Ollie Smith: This week, we're devoting all our content to International Women's Day, so I want to talk to Morningstar's resident ESG expert to ask her about ESG and diversity specifically. Hortense Bioy joins me now.
Hortense, on the governance side, it's been important for ESG fund houses to practice what they preach with ESG and diversity. So, is it too optimistic to say that ESG has therefore been a career opportunity for women working in financial services?
Hortense Bioy: I think ESG investing is a tremendous career opportunity for women. Historically, ESG or what used to be called responsible investing always attracted women because they saw it as a force for good. But for many years, ESG was of secondary importance in the asset management industry. Every large fund house had a smaller team of ESG professionals that would serve a small number of clients. But that has changed in recent years with the increased demand for investment strategies that incorporate environmental and social issues. So, all of a sudden, these women who were sitting in the background before are now recognised as the experts in the ESG field and asked to sit at the top table and take part in strategic decisions. So, I think, going forward, actually, more women will be attracted to the asset management industry because of its growing focus on ESG and sustainability. And we know that money is powerful and ESG is a way to win that power in a positive way.
OS: Just on strategic decisions, one of the ways women contribute in ESG is through engagement. But I wanted to ask you, do you think the female fund managers are uniquely placed to conduct diversity engagement with companies if they have unfortunately lived experience of the effect of bias in the workplace?
HB: So, let's start with the facts, Ollie. There aren't many female fund managers. So, last year, Morningstar conducted a global survey and found that only 14% of fund managers were women. But there are women in other roles, investment research, for example, investment analysts, stewardship specialists, who do engage with companies, and they also do engage on the topic of diversity.
Now, do I think women are better placed than men to engage with companies on diversity? The answer is no. Men can also talk about this issue. In fact, men in the industry have become strong advocates of diversity because they now understand the benefits of more diverse teams. There are plenty of studies that show that diverse teams of which gender is just one aspect, by the way, perform better.
OS: And then, just finally, I suppose given that there is widespread disagreement, among companies that do ESG analytics or ESG awards or ratings, do you think that is in any way hindering progress in diversity? Does there need to be more agreement on what good looks like?
HB: So, when it comes to ESG data availability and quality and consistency, I mean, it's well-known that social metrics have fallen behind environmental metrics. There's poor data disclosure on diversity specifically, and not only related to gender, but also race, ethnicity, and age. And this lack of ESG data is indeed hindering diversity, because without data it's difficult to track the progress that companies are making in that area. So, I think it really starts with disclosure and for that we need the help of regulators. And in several countries, regulators have started to make certain data related to diversity mandatory.
OS: For more International Women's Day content do check out Morningstar.co.uk. We've devoted all of our time and resources to it this week. Until next time, a big thanks to Hortense, I've been Ollie Smith for Morningstar.
