Women, ESG and Investing

Foreword

‘Women care…and want to invest responsibly.’

Our research identifies today’s working women as lead decision-makers and money managers, conscientiously engaged in managing money for themselves and their families. It also highlights a keen interest in the way in which environmental, social and governance (ESG) issues impact on their lives and their finances.

Discussions about how integrating ESG considerations into the investment process can lead to better outcomes for people and our planet were met with positivity and enthusiasm. There was also much interest in how the United Nations Sustainable Development Goals can be aligned to investments. Women care about these matters and want to invest responsibly.

While the research highlights the low awareness of some of the terminology used by the investment community, it nonetheless reveals an appetite among women to know more about ways in which they can “invest well”.

This report provides a summary of the findings from qualitative research undertaken among women, and quantitative research among a nationally representative sample of almost 9,000 men and women in the UK. It is the first report from a much larger study and other findings will be published over the next few months.

At Aberdeen Standard Investments, ESG considerations are embedded in our investment process, and have been for many years. We are long term investors and that means knowing and understanding the environmental, social and governance factors affecting the prospects of the investments that we make on behalf of clients. Investors can be confident that we are working hard to enhance the value of their investments while contributing to a sustainable world. A good outcome for our environment and our society is consistent with a good outcome for our clients.

We are also committed to working with our clients and their advisers to ensure that investment decision-making is straightforward and removing complexity wherever possible, which was identified in this research as a key requirement.

There is more work to be done to make investing responsibly more widely understood and accessible. We look forward to building on relationships with our clients, the wider investment community and policymakers to hasten the pace towards meeting these goals.

Amanda Young

Head of Global ESG Investment Research

Aberdeen Standard Investments

Research Methodology

Qualitative

Focus groups

 Groups were held in London (6 August), Manchester (7 August) and Edinburgh (10 August) among 18 women aged 25 – 67 years, working full time or part time, covering social grades B, C1 and C2. All held one or more of the following: company pension; personal pension; bank or building society savings account; cash ISA; stocks and shares ISA; other investment account.

All verbatims quoted in the research report are drawn from these three focus groups undertaken as the first phase of the research.

Quantitative

YouGov Omnibus survey

YouGov ran four waves of the Omnibus survey among a nationally representative sample of 2,000 UK adults from 16 – 22 August. The actual sample comprised: 8,958 UK adults. Of these, 4,346 were men and 4,612 were women (weighted bases). The basic analysis illustrates gender differences; deeper analysis by other variables (age, working status, investments held) is based on women. These bases are clearly indicated under each chart in the report.

Quantitative

Demographic context

The research was undertaken by Gabriel Research & Management Ltd on behalf of Aberdeen Standard Investments. The research programme comprised qualitative focus groups followed by a quantitative survey. Fieldwork took place from 6 – 22 August 2018

Summary of Research Findings

ESG and investing – to what extent do investors care?

The majority of investors certainly care where and how their money is invested, particularly women.

  • 36% of women (compared to 30% of men) assume that their provider is not investing their money in companies which are not appropriate, but “don’t know”. Nonetheless, there is a latent interest in ‘doing good’;
  • 24% of women compared to 20% of men like the idea that their investment choices could make a positive difference in the world.
  • Only 9% of women are not interested in where or how their money is invested. ‘ Only 9% of women are not interested in where or how their money is invested.’

The nine categories of ESG issues introduced to respondents: human rights, preserving the environment, good corporate governance, sustainability, avoidance of unethical products, ethical sourcing, innovation, community, and social impact, attracted a groundswell of support but human rights was top overall.

Generally, women care more than men about all of the ESG issues presented, attributing higher scores than men to each category as being important to them personally, particularly human rights. Good corporate governance matters most to men but is the third most important issue for women after human rights (first) and preserving the environment(second) .

‘1 in 4 women like the idea that their investment choices could make a positive difference in the world.’

to-what extent-do-investors-care


Which-ESG-issues-matter-most

The 17 United Nations Sustainable Development Goals (UN SDGs) were also the subject of discussion among qualitative respondents, who found it hard to choose what they would prioritise as being most important to them. As one respondent said, “they’re all important”; and another, “no poverty, zero hunger and clean water – who shouldn’t have clean water in the world? Who shouldn’t eat?”

Only 20% of respondents overall (19% of women, 21% of men) had heard of the UN SDGs before taking the survey, but once these had been introduced to the qualitative respondents, talking about ESG issues and the UN SDGs prompted women in the groups to want to know more about how and where money is invested.

