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Social responsibility is second nature to female entrepreneurs

When it comes to social responsibility the answer is “yes,” according to 2013 U.S. Trust Insights on Wealth and Worth. Successful women are more likely than successful men to own a business so they can pursue a personal passion and to make a positive impact on the world. These women are also far less likely than than their male counterparts to take actions such as moving the company to another state, eliminating staff or reducing employee benefits in response to increased tax burden.

Women entrepreneurs tend to treat their employees better and give back to their communities, said Joy Anderson, President and Founder of Criterion Institute, which helps shape emerging financial markets and movements.

With increasing numbers of women owning bigger businesses, female entrepreneurs are poised to make an even greater impact. The number of $1-million-plus firms owned by women grew 31% from 2002 to 2012, according to Growing Under the Radar: An Exploration of the achievement of Million-Dollar women-Owned Firms. That’s 7% more than all million-dollar-plus firms. Even more significant is the growth of $10-million-plus women-owned firms, which increased 57% — a growth rate nearly 50% more than all $10-million-plus firms.

Women’s social responsibility extends to managing their investment portfolios

Women entrepreneurs’ social impact goes beyond their businesses to managing their wealth. Women take a holistic approach to managing wealth, which includes their investment portfolio and philanthropy, said Kathleen McQuiggan President and Founder of Catalina Leadership, which helps financial services firms better engage with their female clients.

“Women, it seems, are more inclined to want their investments aligned with their values while men are more likely to compartmentalize – investments in one compartment, moral and political values in another,” wrote Joseph Keefe President and CEO of Pax World Management.

Impact investing is an umbrella term that refers to environmental, social, and governance investing (ESG), sustainable investing ,and socially responsible investing (SRI), explains Geri Pell, CEO of Pell Wealth Partners, a private wealth advisor. She began recommending impact investments when she realized that it matched her values and the values of many of her clients. Importantly, after researching returns of impact investments, Pell found out that they delivered market rate return or better. Her clients didn’t have to sacrifice financial returns to make a social impact.

A significant minority, about $3.7 trillion (11%) of the $33.3 trillion in total U.S. assets under management, now employ sustainable, responsible, and impact (SRI) strategies, according to Report on Sustainable and Responsible Investing Trends in the United States.

Some investors are filtering their investments through specific thematic ‘lenses,’ such as gender. This is known as Gender Lens Investing. Anderson has been at the forefront of building this field which, without giving up financial return, considers the social impact of gender when making investment decisions. Investors evaluate their investment decisions based on righting historical inequities and fueling positive change for women and girls, she said. This covers issues such as promoting women workers, managers, and board members as well as including the broader societal returns and positive impact flowing to communities when women’s access to education, jobs, and capital improves, according to Women, Wealth and Impact Investing With a Gender Lens. a report by Veris Wealth Partners.

Women can use the power of their portfolio to influence change

Women control 51% of private wealth and can use this collective power to drive social change. Women can engage as shareholders and vote with their portfolios, said Pell. That’s an effective way to get companies to stand up and listen to what women want, she continued.

Women are more philanthropic

Women are more philanthropic than men. At every income level, they give to charity more often than men do — and they tend to donate more money on average than their male counterparts, according to Women Give 2012 research conducted by Women’s Philanthropy Institute at the Indiana University Center on Philanthropy.

In general, women entrepreneurs are more altruistic and empathetic. Combined with their rising success, it’s likely that small- and mid-sized company social responsibility efforts will increase and take on new forms,d which may well change the way we all think about business responsibility.

How will you make your social impact?