Maria Van Der Heide on female representation in sustainable finance

Ahead of the Sustainable Investment Forum Europe 2021, Maria Van Der Heide from ShareAction talks to Climate Action as to why female representation is higher in sustainable investing that in the finance industry in general.

Why do we need to talk about women in (sustainable) finance?

In the UK there are more funds run by men called Dave or David than by female portfolio managers, with women running just 7.7 percent of funds. In recent years some steps have been taken to improve the gender diversity in the industry, but there is clearly a lot more work to be done. Representation in finance is not only important in terms of equal opportunity for those jobs: there is enough research on the downsides of “group think” for us to know that if the people governing our money are diverse, they are better equipped to make decisions for everyone. The under-representation of women, in all their diversity, in positions of economic power means that women are not taking part in shaping the decisions that affect their future.  

The female representation is higher in sustainable investing than in the finance industry in general. Some studies suggest women focus more on the greater interest in ensuring investments do good for others and society. We shouldn’t assume all women think the same way, but we should harness the diversity of thought, and the apparent interest in sustainability, that women can bring to the table.

At ShareAction we are working towards an investment system that is diverse and inclusive at all levels. We believe that the investment system should reflect the society it serves. That means that it has to be diverse in any dimension that reflects people’s different identities and backgrounds. The system also needs to be inclusive, by ensuring that people are valued for their distinctive identities, experiences and perspectives as well as provided with equal opportunities for participation. If people’s money is being invested, their voices should be heard.[1]

What role can ShareAction take in this?

In parallel to making the investment system itself more diverse, we also work with investors to help them contribute to gender equality more broadly by influencing the practices of the companies they invest in.

ShareAction uses shareholder activism – attending company annual general meetings and asking questions to their management - to take issues straight to company executives. We encourage investors to hold boards to account on issues like gender diversity and the gender pay gap. 

In addition, we rank investors on their performance on responsible investment in the area of diversity and gender pay gaps. We call on investors to use their power to ensure gender equality policies and practices are on the agenda of the companies they invest in. 

Lastly, we advocate for legislation that makes investors take gender equality objectives into account. At an EU level for example, we successfully advocated for regulation that requires investors to disclose the gender pay gap of companies they invest in.

What steps can investors take to improve gender equality?

It is vital that investors continue to put gender equality on the agenda of the companies they invest in and hold them to account. They have various tools at their disposal to do so.

They should regularly engage with companies and encourage them to adopt time-bound actions to implement diversity policies. This could include actions around training and promotion, parental leave policies or flexible working conditions.

Another method that investors can use to engage on these issues is by using their vote on resolutions - on gender diversity, pay gaps etc- that aim to address such inequalities.  Where investors do not believe that company management is taking this seriously, they can vote against board appointments and remuneration packages. ShareAction developed the Workforce Disclosure Initiative to unlock better data from global companies about how they address gender diversity in their operations and supply chains.  This data can then be used by investors to better inform their engagement and stewardship of companies.

[1] This can include their ethnicity, sexual orientation, gender, gender identity, age, social background, religion and beliefs, among others.

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Maria Van Der Heide will be speaking at the Sustainable Investment Forum Europe in April, bringing together asset owners and managers, ratings agencies, banks, UN and Government policymakers, investors, development banks, think tanks, and NGOs committed to driving forward the sustainable finance agenda. Register your place for free here.