Let's start with the broadest. That could mean everything from more representation of women on boards but also more representation of women in the executive suite, in management positions, and all the way down the line, as well as all of the policies and practices that would go into making that a more, you know, high-gender equity kind of place. For example, the gender diversity piece of this I think falls into the kind of governance and equality components of ESG and sustainability. Change Pays is about creating a more inclusive workplace to advocating gender equality. That’s 93 percent of the capital markets, or $33.8 trillion dollars. And that's been partly bottom-up because customers and clients have been demanding it, partly that whole sort of picking up a newspaper in the morning or looking out your window and seeing protests, seeing that people in so many parts of the world are fed up with how the system works. She is Morgan Stanley’s chief marketing officer and chief sustainability officer and a member of the Firm’s Management Committee. And so it's really important that you take a holistic view, and I think that's why ESG is such a helpful framework for thinking through the relative materiality and importance of all the underlying issues, trying to explore the interconnectedness of them all, to come up with a holistic and well-thought-out and sustainable framework or approach for investing that takes all of these issues into consideration. One of the themes of the leadership summit, notably, and I'm quoting, is: 'Realizing opportunities of the 21st century for all by empowering people, creating the conditions in which all people, especially women and young people can live, work and thrive.' Like both Sonia and Mona, Audrey Choi, the Chief Marketing Officer and Chief Sustainability Officer at Morgan Stanley, sees gender as a social factor that overlaps and intersects with other ESG issues like climate risk. View Audrey Choi’s profile on LinkedIn, the world’s largest professional community. So when it comes to risk management and planning, you just have a more holistic, well-rounded understanding of all the possible permutations that could arise. I'm interested in ESG, I care very strongly about environmental factors, perhaps I'm high risk on some governance factors along those lines —  but I'm really interested in gender. We take the broad view that sustainable investing encompasses both financial sustainability and environmental and social sustainability. Please contact your professors, library, or administrative staff to receive your student login. And gender inequality and overall inequality are linked in many ways. So the combination of those two things, sort of bottom-up demand from clients and customers and then maybe a top-down steer from policy makers and regulators, have combined to put all of these ESG issues right at the forefront of attention. You know, we have these U.N. And you don't have that unless people start asking the questions. How do you see investing in women actualize and what do we need to do as investors, individuals, companies, countries to actually make this kind of societal impact? Traditionally, there was a tendency to divide investing and philanthropy, using the first to build wealth and the other to make a positive social difference. So, it's a helpful framework and there are a lot of activities going on in the international arena that are geared towards making gender equality a bigger priority for governments. Gender is barely scratching the surface, and it's a much easier discussion to have because it's more visible, it's morally arbitrary, and it's something that we have data on. Molly Mintz: What do you think that companies and countries need to do to take it a step further? Then perhaps gender doesn't play as big of a role in terms of the share of revenue it can be accounted to. There is definitely a large amount of sort of Venn diagram overlap between the issues. Obviously across ESG, you have gender problems but in some regions of the world where climate risk is extremely high, environmental concerns would also impact populations that may be disadvantaged because of their gender or socioeconomic status How do you see the interconnectedness of different ESG factors? And this philosophy carries over to their investing decisions. Molly Mintz: What do you expect to come out on that front from the B20? When you talk about diversity and inclusion, you know, it is looking at a variety of different kinds of diversity. All of these things I think are being treated far more seriously. If you think about financial services or technology or pharmaceuticals, these are all the types of industries where R&D is a really key business driver, and so we can start to see how gender plays out as being a very important metric for better success in those particular areas. Audrey Choi: We have seen so much interest in sustainable investing. They feel compelled to do something about it. The Trump administration leaves a legacy of confusion over cybersecurity issues with few positives. So there's so many initiatives looking to make this happen at the kind of policy and regulatory issues. There is definitely a large amount of sort of Venn diagram overlap between the issues. Because if you buy into this argument that gender creates better decision making when it's a diverse perspective, but then all the senior female leadership positions are in areas that are dominated by women already — for example, marketing or HR, which is where we typically find a lot of concentration of females in the workplace — then you're not necessarily reaping the benefits of that diversity if they're just making decisions amongst likeminded people. You couldn't look at how much women participate in the economy, what kind of opportunities they have. And that I think is a big change. And that can be directed in a variety of ways. The Leading Institutional Investor ESG Investment Summit. But to do