Why are there so many women in sustainable investing?

Nordsip asks women in the market why they think it outstrips conventional finance when it comes to female representation.

In honour of International Women’s day, NordSIP decided to take a closer look into the world of sustainable investing out of a gender perspective, on the premise that that the share of women is much larger in sustainable investments than in finance in general.

To better understand the reasons behind this “imbalance” and what the consequences might be, we approached a selection of senior women in the finance industry with ties to sustainable investing and asked for their views. We also asked for answers from followers on LinkedIn. We are very thankful for the quality of the answers we received and for the effort that was put into these mails.

“Why are there so many more women in sustainable investing than in finance in general?” was the general question we asked. The outcome could be grouped in three parts:

1. Why?
2. Is it a positive or a negative for sustainable investing?
3. What actions should we take, if any?
4. Why is gender balance more skewed towards women within sustainable investments than in the finance industry in general?

Many respondents discussed the notion of women traditionally having a more nurturing role than men and thereby greater interest in doing good for others and society in their lives at large, but also when it comes to investing. Men, on the other hand, have traditionally been more focused on reaching fortune, power and influence which hasn’t been as plentiful in the sustainability area as in traditional finance.

These traditional roles are probably the reason why women for longer have been aware of so-called ‘soft’ factors such as environmental issues, human rights, health etc, which have long been considered less important by many, but can no longer be ignored.

Many of our respondents also pointed to the fact that sustainability has been a new area offering better career opportunities for women than finance in general, simply by not being so traditional and more open to diversity and new ways of doing things.

“I think it reflects the generally and traditionally higher interest among women in sustainability. When I worked for a large Swedish pension fund we asked our one million clients, mostly women, how important they viewed ethics and sustainability. They ranked it higher than financial return and volatility. A similar survey on another client group with more men showed a much lower interest among the men,” says Gunnela Hahn, Head of Sustainable and Responsible Investment, Church of Sweden. “The reason behind this is in my view mostly cultural,” Gunnela continues. “For a long time, it has been more accepted, or even expected, for a woman to be caring and nurturing to others and set aside her own self-interest for a greater good (or a husband), than for a man. Also, engaging the so-called ‘soft’ questions we human beings actually live for – good relationships, health and well-being, being part of a greater context – have not resulted in higher status or prestige. Hence, people that aimed for and were allowed to reach power and influence were not attracted to that. These people of power were historically mostly men.”
“Studies show that the majority of investors care where and how their money is invested. In particular women, as compared to men, are more concerned that their investment goes into “doing good” and that their investment choices could make a positive difference in the world. In general, women care more than men about sustainability and women attribute higher scores than men to each ESG category,” says Claudia Stanghellini, Head of External Management at Swedish pension fund AP3.“I suspect it is in line with women’s nurturing nature – they care more about things like that. Women tend to be more consensus driven – want things to be for the greater good. Perhaps less selfish than men and as a consequence also bad at looking after themselves (everybody else’s needs first – children, husbands, animals…)?” says Sara Chance, Founder and Managing Director of fund manager Arkney Limited.
For some, the question needs more research. “It is a difficult question,” says Tove Bångstad, Head of Nordics for Amundi. “I don’t have a good answer to it. Is it because men find sustainability uninteresting and do not look for positions in that area or are women more interested? It would be interesting to do a survey at the four major banks in Sweden.”
For Irene Mastelli, Director Advisory, Phenix Capital: “Men care about society and the planet, too! I think the answer lies in the fact that this sector is inherently – perhaps by design – more diverse and equitable. In other words, it has to do less with women being more interested in the topic, and more with the attractiveness of this segment of the industry, and its openness to diversity.”
The fact that women in general, have a different attitude towards risk than men is also perceived to have played a role.
“Women are often more risk averse than men and then it’s wise to take sustainability into consideration in an investment decision. The best way to achieve good long-term return is, to avoid crises, including climate ones. Investing in non-sustainable companies thus becomes far too risky in the long run,” says Annika Winsth, Nordea’s Chief Economist for Sweden.
“The field sustainable finance is an area of finance which continues to make the most headlines for reputational risks associated with issues at the intersection of both social and environmental spectrum (think about risk assessments of environmental disasters now encompassing likelihood and severity of community displacements etc), as well as value-aligned governance (pay4performance etc). I personally believe sustainable finance has been a magnet for women leaders as it continues to be most aligned with women’s own aptitude towards risk taking, longer-term focus and, again, alignment of personal values vs. organizational ones,” says Alessia Falsarone, Managing Director, Risk and Sustainability Officer at Vision +.
Beyond risk, sustainable investing is also an area that gives a meaning to work, a feature women may be more attracted to than men.
“One of the huge positives for me in taking this job is that it is very personally satisfying to me,” says Maria Elena Drew, Director of Research, T. Rowe Price. “I feel like I am making a difference every day that I go to work. That feeling may resonate with more women than men, perhaps. Men do care about the world also, of course, but I think that women have shown over time, across different industries, that they choose their job not just for the money. Women care also about the contribution they are making.”
“Maybe it has to do with women’s interest in future generations, which could be partly genetically conditioned,” adds Helena Levander, Chair, Nordic Investor Services. “I also think that women look broader on business and consider stakeholder values more than shareholder values. Maximising profit isn’t the only priority. Or, it could be that women just realise the importance of sustainable business more than men and realise its potential value creation. More interest in difficult questions for the future? Women are also said to be better at managing their health, which also has to do with sustainability.”

