How Women are Leading in ESG Investing by Jane Marsh of Environment.co

How Women Are Leading in ESG Investing

By Jane Marsh, Environment.co

Jane Marsh of Environment.coWhen adults encourage young girls to dream about their future careers, they often mention becoming teachers, nurses, or childcare workers. Young boys get to imagine themselves in suits and ties while handling business transactions or leading meetings. It’s one reason why men have long dominated the financial world – but women are changing the game with ESG investing.

Check out how women are leading in ESG investing and why it’s so important. The future will look much brighter for women and the planet because of this specific economic growth.

What is ESG Investing?

You’ve likely heard about stocks and bonds related to traditional companies like Apple or Google. ESG investing is a bit different. It stands for Environmental, Social, and Governance (ESG) investing, which means investors consider those factors when considering the value of a potential investment.

ESG-focused companies will consider the environment and the well-being of their employees above traditional business practices and profits. The ethics behind a company’s operations are a primary component for ESG investors.

Why Is ESG Important for Women?

Companies that care about ESG values will be more willing to listen to their investors and consumers. Putting more money into those companies gives women a voice and additional economic prosperity.

U.S.-based ESG assets grew to $357 billion by the end of 2021, a substantial increase from the $236 billion in 2020. While women still have to deal with a gender pay gap and fewer professional opportunities than men, ethical investing can mitigate the systemic economic disadvantages and even provide more profits than traditional investments.

Corporations that listen to their retail investors equally to their board of directors will also help change the workplace structure. Female investors can push for more representation in leadership positions and provide valued input because the companies value their social and economic well-being beyond their shares in the company.

Types of ESG Companies

A few types of industries may consider ESG standards for their business. These are the most notable company types that are beginning to value sustainable business models, social well-being, and improved governance.

• Co-Op Corporations

Co-op companies are different from traditional corporations. Although they still have a board of directors, those individuals will prioritize business choices based on their ESG aspirations and the votes of their democratic enterprise. They start their company to create positive social change by working together with people on all levels of their organization, which makes ESG values inherent to their brand.

• Consumer Goods Brands

Retail companies and transportation corporations contribute significantly to climate change through airborne pollution and landfill waste. Given that 85 percent of consumers have become greener in their purchasing over the past few years, these companies have a significant incentive to align their practices with consumer demand.

People who live eco-friendly lifestyles by reducing their water usage or buying second-hand clothes still want to make financial investments. If they already have brand loyalty to sustainably minded companies, they’ll choose to make their ESG investments with those same brands. The expansive variety of consumer goods brands means more ESG investment opportunities will become available to women as more consumers demand green products and services.

• Mining, Industrials, Materials Companies

Sustainably minded investors want every aspect of their lives to support the planet. Materials companies and other businesses that utilize natural resources for their services or products will become greener as more young female investors want ESG-influenced stock.

• Financial Corporations

Some financial businesses hurt the environment – like bitcoin mining companies – and others have business models that don’t prioritize the well-being of their employees. Both things could change if they want to work with ESG investors and make the workplace more welcoming to women.

• Technology and Communications Brands

The high usage of natural resources in technology like computers and smartphones depletes the environment. Massive brands tend to prioritize profits over their employees and retail investors. An expanding pool of female ESG investors could make more of these companies turn to greener solutions and socially responsible business models.

Are Women More Likely to Invest Sustainably?

A healthy planet benefits everyone, so why are women more likely to invest in sustainable companies?

Recent research shows that while 51 percent of men will make investments in companies that don’t align with their values, only 19 percent of women will. It may relate to the same research demonstrating that men are twice as likely to be overconfident in their investments, while women make strategic financial decisions that require more of an in-depth understanding of each company.

Women are also more likely to live sustainably. Experts who conducted a study on gender-based altruism found that women are more often altruistic than men, so prioritizing sustainability is a quick way to care for themselves and others.

When these findings come together, they explain why female investors are more interested in ESG investment opportunities than men.

Women Are Leading in ESG Investing

ESG investments are for everyone, but these factors explain how women are leading in ESG investing specifically. The opportunities for economic prosperity and caring for others make it an excellent opportunity for women who share those values.

 

Article by Jane Marsh, an environmental journalist and the Editor-in-Chief of Environment.co. She covers all things related to the environment, sustainability, and renewable energy. Jane has been featured on sites like Renewable Energy Magazine, Manufacturing.net, and Nation of Change. When she’s not writing, Jane loves hiking, canoeing, and spending time with her rabbit and birds. You can keep up with her by subscribing to Environment.co.

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