it at big scale, you need large institutional investors. You know, each  country will want to include some agenda items that resonate particularly in their region. That's the first most important thing, I think, it's just to even open the door. Molly Mintz: From S&P Global, this is Change Pays, a new monthly podcast exploring inclusivity and gender equality in the global economy, workplace, and markets. It really is a combination of, kind of, a cultural impact that enables you to get those kinds of performance premiums. It sent a clear signal of change that may open new conversations on ESG and sustainable investing, as well as the inclusion of climate change-related risk as a material financial consideration. And actually, this raises an interesting question around how ESG plays out from a top-down standpoint. When I think about gender in particular, I think about it in quite scientific terms, just kind of taking the emotion out of the discussion for a moment, when you have a more diverse workforce, it leads to better brainstorming, better decision making, more diverse opinions. 1) What does sustainable investing mean, and how has it evolved in recent years? Part of what we're trying to do here at the IIF is to support the scaling up of sustainable investment in sustainable finance. It's interesting to see how each, perhaps, investor or any kind of market participant or just individual defines diversity personally and professionally as you have, because obviously there is a difference. View MSCI's research archive and read papers on index, ESG, analytics and real estate investing Choi joined Morgan Stanley in 2007. We can see very easily based on just someone's name, whether they're female or male. So there certainly is a sort of social justice component that is very interrelated with a lot of the environmental protection issues that we've seen from a gender perspective, as well. And part of it is certainly a policy impetus, regulatory driver, and right now that tends to be more on climate issues, where you're seeing so many more initiatives designed to get the financial sector to focus on climate risk mitigation, on finding opportunities to finance the transition to invest in green and sustainable investments. Subscribe to this show on Apple Podcasts and Spotify, share your feedback on social media with the hashtag #ChangePays, and listen to new episodes at the beginning of every month everywhere podcasts are played. And SASB has created standards for ESG considerations across eighty industries, helping public corporations disclose material issues to investors. with more than $20 trillion dollars now invested in the sector globally. So we have seen some interest in gender-lens investing for some time, but I think it's been over the past sort of five to 10 years that there've been a lot of studies that have come out to show the link between gender and financial performance. We definitely know that poor communities, both geographically but also even within societies, that poorer communities are more exposed to many of the threats posed by climate change, as well as many of the threats posed by other environmental issues, whether that be pollution —  air pollution, water pollution, et cetera. So the combination of those two things, sort of bottom-up demand from clients and customers and then maybe a top-down steer from policy makers and regulators, have combined to put all of these ESG issues right at the forefront of attention. And then another type of question that I would love to know, but unfortunately as an index provider and, you know, using data that we have, it's very difficult, perhaps sensitive, and this isn't the opinion of S&P at all but just mine personally, is do we see that women certain types of women embody certain types of characteristics? Molly Mintz: Touching on what you said about having women in positions across the board, and not the board of directors but across all different types of positions, I always say to my friends I think that there should be more women arms dealers. And when you go further down the totem pole and you start thinking about executive leadership and then senior management and all the different levels of the organization, which levels are the most gender diverse? If you talk to the leadership of the Central Banks and Supervisors Network for Greening the Financial System, they will say that they are here and now a coalition of the willing wanting to take this climate agenda forward, but the hope is that in 10 or 20 years, there won't need to be a network for greening the financial system because the financial system will be green. As part of the sustainable investing evolution, there has been a great deal of work in the field to better understand the type of sustainability considerations that can have both real business and investment impact. Diverse teams often end up having better instincts around risk because they bring different perspectives and are seeing different opportunities and risk factors out there. All of these are ways to help address the gender gap. Investors have moved away from predominately avoiding—or divesting from—industries and companies considered harmful toward taking a more proactive approach as well. I mean, in some cases I do believe that there are fewer opportunities afforded to women and that somehow does need to be corrected; I really do believe that. Learn more about the topics referenced in this episode: Introduction: To me, Change Pays means empowering women around the world to become confident and impactful leaders. Obviously across ESG, you have gender problems but in some regions of the world where climate risk is extremely high, environmental concerns would also impact populations that may be disadvantaged because of their gender or socioeconomic status How do you see the interconnectedness of different ESG factors? Mona Naqvi: Great question, and maybe I can spare the S&P mention and just talk about gender and