Values-based investing has long been relegated to a back office, the province of predominantly female junior staffers.
Now it’s having its moment — and guess what? Men want in.
While men dominate the financial sector overall, women lead when it comes to so-called ESG investing — using environmental, social and governance standards for investment decisions. That means women are largely the ones deciding to put resources toward companies that promote sustainability, workplace diversity, gender and LGBTQ rights and changes to corporate governance.
“ESG was not always popular or glamorous,” Bonnie Wongtrakool, a portfolio manager and global head of ESG investments at Western Asset Management in Pasadena, California, told Bloomberg. “If you have an important but thankless task, you give it to a female, because you know they will get it done.”
But there’s been a sea change, with the world’s largest hedge funds and a broad cross-section of companies, governments, regulators and investors recognizing the need for this type of expertise. A Collier Capital survey late last year showed that private-equity firms plan to hire more people focused on ESG investing and that three in five PE firms already employ at least one person who focuses on ESG.
Bloomberg reported that 44% of the top ESG jobs that recruiter Acre Resources helped fill over the past five years went to women, much higher than the general level of penetration in the industry. But all but one of the 10 best-performing sustainable funds, as ranked by Morningstar Inc., were run by men last year, according to Bloomberg. And the increase in male executives could escalate.
“There could be a temptation for senior management to withdraw their support from the women who have been key to the development of those franchises in the wilderness years when appointing senior investment roles, reverting back to more jobs for the boys,” Ian Povey-Hall, principal consultant for sustainable and impact investing at Acre Resources, told Bloomberg.
- Impact-fund managers have been amassing record amounts, continuing a five-year trend, according to a McKinsey & Co. report in December 2018.
- BlackRock Inc. CEO Larry Fink announced this month that the world’s largest asset manager would put sustainability at the center of its business.
- British billionaire Chris Hohn, whose fund manages $30 billion in assets, has said he’ll oust boards and dump shares of companies that don’t work to actively cut emissions.
- Investors managing more than $80 trillion in assets have pledged to integrate ESG data in their investment process as signatories to the Principles for Responsible Investment (PRI).