Not all women in the qualitative phase of research felt sufficiently well informed about the companies/funds in which their pensions were invested or that they had been encouraged to get involved in making choices. Those who were aware spoke passionately about their motives for investing responsibly, in ways “which are morally, sustainably acceptable”. They did not want their investments “earning money at someone else’s peril…to harm anybody else or to harm the environment”.

Some women were critical of what they perceived to be a lack of progress as regards preserving the environment in recent years: “We were the generation that were told as children, ‘we’re destroying the environment, CFCs are bad, global warming is on its way’. It’s really depressing to get to nearly 40 years old and find out that actually, no one’s done a damn thing about it.”Those who already have ESG-based investments feel particularly strongly about all issues and are most aware of the UN SDGs. The data also indicates that 18-24 year olds are also much more aware of these.

‘Talking about ESG issues and the UN Sustainable Development Goals prompted women in the groups to want to know more about how and where money is invested.’

Ranking third in importance to women overall, good corporate governance was also described by some respondents as being expected – “a given” rather than a preferred requirement.

Looking at the views of women only (see below), the relative importance of ESG issues is constant across female demographics, a slight point of difference being that good corporate governance is relatively more important to women with investments (i.e. older women and those with pensions).

Which-ESG-issues-matter-most-to-women

Those who already have ESG-based investments feel particularly strongly about all issues and are most aware of the UN SDGs. The data also indicates that 18-24 year olds are also much more aware of these.

Terminology – a barrier to engagement?

Of the terms used to describe investments that take account of ESG issues ‘ethical’, ‘socially responsible’ and ‘sustainable’ were selected overall (by men and women) as the most appropriate, possibly because they are the most familiar, but a large percentage of respondents (37% of women and 28% of men) did not engage with this question.

The number of “don’t know” replies in the quantitative survey is indicative of just how unfamiliar this subject is to a mass consumer audience. Among qualitative respondents, ESG as an abbreviation was considered “positive” but “nebulous”.

‘Awareness of the UN SDGs is greatest among 18-24 year olds.’

Which-terminology-best

“Now that I know what ESG is, it’s definitely positive, but it’s nebulous. I don’t think it’s going to mean a lot of things to a lot of people. I think ethical is very specific to a person, whereas I think socially responsible probably covers the whole gamut of what ESG does.”

Top-5-ESG-issues-that-matter

Although ‘ethical investing’ resonates best with the issues that matter most to women overall, older women relate more to ‘socially responsible’. ‘Sustainable investing’ is popular among the youngest (18-24s). It is significant that those who have already invested in ESG-based investments strongly support the term ‘ethical’, which probably reflects the predominant nomenclature of investment products in this sector.

Almost half of all women surveyed (48%) hold some form of investment (pension or standalone product); of these, 14% have chosen to hold an ESG-based investment (7% of all women surveyed).

Motivations for ESG investing

Socially aware and concerned about global issues, consumers nonetheless need a compelling reason to buy an ESG-based investment. Investment performance and cost are a priority (cited by 25% of women and 27% of men).

Qualitative respondents agreed: “If they were both the same, obviously I would pick the one that would support these kinds of principles”. This view was shared by all women in the groups; several were willing to accept a lower level of return in exchange for the reassurance of knowing their investments were socially and environmentally responsible.

Our research findings suggest that simple, easy-to-understand product information from a trusted source would encourage engagement. In addition to this, qualitative respondents believed financial services providers could do more to promote their ESG credentials and reported that they would be receptive to messaging from financial institutions that “show compassion and understanding”. They were especially positively inclined towards brands that support minority groups and demonstrate social responsibility: “There are huge chunks of society that have [particular] needs and they would prefer to invest their money in companies that support and embrace them.”

“Obviously, I want my money to earn some money for the future but I want it to be a socially acceptable investment. I don’t want it to be earning money at someone else’s peril. I’m very, very concerned about the environment, and how people are living, that my money’s not being used to harm anybody else, or to harm the environment.”

Marginally more women than men are inclined towards gaining a better understanding of ESG-based investments (23% compared to 21%).

Women’s commitment to doing what’s best for their own financial future and that of their families was very evident from our research, as one respondent said: “I see it as my job to make sure that I’m aware of what’s going on and how best to manage our finances.”