ESG in general. If you look at the data or if when you think about gender as a channel through which better R&D emerges, better decision making, more diversity of opinion, then you can start to see how it's not enough just to have it at a particular level of management but to have it permeate through every level of the organization. So, disclosure — we now have way more ESG scoring systems out there that are looking at issues including gender, so we now have just so much more data and information to do the analysis that tell us that these types of companies tend to perform better financially. I think this comes down to how one sees diversity in general. Aid is critical in these instances where financial returns, cannot, or should not, be expected. There's different types of investors that invest in ESG for different reasons. When you think about gender, obviously I think that's probably the most straightforward of the terms, it is really thinking about, are we truly being focused on gender diversity, on gender equity? Environmental, social, and governance (ESG) factors are of dramatically increasing interest to investors who are concerned about companies adopting practices that will mitigate risk and ensure their long-term sustainability. So it's only by all this talk and all this action that you're going to make a difference, and you can't really expect perfection, right? Chief Marketing Officer and Chief Sustainability Officer at Morgan Stanley. Talk to you next time. Audrey Choi - Morgan Stanley’s Chief Sustainability Officer. In fact, you often hear the concern that there just simply aren't enough qualified women, that the pools are not large enough. And yet we see across our member firms very determined efforts being made to recruit women for these roles. I'm personally quite excited about gender diversity and also broader definitions of diversity increasingly being understood  as a real marker of good management but also of superior ability to innovate, to perform, and really to deliver the right impacts both financially as well as socially. ESG stands for environmental, social, and governance risks and opportunities on which companies are measured. Obviously, you want that impact to be environmentally sustainable as well as socially sustainable. That's not necessarily something that's easily disclosed. In your perspective, what does investing in women actually look like? by 5) Looking ahead, what is the outlook for sustainable investing, in the short and long term? Backgrounder Because to address gender parity, you need really the whole of society on board. And many investors seem to believe that gender equality is an important value and something that they should invest in. It's something that's fundamental to business strategy. There's a whole range of aspects to gender diversity and gender gaps. I mean, there are many, many different ways to measure gender gaps. by Claire Felter Actually, the Sustainable Accounting Standards Board did a study and showed that something like 93% of the U.S. equity market is actually exposed to climate risk. But when it comes to gender, there isn't necessarily the full spectrum of information that one might hope for. In this episode, Sonja Gibbs, Managing Director and Head of Sustainable Finance at the Institute of International Finance, Mona Naqvi, Senior Director of ESG Product Management at S&P Dow Jones Indices, and Audrey Choi, Chief Marketing Officer and Chief Sustainability Officer at Morgan Stanley, discuss their respective interpretations of gender’s role in ESG. One other thing that's changed in the past 10 or 20 years is the tools that there are to measure and to make these comparisons. So there's all these layers of complexity when you think about diversity that you can't necessarily see them that easily in the metrics and in the data alone. For example, we know a lot about, particularly in the public equity space, which is what most of our indices focus on, we can see board representation quite easily. Info. It's interesting to see how each, perhaps, investor or any kind of market participant or just individual defines diversity personally and professionally as you have, because obviously there is a difference. But I think as a metaphor it fits for a lot of different things. Because to address gender parity, you need really the whole of society on board. Part of it is a bottom-up demand that something needs to be done about it. Molly Mintz: Give me one example of how S&P Dow Jones Indices addresses gender. The European Union and the United Kingdom came to a last-minute trade deal on Christmas Eve, narrowly averting the hardest of all potential Brexits. You know, is it enough to just have enough women on the board? If you think about financial services or technology or pharmaceuticals, these are all the types of industries where R&D is a really key business driver, and so we can start to see how gender plays out as being a very important metric for better success in those particular areas. In terms of sustainability, I often talk about sustainability with a capital S, which is really, you know, quite an expansive view — which says, look, if we want a business or an activity or an initiative to be truly sustainable, we need it to be truly financially sustainable and economically sustainable, right, so that it can actually be a flywheel, that you can continue having go and repeat and really expand its impact. Particularly, you know, the U.N. springs to mind. That's typically widely known. Do your personal definitions of these concepts differ in any way from your professional perspectives? It's not a corner, it's not even one business line. It's really the result of a much more holistic kind of management strategy and also a sort of cultural orientation that they value the input of diverse teams and that from a recruiting or retention, promotion, stretch assignment, mentoring perspective, that gender diversity is important to them. And so for