Impact investing is a movement that has started to take off around the world and within the United States. What was once a niche corner of investing is starting to expand, and traditional investment vehicles are taking notice. It’s possible to make profits by putting private capital toward good causes, and policymakers, philanthropists, and researchers are taking actions to see where social and financial good can come together.
When it comes to creating change, though, it’s not just positions of power that can make a difference. It matters who holds those positions and what they bring to the table. In recent years, many women have stepped up to bring innovations to the investment world to maximize impact. Falcons Rock Impact Investments wanted to recognize what women bring to a table that, until recently, was held by men.
What Women Have Done for Investing
Where other investing sectors are usually headed by men, women are the ones who make up the bulk of governance in the impact investing sector. Female investors, entrepreneurs, and leaders are taking their talents and experience to help make investing and the world a better place. Social responsibility is more holistic than traditional investing and women have been standing out. However, it doesn’t mean that social returns are the only ones that matter to women.
Women care about financial, as well as social returns. Their investments should play a role in society and the environment beyond a fiscal benchmark, but they don’t need or want, to sacrifice financial returns to achieve it. Money and beliefs are closely tied for women, who are more likely to make purchasing decisions that reflect their values and beliefs. It makes sense that they would invest in the same way.
Women in Impact Investing
Change is coming to the world of investing, and women are some of the leaders within it. Whether from the social, governmental, or entrepreneurial sector, there are women across the board that are making positive changes in the world around them. As more companies diversify their board rooms with women’s voices, the amount of impact that women are making will continue to grow. A study conducted by Bank of America Merrill Lynch in 2018 concluded that companies with high scores on gender diversity, including board diversity, women in management, and company policies on diversity/inclusion saw lower subsequent stock price and EPS (earnings per share) volatility, as well as higher subsequent ROE (return on equity) than those with low scores.
Women in Philanthropy
From the social sector, we see an effort to build the infrastructure that will support communities, as well as impact investing, at large. Trailblazers in this field work with what they have and do as much good as possible, even striving for more. Here, we see women, like Clara Miller of the Heron Foundation, who broke tradition and ensured that impact investing was integrated into the operations and mission of the foundation. Debra Schwartz at the MacArthur Foundation’s impact investing arm, is another great example, as she works to improve the cost of affordable rental housing. Kimberlee Cornett, the Managing Director of The Kresge Foundation’s Social Investment Practice, who uses grants and investments to help fill in funding gaps for the communities and enterprises that need them. Then there is Donna Katzen, the founder of Shared Interest, an organization that provides, or backs, loans to previously disenfranchised citizens in South Africa and her organization is responsible for thousands of jobs in the region.
Women in Investing
As much as the change from the bottom can help, change from the top can bolster impact investing. Whether through investments or through redefining traditional metrics, making traditional investing more impactful is another great strategy. Notable women in this area include Maya Chorengel, the founder of Elevar Equity, which develops business models and solutions to problems around the world by providing early-stage investments for entrepreneurs; Jean Rogers, founder of the Sustainability Accounting Standards Board, which provides measurement standards for environmental, social, and governance criteria; Deborah Winshel at BlackRock Impact, who has been transforming how the large traditional investing firm views and offers impactful options; and lastly Amy Domini, creator of the Domini Social Index, which is now called the MSCI KLD 400 Social Index. The Domini mutual funds are prominent in the investment industry.
Women in Government
People in government are the ones that can enact the policy changes that make impact possible. They can also ensure that capital is available for organizations that strive to have a better impact. In government, we have Maria Contreras-Sweet, former administrator of the U.S. Small Business Administration, who worked to increase the awareness of and amount of money flow to areas that need it; Ruth Madrigal, former attorney-advisor in the Treasury Department’s Office of Tax Policy, who worked to unlock the funding available to foundations; and Elizabeth Littlefield, former president and CEO of Overseas Private Investment Corporation, which helps American businesses invest in emerging markets.
The Future of Women and Impact
Women and young people stand to gain a lot of footing in the investment world thanks to impact investing. Millennials are expected to inherit trillions of dollars in the next 40 years, and women to hold 50% of the private wealth. In addition, these two groups are educated and looking to have the same decision-making power that men do. These opportunities should be nurtured for the good of investing, as well as the world. It’s important to recognize women’s contributions in the field and do more to enable their voices to be heard. Ensuring that more money moves through the system, by welcoming women not just in board rooms, but also in investing, will bolster impact investing to the point where it becomes more mainstream. It will also help to educate others about sustainable and responsible investing: very few people know that they can make investments that align with their values, and it’s time for that to change.
Opportunities with Falcons Rock Impact Investments
Impact investing provides the opportunity for everyone, no matter who you are, to have a voice at the table. Even if you can’t be sitting in a board room when decisions are made, as an impact investor, you can have the next best thing: a chance for your money to speak for you and represent you and your interests to a company and the investment world at large. Why not make your money work for you by supporting causes you believe in?
There is still a lot of growing for this industry to do, and Falcons Rock Impact Investments wants to help you be a part of a brighter, better future for everyone. To learn more about our process, follow this link.