Tuesday, August 2, 2011

Why Women are Investing Green

Thanks to Bob de Wit of GreenAngel Energy for giving us permission to post this. Read the GreenAngel Energy blog here.

Our recent GAE shareholder report shows that a significant portion of our new retail investors are women (or at least have traditionally female names!) which has led us to wonder what it is about cleantech investments that is driving this increased interest among women. We decided to do some primary research to validate our hypothesis that women are investing in companies that are focused on a smarter future. We looked to both mainstream media and published literature on the subject as well as reached out to a popular parenting blog for insights from its followers.

In their Handbook of Consumer Finance Research, Tahira K. Hira and C├Ązilia Loibl discuss investing behaviour of both men and women, highlighting some of the compelling differences between the genders. According to their research women tend to be more “buy and hold”-type investors, while men are more likely to move their money around and change the amount held in investment more frequently than women. Women also tend to be more risk averse and focused on the long-term strategy. If there is any correlation between this and why women are investing in GreenAngel it could be good news for our investors. Angel investment is usually thought to be risky, and GAE is an angel fund, so what is it that these women see that maybe others do not? Although it is perceived as risky, it is still a long-term investment, highly diversified, and in an industry that will set to see high growth and big demand for many years to come. Perhaps these factors cancel out the high risk perception for some, as the overall industry is a mere fraction of the size it is likely to become.

In the June 2011 Toronto Star article entitled: “Women shifting to online investing to control their financial destiny”, Suzanne Wintrob discusses the overall rise in female investors which could also speak to our observed increase in female shareholders. She reports that women prefer the freedom and ease of investing online because it allows them to research the companies they are interested in and take immediate action to invest in them. The article quotes Connie Stefankiewicz, President and CEO of InvestorLine, who believes that women are more interested in “building a portfolio, managing it and really taking a disciplined approach to doing that” which obviously became more feasible with online investing. Stefankiewicz believes that it is due to the availability of online investing that has driven women to invest more for themselves. Beyond online investing, the article also discusses issues around females not feeling like advisors take them seriously and their preference for the internet because they can learn how to invest without any judgment. So maybe more women are investing in GAE because of the ease of purchasing GAE stock online.

According to Steven J. Schueth in his article “Socially Responsible Investing in the United States”, he has observed “as women have filled the ranks of MBA programs and law schools, climbed corporate ladders, started their own companies, and assumed roles as fiduciaries, they have brought an affinity for socially responsible investing along with them”. This statement leads us to question whether if for some GAE is an avenue which can be used for socially responsible investing.

We were curious about our many hypotheses and wanted some real feedback from a group of women and parents. We engaged with “Multi-Testing Mommy”, a popular parenting blog to administer a survey. The site’s author (a parent herself) posted a survey for us and asked her followers to participate and help us see what it is about green technologies that is so attractive to the female investor. With the hopes of winning a $10 gift card to Tim Horton’s, we received 41 responses and derived some valuable insight.

Of our respondents, 75% indicated that they are totally in control or equal participants in the decision process for their family’s investments. It is clear that with the overwhelming majority of women saying they are at the very least somewhat involved in their family’s investment decision we can conclude that female-centric approaches to investing are occurring in the market that could speak to our observations. Our data also indicated that women are still risk averse and prefer to take either a little risk or none at all when choosing their investments. We also saw that women, while still focused on overall return, also consider the industry and practices of the companies they are investing in. When asked specifically what it is about green technologies that they find attractive the following themes were present in their responses: they are concerned with the future for the sake of their children; they are concerned about depleting resources; they see green as the future and they don’t want to be left behind; they are not only concerned with the environment but believe that cleantech will also provide them with returns; and it makes them feel better about themselves that their money is going to a good cause.

After doing this research we realized there are an infinite number of reasons why GAE is an attractive investment vehicle for women or any savvy investor. From the ease of purchasing online, the diversity and growth potential of the fund, to the ethical benefits of investing in a greentech fund, GAE can certainly be seen as great choice for forward thinking investors.

We would love to hear your thoughts on the subject and for you to provide us with your own hypothesis as to why we have seen a spike in female investors in the recent months. Join the conversation and leave us a comment below!

For a related story, check out The Top 12 Women of Cleantech.

1 comment:

  1. You are right: Women are investing in you because they BELIEVE in what you are doing. As mentioned, they invest based on a values system and not just on a profit system and this has been true for a long time but until the errors of profit-only investment came to light in 2008, it was not valued.

    With the returns so little, then the losses are also small and this makes it easier for risk-averse people to get in the game. Testing yourself no longer means risking your family or your pension, so Cleantech is a good place to start and that leads to you.