so many investors for so long, there was a sense that professionals should do it, that you as an individual, your job is to manage your career and to count your investments but that at some point, right, you didn't necessarily need to know everything about every single investment and underlining and whatnot. We're talking about these topics more than ever before, and then we'll know that we've accomplished what we've set out to do when we stop talking about it. But if I think about a construction company or a mining one, even something like utilities, for example, where R&D is important, but perhaps not as important as for some of those other areas where creativity is much more important. ESG stands for environmental, social, and governance risks and opportunities on which companies are measured. So I think it's important to just address that preconception in people's minds. There are companies where R&D is more important than others. But how important is gender in ESG? What drove that shift? But what's more interesting for me is whether or not an investor finds its importance in terms of how they choose the companies they want to put their money in. How you embody these ideals in everyday life is different from the access and the information that you have in the place that you work. Of course, all of that's great, but somehow I think that that's going to restrict my returns.' – Audrey Choi, Chief Sustainability Officer at Morgan Stanley and CEO of the Institute for Sustainable Investing Why do investors care so much about ESG? They feel compelled to do something about it. When we've polled people, we found this really funny thing; we found that 86% of investors believe ESG companies to be more profitable and might be better investments, and yet 64% of people believe that if they became an ESG investor, that they would have to deal with a financial trade-off. Report this profile. Join to Connect. One of the other things that Morgan Stanley has done, really looking at both female entrepreneurs and entrepreneurs of color, and in the studies that we've done, Morgan Stanley has found that there is a vast underinvestment in enterprises, small enterprises, or startups that are led by women and people of color. I think what's harder is finding feasible solutions or feasible ways to address a problem, but I think there's a lot of really interesting recommendations that will be coming out of the Saudi Presidency. How do you see investing in women actualize and what do we need to do as investors, individuals, companies, countries to actually make this kind of societal impact? So I really do feel like, again, as whether it's the first time you're making investments or the largest sovereign wealth funds in the world, the largest asset owners in the world, the whole journey always starts by just asking the question. It's just about how we can translate some of those into an investable metrics to create real investment strategies and benchmark indices based on that information. They're a topic that's no longer sort of a small niche area that somebody might do a PhD thesis on; rather, it's a topic of conversation, you know, at the dinner table. So, how do you get to understanding how gender diversity plays out across the organization, not just in terms of the numbers but in terms of the culture of a place? Sonja Gibbs: Two thoughts. At the end of the day, it's very difficult to tease out the individual thematic issues, but I think ESG as an investment approach does a pretty good job of giving investors the opportunity to put lots of ingredients in the pie and still get a piece of everything, whilst not having to give up too many of those tradeoffs. The attention, the growing understanding, of how much inequality has increased over the past decade or so has also shed light on gender inequality. But again, it poses this question of, To what extent is that indicative or the cause or factor in all of this, or simply a byproduct of the fact that these issues are also interconnected, and it just happens to be the case that countries that perform well on gender equality are also those that are better governed and democratically positioned? Sonja Gibbs: Sustainability is a complex concept. You know, what your educational background is,  what your income status is, whether you're from a rural area or a city center, you know, all of this has an impact, a profound impact, on one's opportunities throughout their life and their career. UNPRI has not only established what responsible investment should entail, but as a membership organization, it is a platform for signatories (asset managers, owners, and service providers) to express their commitment to a more sustainable global financial system. Mona Naqvi: Good question. So, for example, if we think about gender equality and governance, as I mentioned earlier, you know, if you have a more diverse workforce, you're better equipped to think through all possible alternative scenarios. Can a country continue an appropriate growth rate that will continue to benefit its citizens? But what's more interesting for me is whether or not an investor finds its importance in terms of how they choose the companies they want to put their money in. It's all interconnected. But to do it at big scale, you need large institutional investors. If you look at the data or if when you think about gender as a channel through which better R&D emerges, better decision making, more diversity of opinion, then you can start to see how it's not enough just to have it at a particular level of management but to have it permeate through every level of the organization. The same dollar in the high performance portfolio rose to $28.36 over the same period. I think it goes hand in hand with a greater willingness to express dissatisfaction about the way our society works and whether that's because of wealth or income inequality, a lack of political rights, or inequality based on gender or sexual orientation.