Women Entrepreneurs in Responsible and Impact Investing
Today’s social investing ecosystem is witnessing a growing number of influential women backed by wealth and a strong motivation seeking to use their wealth for the better.
When the socially responsible investment movement first emerged, women were often seen as beneficiaries of social programs rather than the ones making an impact with these strategies.
Today’s social investing ecosystem has changed significantly, with a growing number of influential women backed by wealth and a strong motivation seeking to use their wealth for the better.
Asia’s Boom in Wealthy Female Entrepreneurs
Women are richer now than ever before, holding almost one third of global private wealth . The number of female High Net Worth and Ultra High Net Worth entrepreneurs is growing across the globe, but perhaps most notable is the rise in the number of female billionaires in Asia.
The 2017 Forbes Billionaires List revealed that China has the most self-made female billionaires in the world, leading the way with an applaudable 63 percent[1] .
Further, a remarkable 6 percent of the total number of Chinese billionaires are self-made women [2] . While this number may seem insignificant, it is much higher than the global average (excluding China) of 1.6 percent. This trend is not limited to China. The share of self-made female billionaires in Asia (excluding China) is more than double the global average (excluding Asia) [3].
Inclination Towards Socially Responsible and Impact Investments
The growth in the number of women entrepreneurs has contributed to an increase in socially responsible and impact investments.
Socially responsible investments aim to avoid harmful companies and industries that cause negative social outcomes, with the intent of maximising financial returns. Impact investments go one step beyond socially responsible investments, as they aim to generate a positive social or environmental impact by investing in companies whose core business model integrates positive impact creation.
Maximising returns is not the main objective, so impact investors vary in their financial return expectations in order to maximise impact. Women are driving growth in the SRI industry, with many affluent women holding a holistic view of investment. They want to use both their money and time to make a positive impact on society, with 90 percent of women saying this is important to them . Female entrepreneurs generally place a higher priority on environmental and societal responsibilities when it comes to investments.
In addition, women are more motivated than men to invest in innovative or new alternative assets and making socially responsible investments.
Although the gap between men and women’s SRI is narrower when examining actual portfolio allocation towards social investments, when asked about interest in sustainable investments, 84 percent of women [4] voiced enthusiasm for investments that pursue a positive social or environmental impact, compared to 67 percent of men.
The choice of SRI are not just to generate income, but also to achieve portfolio diversification and to pursue positive impact through investments.
Impact Investing & Philanthropy as Future Priorities
The 2018 BNP Paribas Global Entrepreneur report shows that the use of impact investing as an investment vehicle is nearly equal between male and female entrepreneurs, with 13 percent and 15 percent engaged in impact investments respectively. As observed, female entrepreneurs appeared to be slightly more active in the field of impact investments than their male counterparts.
Women generally identify impact investments as a major future priority. Approximately one third of women entrepreneurs stated that they were planning to significantly increase their usage of impact investment vehicles within the next five years.
Only 25% of male entrepreneurs expected themselves to do the same. If these female entrepreneurs who display a higher interest than their male peers in investing in impact investments act upon their plans, we can expect to see a greater gender gap in impact investing in the future.
Apart from impact investments, philanthropic projects are another avenue female social entrepreneurs opted for. China’s female self-made billionaires are big drivers of social change, with one third of the richest female entrepreneurs using their wealth to launch philanthropic projects, which is significantly more than their male equals.
Considering the continued increase in wealthy female entrepreneurs across the region and the trends adopted of this billionaire population, we expect to see more female-driven philanthropy in the future.
Looking into the Future
Women entrepreneurs in Asia are growing rapidly in numbers and driving the global growth rate of total female wealth. With women holding a more holistic view of investing, with a greater desire than men to increase their stake in impact investments, we may expect to see this reflected in an increase in SRI investments by women in the near future.
BNP Paribas Wealth Management closely follows trends in the sphere of women entrepreneurship. Read more insights on female entrepreneurship below, or find out how we aim to connect female entrepeneurs across the globe through our Executive Program for Women Entrepreneurs
[1] Li, T. South China Morning Post. They hold up half the sky: six out of every 10 of the world’s self-made, women billionaires are in China. 26 October 2017. Web. [2] Ahmadov, F. Forbes. China’s Wealth Boom Is Creating A New Generation Of Self-Made Female Billionaires. 27 November 2017. Web. [3] Ahmadov, F. Forbes. China’s Wealth Boom Is Creating A New Generation Of Self-Made Female Billionaires. 27 November 2017. Web. [4] Bessemer Trust. Integrating Values and Your Investments: Sustainable Investing. 2018. Web. BNP Paribas Wealth Management. 2018 BNP Paribas Global Entrepreneur Report. 2018.