Women’s growing wealth fuels impact investing
Women are getting wealthier in Asia and many want to use their money to make a positive impact on society and the environment, writes Fan Cheuk Wan, Chief Investment Officer, Asia, HSBC Global Private Banking and Wealth.
Women today are more financially independent than ever - their wealth is growing continually, posing a strong match for their male counterparts.
Currently, one-third of the world’s private wealth is held by women, according to Boston Consulting Group (BCG). In Asia, the proportion of women in the high-net-worth segment continues to rise, propelled by higher levels of education, more senior job positions and increasing pay.
On the demographic front, women continue to live longer than men, and are inheriting money at higher rates than before. In the past, women’s wealth was mostly derived from family inheritance, but today we see more women leveraging their professional skills and achievements to accumulate wealth through work, entrepreneurship, investment, and wealth management.
BCG projects that women’s wealth globally will reach $93 trillion this year, and they will add $5 trillion to the global wealth pool every year.
It also estimates that the total wealth of women in Asia, excluding Japan, reached $13 trillion in 2019 and will reach $19 trillion this year, giving the region the world’s highest growth rate of women’s wealth. Women in Asia are expected to hold more wealth assets than women in any other regions in the world outside of North America by the end of 2023.
Better jobs, higher salaries
According to the WealthiHer Network, women currently under the age of 38 are the best educated of any generation of women, helping them attain higher job positions and salaries.
The proportion of women in senior management roles has grown globally to 29%, the highest level ever recorded. Female entrepreneurs have also become a significant force, representing one-third of the world’s business owners. A 2021 report by the Asia-Pacific Economic Cooperation said 45% of private entrepreneurs in Hong Kong were female.
When it comes to investing, research indicates that women are more likely than men to focus on investments that generate positive social and environmental impact to help create a better future for the next generation.
A WealthiHer Network study suggested that 75% of women believe investing responsibly is more important than the returns they generate. Some 53% of women indicated that they want to give back to their communities, while 63% believed practising philanthropy is important, compared with 56% of men.
The study also indicated that 98% of women in mainland China believe the most important factors to consider when investing relate to a company’s environmental practices and positive impact on communities, and 93% want to adopt a responsible approach to investing in the future.
Female millennials are particularly focused on sustainable investment, the WealthiHer Network found. Over 90% of women aged between 22 and 38 are likely to say social and environmental causes and issues are very important to them. In addition to wealth appreciation through investing, more women now truly understand that they can make use of their wealth to improve the current status of society and the environment.
Global investors are increasingly focused on looking for companies that possess sustainable development strategies and resilience against significant global disruptions
We believe incorporating environmental, social and governance (ESG) factors into the investment process can enhance long-term investment returns, hedging investors against risks related to climate change, environmental issues, social responsibility, and corporate governance. Through the ESG enhanced approach, we can screen out companies with lower ESG scores that are exposed to climate risks, regulatory or penalty risks.
The global economy has been battered by challenges posed by Covid-19, extreme weather and social conflicts over the past three years. As a result, global investors are increasingly focused on looking for companies that possess sustainable development strategies and resilience against significant global disruptions.
Since the onset of the pandemic in 2020, capital inflows into funds focusing on ESG integration strategies and sustainable development themes have been growing rapidly. In addition to the benefit of risk management, sustainable investing captures attractive structural growth opportunities from the global net zero transformation.
Asia accounts for about 52% of global carbon emissions. Asian countries, in particular mainland China and India, have injected an enormous amount of investment funds to support the transformation towards low-carbon economies.
The green revolution in Asia has given rise to many emerging industries in recent years, from renewables, electric vehicles, lithium batteries and photovoltaic products to environmental technologies, as well as other innovation and technology industries, representing huge long-term growth potential.
A version of this article first appeared in the Hong Kong Economic Journal.