Thinking beyond investment returns

In my previous article I looked at some of the ways women are changing the financial services industry and shaping the investing landscape based in their unique investing and savings needs. One aspect that I didn’t touch on in that article was how women are also looking different investing outcomes than investors have traditionally focused on. I received a great question about this last year at the Women’s Collective that I didn’t get a chance to answer: “If women will be in control of over $4 trillion dollars in assets in the next decade, how can we use that capital for the greater good?”.

First, you are not alone in asking this question. There is plenty of evidence that next generation of investors (not just women, but millennials and gen Z and beyond) want to find a way to use their assets to help foster change. They are looking beyond investment returns and considering how their investments can lead to broader outcomes, whether that is environmental impact, socioeconomic prosperity or something else that reflects their values.

The growth of responsible investing

It shouldn’t come as a surprise that the next generation of investors are focused on how they can make an impact with their money given some of the challenges they will have to face and the mounting problems they will have to solve. From slowing the impact of climate change, and fighting for a more equitable world, to ensuring a more sustainable future, there are no shortage of issues to focus on and problems to tackle.

Of course the umbrella term “values-based” investing isn’t new. Investing based on environmental, social and governance (ESG) factors, responsible investing and impact investing has been around for decades and is especially popular with institutional investors. A report from PWC projected that ESG-related assets under management would hit nearly $34 trillion by 2026[i]! Studies show that women are playing a key role in driving demand for responsible investing products and pushing companies to change.

• A survey by Cerulli Associates found that about 52% of women would like to invest in businesses that have a beneficial social or environmental impact. Such is the case for only 44% of men.[ii]
• According to S&P Global, which surveyed investors in 11 countries, including the U.S., over 43% of women (versus 34% of men) believe a company's stance on social or environmental concerns is "extremely essential.[iii]
• The Responsible Investment Association’s 2022 Investor Opinion Survey found that women are more likely than men to be attracted to firms and funds that boast strong ESG performance and more likely than men to choose Responsible Investments.[iv]

So one of the easiest ways women can make a difference with their capital is to invest in companies and investment products that take these factors into account.

Researching and analyzing companies

For investors who prefer building their own portfolios by investing in companies directly, it can be difficult to understand company’s performance for ESG factors. While “ESG” has a standard definition, it can be difficult to establish a metric across countries, sectors and businesses. To help standardize this, many asset managers and analysis firms have introduced ESG scores to help provide a holistic view of a company’s performance on a range of factors including pollution prevention, board effectiveness, human rights and more.

Based on the growing demand from investors for ESG products and interest in creating more sustainability focused portfolios, Qtrade Direct Investing® is the only online broker in Canada that provides ESG scores. The ESG scores are available in both our Portfolio Score ™ & Portfolio Simulator ™  suite of analytical tools. We added this feature because we knew self-directed investors were looking for help in navigating the complexities of ESG investing, whether they are in the research phase, or looking to make changes to their existing portfolios.

Investing in a theme

Though for many investors it is much easier to align your values with your investments thanks to the almost overwhelming number of ETFs and Mutual Funds available today. Some funds are more broadly focused on index investing with an ESG lens, while other funds focus on specific themes that are becoming more niche all the time. Whether you are looking to invest in clean energy, companies that meet gender diversity targets or have committed to reducing their carbon emissions, or companies with diverse boards. Whatever your values are, there is likely a product built to meet your needs so that you can invest in ways that use your capital for the greater good.

Christine Zalzal
Senior Vice President & Head of Online Brokerage and Digital Wealth
Aviso Wealth