Why Investing in Women is Crucial Right Now
It’s been a strange and terrible couple of months. The world around us has changed faster than any of us could have imagined. I miss going into our Ellevest office in Manhattan every day. I miss seeing colleagues and friends. (I cannot imagine turning down a social invite ever — and I literally mean ever, again. Concert, basketball game, glass of wine, you name it, I’m there.)
While this pandemic has made many of us feel isolated and fearful, it has also given us the opportunity to connect in ways we previously wouldn’t have imagined. Our Ellevest community is engaging with us like never before on platforms like Zoom and Instagram Live. And in the first week since we launched a firstname.lastname@example.org inbox with a promise to answer any money question we received, we’ve gotten hundreds of questions and growing by the day. COVID-19 has brought the need for a new way of operating, and we’re all adapting.
Another thing I hear loud and clear from our community is the desire to help each other during this crisis. Some of us will donate our time, others our money. I think there’s another thing to consider doing: continue to shift capital to investments that are better for women. Because as we come out of this crisis, the same global issues that existed before COVID-19 will exist afterward — and in some cases, in a more pronounced way.
For example, as early reports of the effect of COVID-19 come in, we’re seeing a disproportionate impact on women. In the United States, women are already worried about the burden of taking care of children at home, while schools and daycares are closed. Women in the US already make up the majority of part-time and minimum-wage workers, and they’re likely to be more affected by layoffs as diversity tends to become deprioritized when companies downsize. And globally, the impact of the coronavirus could be extreme as women shoulder more childcare and healthcare burdens worldwide.
More than ever, it is important to invest in women. Since the early days at Ellevest, we’ve been big proponents of sustainable investing, with a particular focus on gender lens investing. We’ve always believed at the leadership level that investing in women is the right thing to do, but it’s also been a big ask directly from our community. This is not surprising, given that 85 percent of investors say they are interested in investing with their values. And so we’ve done the work to make these opportunities accessible via our digital platform (which has no investment minimum) and to our private wealth management clients.
My view of gender lens investing has expanded as access to company data has expanded. Early gender lens investing in a public equity portfolio was measured by looking at women in leadership in public companies. Today, we continue to know that having more women in leadership is better for women (and for a company’s bottom line); but we also know that climate change disproportionately impacts women. And that firearms play a significant role in domestic violence, which harms women more often than it does men. It’s important to go wider and deeper — because women worldwide face greater risk and bias in their everyday lives. When companies have harmful business practices around things like wage gaps, poor working conditions, and unsustainability — they affect all of us, but they affect women more.
The interconnectedness of these issues leads us at Ellevest to conclude that you can’t invest sustainably without investing in women, and you can’t invest in women without investing sustainably.
Our gender lens investing strategy at Ellevest reflects this thinking. We still look to shift capital to public companies ranked highly for advancing and supporting women in the workforce. But we also look for public companies whose policies and practices have been shown to be better for women. We’re looking at labor relations, human rights, exploitative products, and even water sources — to name a few.
Though the data and the desire to put this strategy into place was clear when we looked at the product landscape, we couldn’t find an existing option that we felt was robust enough. So we worked to put together our own framework. It takes 12 different sustainability criteria into account, all focused on companies that do better than their peers with policies and practices that affect women. The output of all of this work is our Ellevest Intentional Impact Portfolios, a separately managed account of about 300 securities.
As we continue to push sustainable investing forward and shift more capital to companies that are doing right by women, I hope we continue to see gender lens investing and sustainable investing converge. What’s good for women is good for all of us.
Now more than ever, in this time of market volatility and economic uncertainty, there’s a real opportunity to make the world a better place by aligning our money with our values. And that starts with investing in women — and the companies that support them.
Article by Sallie Krawcheck, the CEO and co-founder of Ellevest, an investing startup for women. Prior to Ellevest, Sallie held several executive leadership positions on Wall Street, including CFO of Citi, and Head of Merrill Lynch Wealth Management. She is the former chair of the Pax Ellevate Global Women’s Leadership Fund. She was named by Barron’s as one of the 20 Most Influential People in ESG Investing.