This same sense of responsibility extended to their attitude towards investing responsibly. 19% of women (compared to 16% of men) would be encouraged to consider an ESG investment if they had a better understanding of how their individual investment could make a positive difference in the world.

ESG Investing 11

What-would-encourage-respondents

‘1 in 5 women would be encouraged to invest if they had a better understanding of how it could make a positive difference to the world.‘

Conclusion

How we decide to invest today, shapes tomorrow’s world.

The research identifies a depth of emotion and strong views among women on the importance of ESG issues to our collective future, particularly human rights, the environment, and good corporate governance. As lead decision-makers on financial matters at home, women are uniquely positioned to help facilitate positive change and to influence the next generation. They recognise that how we decide to invest today, shapes tomorrow’s world.

The concept of ESG integration as a determinate of long-term investment performance is well understood among the institutional investment community but remains new to mainstream investors. The number of “don’t know” replies with respect to certain ESG-focused questions in the quantitative survey is indicative of just how unfamiliar this topic is to a mass consumer audience.

The women we surveyed were highly engaged but none of them had ever come across the abbreviation ESG before they took part in the research. Once certain concepts and terminology were introduced, they were enthusiastic about learning more, debating the issues among themselves and asking questions of the moderator. For all but a small minority of women who had chosen to invest according to their values, being part of the research group changed the way that they viewed their savings and investments. It prompted those who had no prior understanding of ESG issues to re-examine what holdings they had, in order to understand more about the companies and funds in which their money was invested, in most cases, by means of their pension contributions.

Aiming to help people make more informed financial decisions is an important priority and one way to do that is by sharing knowledge. This research highlights the need to raise awareness of the ESG-driven investment process, so that mainstream investors can readily understand the opportunities it offers them, their families and the world we share.

Investing every day for a better future

At Aberdeen Standard Investments, we are active stewards of the investments that we make on behalf of our clients around the world.

In order to create the right outcomes, we invest with conviction across all asset classes. That conviction is informed by the research and engagement that we undertake and ESG (environmental, social and governance) factors are integral to that.

Our investment philosophy is built on the following fundamental beliefs:

  • By putting ESG considerations at the heart of our investment process, we are able to generate better client outcomes
  • High-quality research and fundamental investment understanding underpin sustainable outperformance
  • Connected teams deliver better innovation and investment results
  • All our investment decisions should benefit from our ESG insights
  • Positive investment outcomes are consistent with positive outcomes for society and the environment.

Our global ESG resource

We have a market-leading ESG resource in terms of the number of people, and their experience, expertise and talent.

Our central ESG Investment team of over 20 professionals supports all of the asset classes in which we invest. In those asset classes we have more than 50 ESG analysts and champions carrying out research and making investment decisions.

Our success lies in our ability to connect across teams, geographies, public and private markets to generate robust investment solutions for our clients. We also play a pivotal role in connecting our investment decision-makers more closely with the aims and objectives of our clients.

Investment expertise

We provide world-class investment expertise across a breadth of markets and asset classes from equities, multi-asset, fixed income, liquidity and sovereign wealth funds, to real estate and private markets. Coupled with a range of investment approaches, from ‘smart beta’ to highly active alpha-seeking strategies, we transform new investment ideas into practical investment products to deliver value for money to investors. The investment arm manages £557.1billion (as at 30 June 2018). We are currently the largest active asset manager in the UK, in the top five asset managers headquartered in Europe and one of the biggest active asset managers worldwide with a presence in 46 locations.

Important Information

The views and conclusions expressed in this communication are for general interest only and should not be taken as investment advice or as an invitation to purchase or sell any specific security.

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RISK WARNING
The value of investments, and the income from them, can go down as well as up and you may get back less than the amount invested.

The views and conclusions expressed in this communication are for general interest only and should not be taken as investment advice or as an invitation to purchase or sell any specific security.

Any data contained herein which is attributed to a third party ("Third Party Data") is the property of (a) third party supplier(s) (the "Owner") and is licensed for use by Standard Life Aberdeen**. Third Party Data may not be copied or distributed. Third Party Data is provided "as is" and is not warranted to be accurate, complete or timely.

To the extent permitted by applicable law, none of the Owner, Standard Life Aberdeen** or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Past performance is no guarantee of future results. Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to which Third Party Data relates.

**Standard Life Aberdeen means the relevant member of Standard Life Aberdeen group, being Standard Life Aberdeen plc together with its subsidiaries, subsidiary undertakings and associated companies (whether direct or indirect) from time to time.