Is the higher female representation in sustainable investments a positive or a negative?

The female over-representation in sustainable investing could be viewed as positive if it is the result of competent women finding a way into finance that they otherwise wouldn’t have been able to. But it could also be viewed as negative, if it is the result of capable men not wanting to work in the field because they consider it to be of little importance.

Female over-representation could be positive if it is the result of competent women finding a way into finance that they otherwise wouldn’t have been able to. But it could also be viewed as negative, if it is the result of capable men not wanting to work in the field because they consider it to be of little importance.

Judging from the experience of some of our respondents, there are companies that certainly didn’t view the sustainability department as very important, for a long time. Today, the tide may have turned and several respondents talk about the changes in attitudes and in actions they have witnessed.
“Initially, sustainability was a role given to women coming back from maternity leave asking for a less demanding role,” says Anna Jönsson, Institutional Sales, Storebrand. “It was considered something ‘soft’ and a role closer to a woman’s heart. Fortunately, times have changed and the true value of sustainability is now common knowledge in finance.”
“This issue has been relevant for several years,” says Carina Silberg, Head of Sustainability at Alecta. “And I, having wandered between industries, must say that there is still a distinct difference gender ratio in different areas. When, 15 years ago, I started as an ethical analyst (preceding role to ESG-analyst) the relationship was 60/40 women to men. But then the profession was small, consisting of value driven boutique firms with 15-20 employees. Client firms – those responsible for ESG at the major asset owners – had about the same distribution. So, no major differences. When I worked as sustainability advisor for non-financial companies for about 10 years, the sustainability manager or the person responsible for sustainability could be a man or a woman, depending on the industry. Environmental managers, I would say, were mostly men whereas sustainability managers were more often women. Now that I am back in finance, I see more women than men working in this area, but at broader ESG-seminars in the financial industry the audience is more balanced. I think that, probably, more women are interested in sustainability issues – women having a more holistic view on risk and value – but also because sustainability has been a new area offering strategic development opportunities and careers in sectors that traditionally have been dominated by men and difficult for women to get into.”
“I wanted to share an experience I had recently at a PRI conference in Paris,” says Zoe Charny, Head of Marketing, TOBAM. “Most of the speakers and participants were women. I initially had a good impression and feeling: nice women at a finance conference, for once! But then it strikes me: because sustainable investing is still considered less important than other major functions at investment companies, management is keen to “leave” the SRI roles to women, with the feeling that they tick two boxes: I have a woman in charge of something, head of a department, and she is quite involved in this topic. This is for the cynical answer. For the hopeful answer: I believe that women are more attracted to meaning, values, challenges and content than by power. The stakes of sustainability in Finance are very much topics where you can influence the behaviour of society, an attractive mission for women. Sustainability topics, because they are still secondary topics for lots of companies are still widely held by women.”
“The finance industry is changing which has made it obvious that many qualifications acquired by women are very coveted,” says Åsa Wallenberg, CEO of SPP Fonder. The foundation of knowledge is still the commercial aspect but I believe women bring other skills to the table, one being sustainability. As awareness rises of how important sustainability is for business success, it will attract more men. It has been evident to many women for a very long time.”
Being a woman working in finance has for many years been a lonely venture and the experience for women going into the sustainability field and meeting other women is for many a positive experience.
“I don’t know what the statistics are,” adds T. Rowe Price’s Maria Elena Drew. “But I do feel that there are a lot more women in the room, looking at sustainability, in any part of the world. I used to focus on heavier industries, particularly oil and gas back in my career, and I was used to being the only woman in the room, most of the time. So, I love the fact that I am not anymore.”
“Another reason is that the traditional man is supposed to be strictly rational and solutions-oriented rather than letting his deeper emotions and empathy guide his choices in life,” adds Gunnela Hahn. “This is also one of the basic assumptions in neoclassical economics, saying that people are strictly rational and always want to maximize their own individual benefit. More recent research, though, has shown that this is a flawed theory, and I guess most people that are not economists already knew that.”“So, I think the reasons why there are more women in sustainable investing than in finance in general, are manifold,” Gunnela continues. “Women haven’t had the same pressure on following a traditional pathway within finance, but have been freer to let a deeper human sense of meaningfulness and importance for a greater good than their wallets and status play a role. Now, this is changing. When mainstream, high-profile, high-status men like Mark Carney and the Finance Minister of France speak about sustainable finance, they open up space to all men. Of course, it is a matter of timing, too, the Paris Agreement and divestment movement have been a wake-up call for investors. In a few years, I believe sustainable investing will be the agenda for any investor, regardless of gender.
“Have the many women in sustainable investing hampered the sector to take off? Of course not. The world (of men in power) was not ready earlier on. Apart from the lack of leadership, the right compensation structures are still missing. But the reality is catching up on us all, and sustainable finance is now on everybody’s lips, instrumental to save us (and our assets) from environmental disasters. That insight is promising for the world and its inhabitants. Now we just need to scale up,” Gunnela concludes.

