Dr Jyoti Mehndiratta Kappal – eShe

In her new book How Women Invest in a Man’s World (Bloomsbury India, ₹399), Dr Jyoti Mehndiratta Kappal takes a deep dive into the factors that affect financial decision-making for women, and how we can overcome unconscious biases to achieve wealth and prosperity.

Dr Kappal holds a PhD in behavioural finance, and is a professor and thought leader in behavioural finance, strategy and leadership. With 20+ years in the field, she researches women’s financial behaviour, champions equity, and advocates neurodiversity as an organisational strength while mentoring students and professionals.

Her book offers insight into the systemic challenges that women face in personal investments; how gendered norms shape financial confidence and outcomes; and how women can take control and shape their financial future on their own terms.

This excerpt from the book has been published with permission from Bloomsbury.

By Dr Jyoti Mehndiratta Kappal

Your investment choices are not mere numbers on a page; they are threads in the tapestry of the world you create. Gone are the days when ‘doing good’ meant giving up on economic benefits. To explore this connection more deeply, let us look at some findings. Each of these add to a growing corpus of evidence about how responsible investments lead to positive impact.

In 2015, Arabesque Partners, an asset management firm, found that a whopping 80 percent of reviewed studies linked sustainability practices to a positive impact on investment performance.

Other studies have painted a similar picture, with SRI (socially responsible investing) mutual funds often outperforming traditional mutual funds on par with, and in some cases, outperforming them.

Additionally, there is even evidence that SRI funds tend to have lower volatility, lending reassurance to the overall financial mix.

Those who once warned against restricting investment opportunities in the name of ethics are being silenced by the expansion of sustainable opportunities. Today, the industry is vibrant with a diverse range of SRI mutual funds, exchange-traded funds (ETFs), and individual stocks covering a variety of sectors and impact goals.

It’s no longer a niche corner of the market. It has become a vibrant stage for economic prosperity accompanied by positive changes.

Renu started an edtech venture with her husband after a successful corporate career. She and her husband hail from the city of Kolhapur in Maharashtra. They grew up in fields, open grounds and played under the trees. Over the years they have travelled the world and picked up assignments from all over the world.

For more than a decade they made the globe their professional canvas and then one day, they gave up their lucrative assignments in London to come back and settle in Pune (a cosmopolitan city in West India that is known as the cultural capital of Maharashtra).

The sole objective of their return was to be close to home. Renu and her husband invest actively and they designed their investment strategy together. Renu lets her husband take the lead but one thing she refuses to compromise on is buying shares from a company that deals in tobacco and tobacco-related products. In fact, Renu’s strong resistance to investing in a tobacco manufacturer even turned into a serious disagreement once.

“Ranvijay wanted to invest a large sum in this company which is a leader in cigarette production in India. He had done his research and was sure that the stock would increase substantially in the near future. But he could not invest before both of us agreed. Joint decisions in finances is the philosophy we have been following for a long time now. The moment he proposed this to me, I immediately said no. He tried to convince me because he had a recommendation on this scrip that it was to increase by 30 percent in the next few weeks. No amount of argument could make me change my mind. I have seen young boys around me wasting their money and lives on tobacco addiction. I think cigarette production should be stopped. How can I give my hard-earned money to a company which is making this poison? That was the last time he tried to convince me to buy such a share. I think he appreciates how strongly I feel about it. He does not even research such companies now,” Renu told me when we met a few years ago.

Despite the pressure from her husband who had a strong recommendation about a company, Renu was not ready to budge and did not allow him to invest in that scrip because it went against her value system.

Over the years, her husband has settled into this approach and stays away from such companies. In fact, he now pitches the socially responsible behaviour of an organisation to get support and a buy-in from Renu to invest in a company.

Financial decision-making for women seems to be guided by what is best for their children and family. Women focus on investments with a lens that will benefit their community and planet. In numerous industry reports, it is highlighted that, compared to men, more women consider social impact an important factor when considering an investment option.

Socially responsible investing is an approach that incorporates financial health of the organisation and also focuses on the impact of the chosen company on society.

SRI approach is typically designed to be closely aligned to the values of an investor. The concept has evolved to ESG (environmental, social, governance factors) investing, which is garnering focus now.

Environmental factors refer to the use of natural resources, carbon emissions, recycling and waste management. Social factors include how an organisation treats its stakeholders, the organisation’s inclusivity index or pay parity issues. Governance factors cover leadership competence, integrity, transparency and compliance.

Women are more likely to look for companies with strong corporate social responsibility practices. Socially conscious wealthy women are driving investments in sustainable projects and socially conscious organisations. When compared to men, it is twice more likely that women will prefer companies which integrate ESG into their policies and procedures.

An organisation that cares for the planet, is inclusive, has a diverse workforce, and contributes to social initiatives is more likely to be more attractive to women inventors who, along with personal financial profit, are looking for value-driven companies when making investment decisions.

By investing in ESG-focused companies, women investors have confidence that they can bring about positive change and save the environment.