Investments are made to make profit. But today they’re also made to make a difference in something important, like society, the environment, or the human condition.
Women entrepreneurs know this better than anybody.
For the last several years, more women have become leading impact investors—entrepreneurs who fund social or environmental issues. But what is behind this growing trend, especially since COVID-19? There may be several explanations of why women are taking the lead:
Because they can. Women now control more capital than ever before. The economic playing field has been levelled. Through better opportunities, more access to quality education, and a significant shift in society’s gender roles, women now sit at the heads of boardrooms, manage more fund money, and have voices that advocate for change. And they’re natural decision-makers—it was about time they were in positions to exercise that ability.
Women have long-term visions for the future. Women’s traditional roles as caretakers are no longer limited just to motherhood and homemakers; they are attuned to the needs of the larger “family” of humankind, such as the care of the planet, the protection of resources, equal economic opportunities for everyone, and a secure outlook for the next generation. From what better position than as entrepreneurs could they act on this vision?
Women recognize, and can identify with, the plight of marginalized groups. A great deal of impact investing works to improve the quality of life, especially for groups that have been slighted by society. Coming out of a history of male-dominated societies where the problems of minority groups were not heard or taken seriously, women listen to the cries of people most affected by environmental, social, or economic disadvantages. And they’re poised to do something about it.
Women are effective money-managers. They—far better than men, generally—can make money work efficiently. And that’s a goal of impact investing: It’s still about making a profit. And companies that invest with an eye towards society and the environment tend to return a greater profit than those that don’t share that goal. Also, because consumers now expect it. Women have a talent for finding a perfect balance, and investors are eager to get on board with that skill.
The really good news is that the party is just getting started: As women continue to embrace impact investing, we’ll see even more of their work in action. And we’ll all be better for it.