Gender Balance & Sustainable Investing: A Journey

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    Stockholm (NordSIP) – This week, NordSIP had the privilege of catching up with Barbara Krumsiek, board member at Arabesque, and ex-CEO of one of the early sustainable investment asset management houses Calvert, during her first visit to Stockholm. Krumsiek is also a senior fellow at the Women’s Leadership Institute at Georgetown University, where she leads a research project on gender equality, trying to answer the question: “Why aren’t we there yet?“. Krumsiek shared some insights into what moved her all along her career, and her role at Arabesque.

    At the onset, Krumsiek candidly admits she did not always appreciate the importance of networks for women. “In the first 15 years of my career, I didn’t need it,” she says. “All of a sudden, it hit me. I had my first child, my oldest daughter who is now 29. I was shocked at how I was treated, going into maternity, and when I came back.” This was the late 80s, and changes have taken place since then, but Krumsiek still recalls the words of her boss just as she was pregnant and ready to take a short leave: “My wife says, women who love their children stay at home with them,” he warned her. “I thought he was kidding,” adds Krumsiek, “but he wasn’t. He probably thought he was helpful.” Krumsiek did come back to work and had another daughter three years later. “I didn’t understand what was going on, and I needed a safe place to talk about obstacles and opportunities.” It became clear to her that staying within networks dominated by men was not going to be the answer, but that only other women could help in certain aspects of her professional career. Krumsiek was instrumental in the development of several professional women’s networks in the financial industry, but also in other areas, such as the Women Campaign Fund, which tries to address the lack of women in politics.

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    At the time, Krumsiek was working for the asset management firm Alliance Capital, now AllianceBernstein, and stayed there for a total of 23 years. She was then recruited for the position of CEO at Calvert, which already at that time, in 1997, was one of the leaders in sustainable investing. “Until then I had never really looked into sustainability, and personally never engaged in it. Some clients had exclusions, but that was it. The more I looked at it, the more I became convinced. Sustainability is a proxy for quality of management, and the ability to look at long-term factors. Environmental liabilities, for example, may not show up today, but when they do, they can really hurt a business. Once you choose to invest this way, you don’t go back. It is truly a way to integrate more information into your investment process.” Krumsiek remembers an interview she gave CNBC when she was hired at Calvert: “People were interested in the move I was making, not because I was the first woman to lead a socially responsible firm – I wasn’t – but that I was the first wall street veteran to do so. They asked me: ‘Is your money invested this way?’ – ‘Now it is,’ I said.”

    Life at Calvert was very good for working mothers already, Krumsiek remembers. Hours were flexible, there was an on-site childcare facility, and employees were allowed to take their children to the office if they needed to. “Calvert had been listed as one of the 100 best companies for working mothers,” Krumsiek recalls. “When I joined as CEO, my goal was to improve earnings and performance of course, but I needed to make sure we won that award again, and we did. The company was a leader in this field, and many followed suit.”

    After 17 years as CEO, Krumsiek decided that it was time to step down and focus on new challenges. She now sits on the board of Arabesque, takes time for the community and most importantly, continues to contribute to the field of gender balance, mainly through her senior fellowship at the Women’s Leadership Institute at Georgetown University. One of her goals is to find new metrics to understand why there is such attrition of women in middle to top management. “Graduation rates are balanced, sometimes above 50% of graduates are women, then there are about 50% who enter companies at the beginning of their careers,” Krumsiek explains, “and on boards, we now achieve a 20 percent female representation, but it is terrible in the middle. Suddenly you drop from 50% to 5% at the C-Suite. There is no transparency.” The goal of her study is to design a method to pierce the fog of this attrition rate. “I don’t believe companies do that on purpose, there must be factors that we don’t understand, and we need more sophisticated tools for women.”

    As an example of particular issues that need to be tackled, Krumsiek mentions the #metoo movement. “We need external intervention. Harassment policies exist everywhere, but clearly, they have not worked. Third parties should be involved, and there has to be consequences. If the complaints are legitimate and severe, the perpetrator has to go. If there are false complaints, and there are clear testimonies that the complaints are false, there should also be consequences.” For Krumsiek, boundaries have to be redefined more clearly. Usually, power relationships are key in determining danger zones, but what about other relationships? Companies must be careful not to disrupt human interactions between employees of different genders. “We need clarity around grey areas,” says Krumsiek.

    Arabesque’s Chairman, Georg Kell, approached Krumsiek two years ago to join what she calls “the elders” on the board. “We are all very seasoned individuals, and we all have experience in the space of sustainable investing. It is important to be involved at the intersection between business and society, and to provide thought leadership.” For Krumsiek, Arabesque was a perfect fit. “It is a firm that focuses on sustainable analysis, integrating ESG into a quant investment process and taking advantage of new trends such as big data availability. The principles that underlie the process are principles that I already believed in, such as the Sustainable Development Goals, and the Global Compact. It all makes sense.” More concretely, in the short term, Krumsiek has come to Stockholm to help Arabesque grow, and in parallel, she is looking at implementing a specific gender-oriented investment tool, while working on a paper at Georgetown.

    Krumsiek leaves us with one more anecdote. “I was invited to talk about sustainable investing at a major investment bank, with several senior women. I mentioned that, as a woman, if you don’t fill in the blanks about yourself, men will do it for you, and it is most likely going to be to your detriment. When I said this, one of the women burst into tears. She admitted that, recently, there had been an opportunity for her to raise her hand to fill a new global position at the firm. As she was leaving the room, a more senior colleague, whose opinion and support she had always valued, asked her: ‘Are you sure you want this?’ As she had young children and the position would imply relocating to a foreign country, the colleague questioned her willingness to pursue this opportunity. What bothered her was not just what he said, but also that other men were probably thinking the same, without saying it. This happened just recently. We are in 2018, but men are still assuming things like they were in the 80s!”

    Indeed, Why aren’t we there yet?

    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA is Editor-in-Chief for NordSIP and Managing Director for Big Green Tree Media. She has 18 years of experience in the asset management industry in Stockholm, London and Geneva, including as a long/short equity hedge fund portfolio manager, and buy-side analyst, but also as CFO and COO in several asset management firms. Aline holds an MBA from Harvard Business School and a License in Economic Sciences from the University of Geneva.
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