Investing in Women, Strengthening Society

Submitted by fteplitz on March 12, 2020

In honor of Women’s History Month and International Women’s Day, we are taking a look at how investments are now being deployed to promote gender parity and women’s empowerment.  While there has historically been a lack of financial investments that benefit women and girls, change is underway!

The good news is that there is increasing focus on how consideration of gender – the roles and numbers of women in the workforce and the increase in women’s economic empowerment – relates to financial portfolios and to investments that benefit women and girls. According to March 2020 research released by Veris Wealth Partners, assets in what is now called “gender lens investing” totaled $3.4 billion as of June 2019, up from $2.4 billion the previous year.

The challenge is that we have a long way yet to go to achieve economic equity for women. A new 2020 report from the USSIF Foundation, Investing to Advance Women: A Guide for Investors, documents that women in the U.S. still earn almost 20% less than their male counterparts, barely 27% of CEOs are women, and only 4% of c-level positions are held by women of color. Action to correct this inequality is needed across society – and the investment sector has an important role to play.

The origin of the phrase “gender lens investing” in 2009 is attributed to the Criterion Institute, a non-profit think tank that uses the finance sector to leverage social change. Criterion explains that “Investing with a gender lens is an extension of gender lens philanthropy. It builds on the networks, power, and experience of women’s funds [i.e., grant makers].”

Criterion’s 2017 Blueprint for Women’s Funds includes insight on “the need to bridge gender knowledge with investment knowledge” in order for finance with a gender lens to be as successful as needed over the long term. Criterion observes that gender lens investing needs to go beyond just counting women or viewing them solely as an economic opportunity, and to put investment decisions in the context of women’s economic empowerment. This means ensuring that investments actually improve women’s lives and set the stage for greater asset building and access to the resources and rights needed to thrive economically.

FAQs about Gender Lens Investing:

What does gender lens investing actually entail?

As with many aspects of socially and environmentally responsible investing, also known as impact investing, there is not just one definition or strategy. That said, in short, gender lens investing integrates gender analysis with investment decision-making. Common aspects of gender lens investing include the selection of companies for investment that have some mix of the following:

  • Significant percentage of women on their boards of directors;
  • Significant percentage of women at the executive level;
  • Woman CEO
  • Woman CFO
  • Woman founder
  • Strategies to give women access to capital
  • Payment of a living wage
  • Products and/or services for services that improve the lives of women and girls
  • Responsible portrayals of women in advertising   

In addition, the Pax Global Women’s Leadership Index and Fund, a leader in gender lens investing, also reviews whether companies have signed the Women’s Empowerment Principles formulated by the U.N. Global Compact and U.N. Women. Other funds consider whether and how companies are addressing the U.N. Sustainable Development Goal on gender equality.

What are the desired outcomes of gender lens investing?

For most investors, the desired results will be multiple, including increased economic and educational opportunity for women and girls, stronger economies, better corporate management, and greater profit for companies and shareholders. Moreover, as the Veris report above notes, we now see connections between women in leadership and better outcomes across a range of social, environmental, and corporate governance issues.

Community development investments for women can also dramatically improve the quality of women’s lives. This happens by providing loans to women and access to needed products and services (from electricity to clean cook stoves). Customized mortgage pools from Community Capital Management, for example, give access to capital to low-to-moderate income female borrowers. Calvert Impact Capital’s Women Investing in Women initiative supports women as investors and uses investments to improve the well-being of women and girls.

Why choose a gender lens for investing?

Research from around the world demonstrates time and again that companies that value women’s leadership, and societies where women have economic opportunity, do better. The Pax Elevate Global Women’s Leadership Fund, for example, invests in companies with more gender diversity because they will have greater financial returns, more innovation, greater productivity, more satisfied employees and less employee-turnover. As the Investing to Advance Women report states: “A significant body of research suggests that companies that promote women to the most senior levels of business and appoint them to boards tend to perform better than those companies that do not.”

What is the role of shareholder action on gender equity?

Active shareholders file shareholder resolutions at companies seeking transparency and practices to close the gender gap between male and female employees across race and ethnicity. The 30 Percent Coalition, including asset owners and asset manager among others, is dedicated to having 30% of corporate board seats held by women, including women of color. This proxy season, Arjuna Capital, for example, has filed 13 resolutions on the need for median gender/racial pay equity disclosure. If you own company stock – be sure to check your proxy ballots and vote your values!

Is investing with a gender lens financially competitive?

Yes! While there are no guarantees with the stock market, funds with a gender lens have performed competitively over time. For example, the Pax Elevate Global Women’s Leadership Fund has outperformed the MSCI World Index, its benchmark, from its inception in 2014 to 2019.

Impax Asset Management, the advisor to Pax World Funds states: “Increasingly, analysts in both finance and academia are examining the relationship between financial performance and gender diversity, and there is abundant evidence that having more gender-diverse leadership is connected to better financial outcomes.” Gender Diversity Delivered: Results from 5 Years of Investing in Women explains the financial performance of the Pax Elevate Global Women’s Leadership Fund in detail.

What products and service providers can help me with gender lens investing?

For financial planners, products, and services dedicated to social and environmentally responsible visit GreenPages.org for members of Green America’s Green Business Network. Many of these options will include a focus on gender lens.

For example:

Mutual Funds: Domini, Green Century, Pax, Parnassus, and Calvert

Community Development Investments: Calvert Impact Capital’s Women Investing in Women initiative, Community Capital Management, and Shared Interest

Asset Managers/Larger Accounts: Miller/Howard, NorthStar Asset Management, Trillium Asset Management, Veris Wealth Partners

In closing, we need investors and investment professionals to continue to work for the day when all investing is socially and environmentally responsible -- and there is no longer any need for a gender lens. That will be a great announcement on an upcoming International Women’s Day!

 

More from the Blog