Looking at Sustainable Investing Through a Gender Lens
The recent movements surrounding harassment of women in the workplace have shined a spotlight on the issues women confront. These issues cannot be ignored—women are taking a stand for economic empowerment, equality in the workplace, and dignity and respect in their social interactions. It’s long overdue, and given the current discussions, gender lens investing is especially important and timely.
At the same time, advisors who’ve questioned impact investing’s place in portfolios can close the debate. Many women want to put their investment dollars to work to stand behind these issues, support their resolution, and make positive changes for the future. It’s an opportune time for advisors to engage clients in a conversation about allocating a portion of their investment portfolio to align and support women’s rights.
The opportunities to align investments with causes important to women are plentiful, ranging from microfinance to fighting ultra-poverty to gender parity in the workplace. Women Investing for a Sustainable Economy (WISE) promotes gender justice and advocates for women in leadership positions. The University of Pennsylvania’s Center for High Impact Philanthropy is replete with resources to guide investors to make portfolio allocations to causes they care about. And several investment options are available that are designed to combine an index-based returns from a portfolio comprised of companies with high gender and diversity ratings. These investments seek to restrict the worst offenders and optimize portfolios based on companies with the best records for supporting women’s rights, including wage parity, family benefits, and diversity.
Impact investing is not limited to women—but women are a primary driver for its growth, which should propel advisors to waste no time in initiating a dialogue with their clients. “Women have a holistic view of investment. They care about returns, but they also care about the role of their investments in society,” notes Jackie VandenBrug of U.S. Trust.
There is no dearth of attractive investment options. According to the 2016 edition of the Global Sustainable Investment Review (published biennially), worldwide global sustainable investments are approaching $23 trillion, up by 25% from 2014, which grew by 61% from 2012-2014. The robust roster of choices includes targeted mutual funds, exchange-traded funds (ETFs), separately managed accounts (SMAs), and private equity.
Although women are leaders in making impact investments, millennials also are interested in socially responsible, sustainable, and impact investing. Morgan Stanley’s April 2016 report showed an astounding 82% of high-net-worth millennials recognize its significance, nearly twice the 45% rate for high-net-worth investors overall. Advisors with clients whose next generation comprises millennials will want to facilitate a conversation to plumb their interest in making impact investments.
The focus on gender equity and women’s rights provides an important opportunity for advisors to engage their clients who want to align their portfolios with their values. If they do not, another advisor will.
The information, analysis, and opinions expressed herein are for informational purposes only. Nothing contained in this piece is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.