Advancing Women Through Sustainable Investing

Although we are two decades into the 21st Century, there is still not much discernible difference between the demographics of the financial services sector compared to forty years ago. One could argue that the main difference between now and then, is why women are taking a far more active role in the financial services space, both as advisors and investors. The rise of sustainable, responsible and impact investing strategies, has led many firms and their investors to seriously question the importance and prominence of gender diversity in leadership positions. Although the financial services sector is still very much a male-dominated industry, considerations regarding environmental, social and governance (ESG) issues have provided an avenue to bring more women to the table.

Advancing Women Through Sustainable Investing-by Jennifer Coombs-College for Financial Planning

The Sustainable Finance “Wedding Cake”

Much of the focus regarding ESG factors is fixated on the “E” component, which makes perfect sense. Human rights and equality, which constitute the bulk of the issues with the “S” component, are often overlooked because they are sometimes difficult to measure and justify. However, a strong society where all participants are treated fairly and equally is essential before a country can truly realize a strong and sustainable economy. Dutch professors Dirk Schoenmaker and Willem Schramde of the Rotterdam School of Management and authors of Principles of Sustainable Finance,1 frequently describe the fundamentals of sustainable finance as a wedding cake: the bottom layer represents the environment, the middle layer represents society, and the top layer represents the economy.

The top layer cannot exist without the bottom layers to support it; so an economy cannot exist without a properly functioning society, and society cannot exist without a thriving environment. However, many still overlook the fact that a strong, thriving economy cannot exist in a scenario when half of society is being marginalized. Therein lies the issue that needs to be addressed for women in 2021 and beyond: how much more optimal would our economy be if all members of society could benefit equally?

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