investors, as entrepreneurs and as leaders of the movement...Women are spearheading and populating this sector more so than any other financial services sector."
Women investors in general, and Generation X and Millennial women in particular, tend to take a more holistic approach to investing, concerned about investments that support their values as much as they are about financial returns. They're looking for investment options that make an impact on what they believe in. Impact investments provide viable options for women striving to make a positive social or environmental impact with their investment dollars.
The Growth of Impact Investing
According to a report by J.P. Morgan, the Rockefeller Foundation and the Global Impact Investing Network, "The growing impact investment market provides financial support to address some of the world's greatest concerns in sectors such as sustainable agriculture, renewable energy, conservation, microfinance, and affordable and accessible basic services, including housing, healthcare and education."
Impact investing has grown into a multi-billion dollar market over the past several years. The Global Impact Investing Network anticipates that market to swell to $500 billion by 2020. Reaching Gen X and Millennial women will play an especially crucial role in the success of impact investments. Both generations place a tremendous significance on environmental, social and governmental concerns. Millennial women particularly, are more likely to engage with brands that prioritize social responsibility.
Gen X and Millenial Women
With Gen-Xers and Millennial women slated to inherit a sizeable portion of the impending $30 to $40 trillion wealth transfer from their Baby Boomer parents, their passion to make the world a better place is driving companies to consider their contribution to the greater good. They are looking for a double investment benefit, with both a social and financial return, and savvy companies are being intentional in their efforts to inspire them. (For more, see: The Growth of Impact Investing.)
Companies looking to engage this segment understand how essential social media is both in communicating their message and understanding their audience. Social media is shaping peoples' thinking. Not only do Gen X and Millennial women tend to use social networks, especially Facebook, to find news on both local and worldwide topics, they can also instantly post their own point of views. "Millennials believe social media can be their megaphone to make an impact on issues they care about. This group is far more likely to use social media to address or engage with companies around social and environmental issues," according to a Cone Communications research survey.
Companies Looking to Attract Socially Conscious Women
To involve them in impact investing, many corporations are encouraging followers to share posts on what they're doing, post online petitions or comment on social media. Many of these corporations are also taking advantage of the prevalence of influencer marketing being facilitated by social media and content marketing, allowing companies to broaden their reach far beyond the scope of direct marketing.
An increasing number of companies are attracting women committed to seeing social and environmental returns along with their financial returns. Women care about the environment which includes sustainability and recycling. Timberland, a footwear and outdoor apparel company, provides full-time employees with up to 40 paid volunteer hours per year, including an annual Earth Day event in April. H&M has implemented a recycling initiative where shoppers can drop off unwanted garments, regardless of brand or condition, at any H&M store across the globe. The H&M Foundation has partnered with The Hong Kong Research Institute of Textiles and Apparel to develop technologies to recycle clothes made from textile blends into new clothes.
Women also want the next generation to be helped and empowered and want to be good role models for their children. In 2015, Always feminine hygiene products unveiled a "Like a Girl" ad campaign. The ad featured young adults simulating running and fighting "like a girl" with timidity and a lack of confidence, then allowed children to create a simulation where they could demonstrate fierceness and confidence. The message was you can still be a girl and win the race. Endorsed by UNESCO, and used by over 500 thousand education professionals, the Always Puberty and Confidence Education Program reaches over 17 million girls annually in over 70 countries.
Through the sale of its shoes, the trendy TOMS Shoes supports over 100 giving partners. Women can view the impact on YouTube or go to the TOMS website to see how many countries have been helped. TOMS has helped over two million children receive the medication necessary to prevent hookworm.
Finally, women are concerned about seeing women empowered. They want to invest in companies that provide programs promoting women in leadership roles with benefits like education and flexible work schedules. Deloitte LLP is an example of a company leading in the advancement of women. Its Women's Initiative helped to build the intellectual capital to serve clients, develop employees and grow the company. Procter & Gamble has a Corporate Women's Leadership Team which is "committed to the advancement of women, helping ensure that women's skills and insights are well-represented throughout the global company, and at all levels of leadership."
How Women Will Drive Growth
According to Calvert Investments, women along with younger investors, will be a driving force in the growth of impact investing. In a study of affluent women, Calvert found that 95% ranked "helping others" and 90% ranked "environmental responsibility" as important. "Roughly 60% of the women (in the study) based purchase decisions on how a company's corporate behavior aligns with their personal values."
Women search for products and companies with connections to what is important to them. They are more likely to engage with brands where issues of social responsibility and the environment are prioritized. That's not only influencing how women invest, but how companies give back. (For related reading from this author, see: How Millennials Can Use Impact Investing to Do Good.)