Gender-lens investing: Less talk and more action needed
By Jacolene Otto, Maitland’s head of Private Equity & Real Estate, based in Luxembourg.
Gender-lens investing (GLI) was first coined back in 2009, making it a fairly new concept, but one that has swiftly gained traction among progressive investors. Just like ESG, GLI looks beyond financial returns when making investment decisions. GLI investing is done with gender concerns as an important factor in the decision-making process and therefore investment must achieve financial return as well as consider the benefits of the investment to women and girls.
The statistics on gender concerns bolster the relevance and importance of GLI. According to the Global Poverty Project, women work two thirds of the world’s working hours but earn only 10 per cent of the income and own 1 per cent of the property. They add that with every 10 per cent increase in girls going to school, a country’s individual GDP rises by 3 per cent.
In addition, BasicEd report that an increase in girls’ education results in a decrease in the human and fiscal costs associated with challenges such as domestic violence, child marriages, and HIV. Goldman Sachs document that gender gaps in labour forces a decrease in GDP for both rich and poor countries, and McKinsey estimate that achieving gender equality could add USD12 trillion to the world GDP.
For several years now, firms such as Morgan Stanley, Merrill Lynch and Goldman Sachs have offered GLI strategies for some of their portfolios. In 2017, the National Bank of Australia announced that it had sold AUD500 million gender equity bonds. These bonds were invested in a portfolio of businesses which received gender citation from the Australian Government according to a Reuters article on ethical bonds.
There are some serious players in the market mobilising around GLI, specifically driven by Development Finance Institutions (DFIs). Two of the interesting current initiatives are:
2xchallenge – financing for women
The 2x challenge launched in June 2018 as a new commitment of the DFIs from the G7 countries to unlock resources that will help advance women’s economic empowerment and gender equality. These DFIs have since supported investments and initiatives that provide women in developing countries with access to leadership opportunities, quality forms of employment, finance, enterprise support, as well as products and services that enhance the inclusion or economic participation of women and girls. To date USD4.5 billion has been committed.
The gender-smart investing toolkit
To assist firms in developing their GLI strategy at the General Partner or Limited Partner Level, the CDC Group released a gender-smart investing toolkit. For the GP this relates to their strategy at both the fund and the portfolio level. It is not just about where you put your money but also what you are doing at the GP level to empower and uplift women.
While GLI is spoken about in the industry and at a regulatory level, meaningful execution is distinctly lacking. The change is mainly driven by DFIs with very little assistance from governments, especially in developing markets. There is a lot of talk around wanting to support women and gender-equality but market players want to start seeing tangible action and results.