Mar 18, 2022 - Parker Timlin
A rising number of investors are looking for ways to grow their money while also selecting companies that align with their values, one efficient way to achieve this is through Gender Lens Investing (GLI).
There is no one-size-fits-all strategy to investing with a gender lens, there are a variety of approaches to incorporate progressive practices, including some that do not require a lot of resources. Investing with a gender lens is not an "all-or-nothing" proposition and should be used as additional investment criteria. With this in mind, our guide presents a variety of gender-based investment approaches.
Gender Lens Investing (GLI) is a technique for creating a positive effect on the world by incorporating gender analysis into investment research and decision-making. Implementing GLI strategies to investing means investing in businesses that promote equal opportunities for women as leaders, employees, business owners, and or customers.
Gender equity is a growing component in the movement for Environmental, Social & Governance (ESG) investing. GLI aims to address the pay gap for women, as well as the lack of development in women's education, healthcare, and economic prospects, as well as unequal representation of women in corporate and political leadership roles. Applying a gender lens to your investment analysis can help spot market possibilities or hazards that others might overlook, while also addressing gender equality in a variety of ways.
The goals of gender lens investing are to:
Lack of gender equity has been a systemic issue in the corporate and investment community for as long as it has existed, but there is mounting evidence that pursuing gender equity as an investor can benefit your investment, businesses, and society.
Companies that promote the interests of women most often promote the interests of investors as well. Furthermore, these businesses are reported to have more favourable work conditions.
There are various definitions of, and parameters used to address gender issues or promote gender equity, we've focused on the three major Lenses. 2X Challenge is a global industry body for gender lens investing; they've identified certain criteria to identify if a business is a gender forward.
This means businesses that are majority-owned by women, directed by women, and/or have a sizeable female board of directors. According to the Organization 2X Challenge, you should be looking for these qualities to qualify a company as woman-owned or lead:
This refers to the number of women on a company's payroll and in leadership roles. It also takes into consideration the policies and practices that promote gender diversity across the human resources cycle, from recruiting and promotion through talent retention and workplace culture. The 2X Challenge recommends identifying these:
Businesses that promote gender equality and/or provide products or services related to women's health, labor-saving technologies or equipment, or learning resources to help women better their skills and capacities. The 2X Challenge recommends identifying the consumer needs by asking:
The State Street Global Advisors Gender Diversity Index is designed to track the performance of large-cap companies in the US that are leading their respective sectors in advancing women by encouraging gender diversity on their boards and in senior leadership positions.
Eligibility is determined based on gender diversity within each industry and ratio-based criteria derived from an independent third-party review of regulatory filings. These criteria fall under these three:
This is the first index of its sort, and it's has been a huge turning point in the ESG world.
Research shows, greater gender diversity is linked to superior stock performance, better risk management, and reduced fraud rates. Even from a macroeconomic standpoint, investing in women makes sense.
So, next time you're researching your next investment, include a gender lens to support your fellow woman and help bring equality to the workforce.