Gender Lens Out of Investors’ Focus
Real gender equality in the investment sector can only be achieved if applied across all industries and asset classes.
Most investors are not tapping into the opportunities surrounding gender lens investing (GLI), while those who do lack consensus on their definition of and approach to equality and inclusion.
These trends were evidenced in a new report analysing investor efforts to advance gender equality through impact investing and sustainable finance, co-authored by UN Women, Politecnico di Milano, Phenix Capital Group, and Bocconi University’s AXA Research Lab on Gender Equality.
GLI is an investment approach whereby capital is allocated with the objective of addressing gender equality, including by contributing to SDG 5 – which aims to achieve gender equality and empower women and girls.
“Gender inequality hampers economic growth and social progress,” said Ximena Caló, one of the report authors and a PhD student at the AXA Research Lab on Gender Equality. “GLI has therefore become not only a moral imperative, but an opportunity to address gender disparities around the world and unlock economic potential across both the public and private sector.”
Based on evidence gathered during interviews with investors, the report suggested there is currently no common definition for GLI, or what an investment focused on gender equality should cover. In some cases, investors have strictly targeted women, whereas others have targeted minorities more broadly, addressing a range of biases, power dynamics and factors.
In addition, not all investors claiming to have a GLI strategy sufficiently contribute to gender equality, the report noted. Some approaches are more superficial, focusing on symbolic representation without challenging systemic gender inequalities.
“Some [critics] question the extent to which GLI addresses the concerns of marginalised women, particularly those facing intersecting forms of oppression,” the report read.
Despite progress, there remains a perception among investors that it is difficult to make a financial return from investing in social impact – though this view is also slowly changing.
“I believe the potential to balance impact and returns by investing with a gender lens is as tangible as investing with a climate one,” argued Thembeka Stemela Dagbo, Fund Manager of M&G Investments’ Lux Diversity and Inclusion fund.
All roads lead to data
Investors are reportedly also finding it difficult to obtain reliable gender-disaggregated information from investee companies, due to such information being either not readily available, or simply unreported.
This has made it more challenging for investors to measure the impact of their GLI-focused strategies.
“Our biggest constraint is the lack of publicly available data and its standardisation,” saidd Camille Barré, ESG Analyst at asset manager Mirova.
Barré acknowledged that although more companies are publishing overall workforce data by gender breakdown, management-level data on gender equality remains rare.
“Almost no data provider furnishes diversity performance and data, and the majority of the time the way they do it is incomplete, or with very a small scope and geographical bias,” she added.
Many companies underestimate the importance of gender data and policies for investors, Barré explained. “But this gives us the opportunity to engage with them and our peers to increase knowledge on the subject and share best practices,” she argued.
Although the positive outcomes of GLI strategies could take years or even decades to materialise, sharing progress is important.
“Companies’ performance can be driven by a magnitude of elements: unpacking the single impact that GLI could have had on performance is difficult to measure, and often relies on anecdotal evidence,” Stemela Dagbo suggested. “This can be a barrier to the greater commercialisation of GLI across climate or environmental investing, and could be the reason why we have seen such inequity in capital flows between the two verticals.”
To bring out true gender equality and equity, all industries and asset classes need to be involved, Stemela Dagbo insisted. “There are always ways that various asset classes can strive for greater gender diversity, regardless of how close they are to the social impact being generated,” she added.
More to choose from
On a positive note, the report noted that a growing number of investors were beginning to reap the benefits of having applied a gender lens in their investment strategies.
As a case in point, the Mirova Women Leaders Equity fund invests in listed companies that can demonstrate that their executive committee is made up of at least 30% women, that their female representation is balanced at the executive and global workforce levels, and that a female CEO or CFO has been appointed.
“A qualitative review of the company’s policies and practices regarding gender diversity is of course also needed to assess the organisation,” said Barré. “This includes gender/minority pay gap information, whether parental leave goes beyond recommended laws, succession planning, and training on unconscious bias.”
M&G’s Global Diversity and Inclusion fund, for its part, is categorised as Article 9 under the EU Sustainable Finance Disclosure Regulation (SFDR). The vehicle invests in companies that have demonstrable gender and/or ethnic diversity, or which strive to promote social equality. Reporting in line with SDFR allows the firm to track the progress being made by the fund’s holdings on growing and broadening out their impact.
“We can track whether companies are adhering to their diversity strategies by monitoring their progress on representation and inclusive policies,” Stemela Dagbo said. “This results in greater accountability and transparency on the impact being generated by the investment strategy.”
Although the fund’s strategy is largely focused on contributing to SDG 5, its impact spans other aspects of the UN Sustainable Development Goals.
“For instance, vital infrastructure (SDG 9), such as mobile payments systems in Africa, has driven greater financial inclusion in regions like Sub-Saharan Africa, where around 60% of the female population is financially excluded,” Stemela Dagbo added.
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