What actions should we take going forward, if any?

Judging by the answers that we have received, change seems to be underway and will be driven further by commercial reasons as well as changing attitudes, but, not least important, we need to see top managements taking a lead.
“Sustainability has been a soft issue as well as a low-status area unlike, for example, corporate finance and sales,” says Carina Lundberg Markow, Chief Strategist, Responsible Investments at Folksam. “This is however changing. Just consider the latest developments in Anti Money Laundering. Also, the Volkswagen emission scandal shows that sustainability can be of great business importance.”
“I believe that younger generations have a different perspective,” Lundberg Markow adds. “I think that quite a few younger men could be interested in building a career in sustainability. If you look at men and women in general, women value sustainability higher than men, younger people higher than older and public employees higher than private employees. We have seen that in several studies that we have carried out.”
“I disagree with the premise that, because sustainability is more female-dominated it won’t have the same voice as if it were a male-dominated field,” says Maria Elena Drew. “I believe that it is about individual women and individual men and the company culture. Often times, the biggest driver of sustainable investment practices is Senior Management buy-in. Top-management support is key to being able to get things done, regardless of gender. I believe that a key skill to drive successful integration of sustainability is to speak the language of investors, while understanding how difficult it is to be a portfolio manager, with countless balls that need balancing and trying to deliver performance for your clients. We focus on materiality in our process. We make sure that we highlight ESG issues that are important to the investment case, and are therefore relevant to the portfolio managers.”
“To make a difference in decision making we need more women together in the steering rooms/top level management. And not in silos at ESG departments that covers reporting and media or communication,” says Angelica Lips da Cruz, founder of ALDC Partnership.
“I would also like to draw attention to the fact that the establishment of the Sustainability Development Goals via SDG5 calls specifically for gender equality and the empowerment of women and girls. Recognizing that women can be a powerful force of change in our modern time directly calls for women to act, be involved and contribute to the change. I am therefore not surprised that sustainability attracts women as more women feel the call to be directly involved in order to push forward the change,” says Claudia Stanghellini, Head of External Management, AP3.
“Women are often more risk averse than men and then it’s wise to take sustainability into consideration in an investment decision,” adds Annika Winsth. “The best way to achieve good, long term, return is, to avoid crises, including climate ones. Investing in non-sustainable companies thus becomes far too risky in the long run.”
“My hopes are that investment capital, by differentiating the price of capital, already in 2019, to a larger extent, will force companies to become more sustainable. Non-sustainable companies will have to pay more to borrow if they at all will be able to get access to capital. If this happens, investors will become climate’s best friend. This would be one important and very efficient addition to taxes and fees,” concludes Winsth.
Last but not least, the only man to have volonteered an answer, Christian Salow Managing Director at altii GmbH, believes the number of women in sustainable investment should increase further: “To understand sustainability requires a high degree of systemic thinking. In order to implement sustainability, the evaluation of action and reaction is needed. In my opinion, women on average can do it better than men on their own. There are still far too few women in the financial industry as such, whether sustainability or finance.”

Kim Hansson is Director of Strategic Relations for the Nordic Sustainable Investment Platform. An unedited version of this article was published on the NordSIP website today.