Man, or should I say woman, it’s a good time to work in the ethical investing space.
Every few weeks, it seems, a new report comes out showcasing up-and-to-the-right trends regarding uptake of values-based investing among various demographics and geographies.
Among these is an encouraging report released last month by the Responsible Investment Association (RIA) entitled Millennials, Women, and the Future of Responsible Investing. As you might guess, the data shows strong interest in responsible investing from both title demographics.
What I found most fascinating was a finding repeated throughout the report that women are “more likely to express uncertainty” than men when it comes to responsible investing (RI). This applies to talking about their interest in RI; their belief in RI’s ability to protect investors against downside risk; and their belief in the stronger profitability of companies with good environmental, social and governance (ESG) practices. (1)
The chart below, taken from the report, is a case in point. Men and women are “equally likely to indicate belief in the importance of taking ESG factors into account when making investment decisions. At the same time, women are nearly twice as likely as men to indicate uncertainty about this.”
“More likely to express uncertainty.” As a female (and millennial) investor this rings true on a personal level, but why do we feel or say we are more uncertain and what are the implications?
The RIA report concludes, rightly, that “uncertainty” should be viewed as an opportunity to provide more educational resources to female clients, but I’m wondering if there’s another upside as well?
I asked a couple leading ladies in the impact and responsible investing space for their thoughts:
Sucheta Rajagopal, CFP, portfolio manager at Mackie Research Capital Corporation points out that “what can sometimes be perceived as uncertainty is often just a desire for more information, and an acknowledgment that they don’t yet know enough about an investment strategy like SRI. This leads to both better decision making and a higher comfort level with potential risk and return outcomes. Most importantly it gives women the confidence to stick with a strategy through good times and bad, and studies have shown that that’s a major factor leading to higher returns.”
And it truly is about higher returns. A much cited study published by researchers from the Haas School of Business at UC Berkley, finds that women investors on average earn 1.4% more over time than their male counterparts. (2)
This analysis also lines up with CoPower’s own Director of Investments, Trish Nixon’s experience working in the impact investing space. “Impact investing resonates with women. Take for example the number of women working in this space (proportionally) versus traditional finance. In my experience, women investors are more likely to want to listen and learn about impact investment opportunities, and are less likely to attach their own biases or preconceived notions to the conversation (not that they don’t ask tough questions!). But still -- most active impact investors I know are male. CoPower’s own investor split -- shareholders, fund LPs and bond holders, reflects this.”
Gender comparisons aside, at CoPower we want all our investors to feel confident that they’re making investment decisions that are right for them.
I’ll be working on building out our educational content this summer, and would love to hear from you -- What kind of information and resources about CoPower, clean energy or impact investing, private placements, or just investing in general would help you make investment decisions? Let me know at lauryn (dot) drainie (at) copower (dot) me