Women invest less than men, that’s a fact. A new study* commissioned by AJ Bell suggests the average level of savings and investments held by women is less than half the amount held by their male counterparts.

To put a number on it, if you extrapolate the average difference in savings and investments between the men and women questioned and factor in the UK population then the gender investment gap comes in at a staggering £1.65 trillion.

There are many reasons for the gap from pay differences to maternity leave and the fact women simply think differently to men, but there could be one change that might start to make a difference.

SEEKING POSITIVE CHANGE

Chatting to two first time investors during research for our new Money Matters campaign it emerged that while both women had different reasons for starting their investment journeys both had really focused on the ability to have their money work for positive change.

31-year-old Dee told me: ‘When I first started investing… I was just happy to give it a go to see if it was for me. As I got more experienced it very much became a conscious decision of what company I invested in and any organisations that I would like to support.

‘I started reading an organisation’s green policies… and it actually did become an emotional decision and it still is. Now I will only invest in a company that I believe will do good for the planet or at least has a green initiative.’

Similarly, Georgia, who is 28, said, ‘I think the first time I looked at (investing) I was getting a sense of how it worked. I invested a small amount, but I got to grips with what all the different words meant. Now I’ve been able to use that information to make more ethical decisions about where I put money and decide the best options for me that fit my values as well.’

RESPONSIBLE INVESTING ON THE RISE AMONG MEN AND WOMEN

That’s not to say women are the only ones putting their money where their ethics are. Two thirds of fund inflows in September went into products that invest specifically according to ESG (environmental, social and governance) principles and over the past year most months saw around £1 billion of funds being invested in ‘responsible’ funds.

But as Dee says, at least among her friends, investing means different things to different people. ‘I’ve got a small circle of friends that invest. Some are female, some are male. Most of my female friends only invest in companies they believe in. Most of my male friends, in fact all of them, invest in the company they think will get them the most money or most reward. In return they very rarely look at the company as a whole.’

Ethics isn’t a barrier to rewards and when you look at AJ Bell’s most traded lists for this year and compare it with five years ago you can see change is coming, albeit slowly.

INVESTMENT APPETITES ARE CHANGING

Several high carbon emitters have slipped out of the top 10 most traded stocks, but BP (BP.) remains a popular choice and its ESG credentials come with great big caveats.

Pre-packaged funds which tell investors exactly what’s ‘in the tin’ have become more popular, and making sure that investors have easy access to clear information might be the most significant thing to emerge from COP26, the Glasgow-based climate change summit of world leaders.

From April next year over 1,000 of the largest UK registered businesses will be required to disclose mandated climate-related financial information, and investment products will also come under the spotlight with the FCA, the financial regulator, due to consult on criteria for ESG labels.

It’s often said knowledge is power but there have been many complaints that ESG reporting has lacked clarity and a mechanism for judging whether all those net-zero promises are more than just lip service.

In this case the knowledge might make a double impact, helping make the UK and the world a cleaner, greener place and giving more women the impetus and the confidence to seek out investing for the first time. Helping the planet and helping themselves.

For more information about AJ Bell’s Money Matters campaign please visit AJ Bell Youinvest’s website and listen to the Money Matters podcast.

*AJ Bell commissioned an independent survey of 5,000 people from Opinium, conducted between 26 and 30 August 2021, creating the AJ Bell Money Matters report

DISCLAIMER: AJ Bell is the publisher of Shares magazine. Daniel Coatsworth who edited this article owns shares in AJ Bell.

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