SUMMARY
By focusing on gender equity, investors can diversify their portfolio and support women.
The last century has seen great strides toward gender equality. We should celebrate those advances, but also recognize how far there is still to go. Organizations from the United Nations to the World Economic Forum are among those to highlight the persistent gap in opportunities for and empowerment of women.
While there is an ethical imperative in advancing gender equality, there is an economic and investment case too. If women are unable to realize their full potential, it is a lost opportunity for everyone. The United Nations (UN) Industrial Development Organization has estimated that if women played an identical role to men in the labor force, global GDP would be $28 trillion greater.1
Fairness and future prosperity
The UN has set gender equality and women’s empowerment as one of its 17 Sustainable Development Goals (SDGs) for 2030. But it has also warned that, at the current rate of progress, that goal will be missed.2
While many global companies have made progress in women’s representation in the boardroom, the overall picture is still unsatisfactory. The World Economic Forum estimates that women account for 20% of boardroom roles. And at current rates, that proportion will not reach 50% until 2045.3
Meanwhile, women’s pay globally is 20% below that of men, and 60% of the world population suffering from hunger are women or girls.4 Traditional family roles that still predominate in most countries mean women are also bearing the burden as caregivers for the sick and the elderly, a particular challenge for economies with aging populations.
But the challenge begins at the earliest stage of life – 129 million girls worldwide are outside education and less than half of all countries provide parity in education access for boys and girls.5
These statistics are not only an affront to equality, but a drag on prosperity and potential for the entire global economy.
Looking through the gender lens
Typically, gender lens investing (GLI) promotes women’s equality through investments in companies with strong gender diversity credentials.
Quantitative factors considered include the proportion of female employees, managers, and board members, home/life balance policy and diversity initiatives.
Companies that are focused on gender balance in both senior roles and throughout their workforce are practicing a form of diversification, bringing a wider range of experiences, and thinking to their decision-making processes. This can result in improved innovation, a wider talent pool, and a better reflection of a company’s customer base, for example.
Companies with poor gender diversity, by contrast, may be exposed to risks, including reputational issues and difficulties in talent retention.
GLI considers possible risks and opportunities that others might miss when painting a picture of a company’s financial performance.
While potentially achieving strong financial performance, investors can elevate and empower women through their portfolios. For this reason, GLI has garnered increased attention worldwide.6
The intersection of gender and other sustainability priorities
Investors committed to gender progress may also want to consider the full range of interconnected sectors and industries within the investible area of the United Nations Sustainable Development Goals (UN SDGs).
By focusing on different areas of the UN SDGs – such as water, food, education, and healthcare – investors may help unleash the economic potential of women and girls and drive gender equity, the process for achieving equality. Gender equity recognizes that not all people start from the same place and therefore may need different opportunities to achieve similar outcomes.
Gender equity leads to gender equality by working to break down systemic barriers for women and girls, emphasizing the importance of wider sustainability themes.
Sustainable investing offers investors opportunities to diversify their portfolio while taking into consideration the needs of women and girls.
For instance, in certain areas of the world women have the primary responsibility for procuring water and food for their families – a challenge that is becoming more difficult in regions that face water and food scarcity due to climate change. These responsibilities can prevent women and girls from participating in education or entering the workforce.
Public and private equity markets provide opportunities to invest in companies enabling remote education, creating clean water solutions, and increasing food production.
Investments in food solutions, for instance, focus on companies throughout the entire food value chain, seeking growth opportunities in emerging areas, such as precision agriculture. This is particularly useful for the areas most affected by climate change and where the most vulnerable populations reside.
Likewise, women are often critical to supporting seniors throughout society, both in the home and as care workers. Longevity is a Wealth Outlook Unstoppable trend. Unstoppable trends are reshaping the world around us. As well as transforming the ways we live and work, they are creating potential long-term opportunities and risks for portfolios – and today, not only are there more people on Earth, but their average age is now older than at any time previously.
Innovative healthcare technologies – such as telemedicine – enable greater continuity of care and coordination of clinical activities.
Health-focused strategies seek to capture these investment opportunities and create new markets for the most innovative healthcare companies. At the same time, innovative healthcare companies can enable women to work from home and support their families, both economically and in person.
These are just a few examples of the products and services that companies are offering which could potentially improve women’s lives.
Investing across sustainability themes may lead to improvements in women’s lives, helping to support and promote gender equity by addressing societal and environmental issues. With this notion, investors may contribute to gender equity while seeking economic and market opportunities that could potentially generate competitive performance in their own portfolios.
As companies focus on diversity equity, and inclusion (DEI), their innovation and new solutions may help solve today’s most pressing sustainability issues.
The case for gender lens investing seems timely, relevant, and compelling.
