Gender-lens investing is a type of socially responsible investing, also known as ESG, sustainable, socially conscious, ‘green’, ethical or impact investing. These investment strategies are designed to contribute to positive social or environmental impact in the world. In the case of gender-lens investing, it’s focused on addressing issues of global gender inequality. Thus, a gender lens investment strategy integrates many gender-based factors into investment decisions, which still aims to achieve strong risk-adjusted returns.
Gender-lens investing seeks to address issues of global gender inequality
The Global Impact Investing Network defines gender-lens investing as investment strategies which:
- Seek to intentionally and measurably address gender disparities; and/or
- Examine gender dynamics to better inform investment decisions.
How long has gender-lens investing been around?
Although the term ‘gender-lens investing’ may seem relatively new to most, it was first used in 2009. According to Trillium’s* whitepaper Investing for positive impact on women the practice of empowering women through the use of capital has much longer precedents1. Much of this takes place in developing economies and has done for years. For example, foundations and donors providing grants to educate women and girls which in turn result in higher household income and bettered employment opportunities.
Perpetual Limited has recently acquired Trillium Asset Management who promote and facilitate integrating gender into total portfolio activation. Perpetual’s Corporate Trust division has also been appointed as the Trustee team for the Emerging Market Impact Fund (EMIIF), a new fund launched on the 3rd July 2020 by the Australian Government. The EMIIF will adopt and promote a gender lens investment approach, encouraging investment in enterprises that are women-led, provide products or services that benefit women, or adopt gender friendly workplace policies.
That all sounds great – but does gender-lens investing actually work?
Investing in what you believe in or actively choosing not to put your money in companies that don’t have a high representation of women in leadership positions can be powerful. In fact, research has shown gender diversity on boards is a predictor of long-term value creation as well as lower stock price volatility. And many organisations agree.
For example, in January 2020 Goldman Sachs announced a move to promote more gender diverse boards; instituting a gender quota for the boards of companies the firm takes public, also known as Initial Public Offering, you can learn more about IPOs here.
In terms of the returns that a gender-lens investment approach may yield; this ultimately depends on how the investment portfolio is built. Interestingly, Business Insider found that companies with a relatively high percentage of women in leadership perform better than those dominated by men. In addition, women-focused investment strategies have been the standout performer in the $6.6 trillion-socially responsible investment world2.
In saying this, past performance is not a reliable indicator of future performance. We suggest speaking to a qualified financial adviser to build a gender-lens investment portfolio that suits your needs and appetite for risk.
How to ‘put your money where your mouth is’
If you’re passionate about closing the gender pay gap or concerned about many of the other prevalent gender gaps (superannuation, unpaid housework) affecting you and future generations, gender-lens investing really lets your money talk.
So, let’s walk the walk. Generally, gender-lens investing involves all or a combination of the following:
Investing with the intent to address key gender issues or promote gender equity:
- Investing in women-owned or led businesses;
- Investing in organisations that promote workplace equity (in staffing, management, boardroom representation, and throughout their supply chains);
- Investing in organisations that offer products or services that improve the lives of women sustainably.
Investing in gender-led strategies that inform investment decisions and allocations:
- An investment process that focuses on gender throughout – from pre-investment activity (such as sourcing and due diligence) to post deal monitoring (such as strategic advice and exiting), and/or
- Examining organisations to ensure alignment with gender issues – from the vision or mission, organisational structure, culture, internal policies and overall workplace environment to their use of data and metrics and how their human and financial resources signify an overall commitment to gender equality.
If anything, gender-lens investing may help with diversifying your portfolio as it may force you look at asset classes or industries you may not have otherwise considered. And it may be timely to tell you that:
Only 6.6% of Fortune 500 CEOs are women3.
Invest like a woman
Gender-lens investing aims to level the playing field, considering investments that get money directly into the hands of women, in businesses that advance women and in companies that make products and services that better the lives of women. Gender-lens investing aims to offer financial returns as well as change the world. Whoever said ‘money is power’ was really onto something.
More about Trillium Asset Management
Trillium offers clients equity and fixed income strategies across promoting social and environmental change while providing both impact and performance to its investors. Trillium has grown to become one of the largest socially responsible investment firms in the US.
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