Women have played a crucial role in boosting the appeal of ESG, which has steadily ascended to the top of the investing agenda. What does this signify for female ESG asset management professionals?
The asset management sector has undergone a metamorphosis recently due to the unstoppable rise of ESG investment. ESG assets reached $35.3 trillion in 2020, accounting for 36% of all assets under management, and Bloomberg Intelligence predicted in 2021 that this figure would increase to $50 trillion by 2025. Who is responsible for this rapid growth in asset management ESG popularity?
ESG asset management: what does it mean?
The trend in environmental, social and governance (ESG) investments is picking up speed while also getting more complicated. Investor interest in these strategies is increasing, investors are approaching ESG with increasingly sophisticated strategies as their understanding of it develops, and regulators are scrutinizing the data and disclosures that underpin ESG strategies more closely.
As a result, asset managers around Europe face with a significant challenge: how to work through these problems and develop a viable business model for a new era of ESG-focused investment. Achieving this will require making long-term, strategic choices regarding their approach to ESG and their market positioning in the near future. Since the Covd-19 pandemic began, flows have accelerated globally as investors have given closer attention to the sustainability of their portfolios over the long run.
Women are fueling the growth of ESG asset management
Women are leading the charge, according to a research RBC Wealth Management conducted among its U.S. clientele last year. “More than twice as likely as men to say it is extremely important that the companies they invest in integrate ESG factors into their policies and decisions,” according to the firm’s female clients. This sentiment was recently echoed in a UBS Investor Sentiment Survey, which discovered that 71% of women, as opposed to 58% of men, consider sustainable factors when investing.
Women are actively encouraging asset managers to incorporate ESG into their investment procedures since they have more money to invest than ever before and a propensity to choose funds that are ESG-focused.
‘Walk the talk’
The fund management sector is not only expected to walk the talk, including in terms of diversity, but is also under increasing pressure to include ESG into its strategy and offerings.
Despite the financial benefits of gender diversity, there has been a lot of attention which has focused in recent years on resolving the continuing gender inequities that exist in the financial services industry. Recently, Goldman Sachs discovered that funds headed by all-female teams or mixed-gender teams outperformed funds led exclusively by men, for example.
Even though the ratio of women in senior leadership positions in the asset management industry has increased, notably in ESG roles, wealth and asset managers today have the greatest percentage of female board members in the financial services sector. Women made up 49.6% of ESG hires in 2020 and 2021, according to HFObserver.
Nearly half of the employees at my own organization are female coworkers, and more than a third hold management roles. Maintaining and enhancing diversity and inclusion is a continuing strategy for the funds team in particular.
A career opportunity for women in ESG
The responsibilities of ESG have traditionally attracted female candidates because they are more inclined to invest in accordance with their principles. ESG is a fantastic career opportunity for women, boosting their voice in what is still a male-dominated field by moving it from a position of secondary importance in the asset management industry to the top of the business agenda.
ESG investing’s future will unavoidably depend on the inclusion of more women in coveted ESG fund management positions. For instance, investing with a gender lens is probably going to catch on.
Focus on gender lens investing
The World Economic Forum defines the gender gap as “the disparity between men and women as represented in social, political, intellectual, cultural, or economic attainments or attitudes,” and gender lens investing is an investment approach that seeks to close it.
According to the Global Impact Investing Network, investing can help close the gender gap by improving gender equity, such as by funding women-owned businesses or ventures that enhance the lives of women, or by incorporating gender considerations into the investment process itself, from pre-investment activities (like sourcing and due diligence) to post-deal monitoring (e.g., strategic advisory and exiting). Female investors are more likely to invest in businesses started by women, even if they don’t specifically term it gender lens investment.
Gender lens investing is only going to grow as a result of Covid-19 amplifying the severity of social and economic problems, including inequality and rising female representation in the fund management sector.
Going full circle
Women are expanding chances for women in the fund management business, which is under increasing pressure to boost its gender diversity, by playing a significant role in the development of ESG. Female fund managers are seizing this opportunity with both hands and ultimately acting as a positive influence inside the industry and beyond thanks to their distinct penchant for ESG.
