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How to invest with a gender lens?

Gender lens investing is a profitable and socially responsible wager that generates improved business performance and multiplies the well-being of a community. It is also a courageous and positive way to do business.
STEPHANIE OUEDA
AUGUST 14 2020

How to invest with a gender lens?

Not only does making investments while incorporating a gender approach contribute to the ongoing task of reducing gaps between men and women, it is also a way to do business in a productive and exemplary way. And there is abundant evidence of this.

To understand what “gender lens investing” means, consider the words of Suzanne Biegel, pioneer of this idea: “One [way to define it] is to think about how you integrate gender analysis and financial analysis to get to a better outcome in any investment. Another way is to think about how we use capital intentionally to achieve positive impacts on women and girls.”

In a practical sense, Biegel proposes thinking “about where women show up across the value chain of a business, in governance, in leadership, in supply chains and distribution channels all the way through to end customers.”

Instruments like the IndexAmericas‒a tool using data provided by Thomson Reuters and created by the IDB Group‒are helpful in this task. IndexAmericas uses more than 400 indicators to evaluate companies committed to this approach, and includes a sub-index recognizing the ten companies most committed to gender equality that are listed on stock exchanges and have operations in the region.

Another indicator, the Financial Services Gender-Equality Index, was launched in 2016 by Bloomberg and, in 2019, the participating companies in the region include Banco Bradesco, Coca-Cola FEMSA, Itaú Unibanco, Telefónica and Walmart Mexico and Central America.

Three pillars of investment

Investment with a gender approach entails a process of cultural change. To achieve it, let’s consider three concrete pillars:

  1. Investing in women-led businesses
  2. Investing in companies that practice gender equality
  3. Investing in companies that develop products or services that benefit women.

When discussing women-led businesses, the McKinsey study “Why Diversity Matters” indicates that “companies in the top quartile for gender diversity are 15% more likely to have financial returns above their respective national industry medians.”

In addition, it is demonstrated that companies that include and empower women perform better than those that do not. In an analysis of 345 Latin American companies, McKinsey found that those in which women are more represented obtain greater yields on investment and profit margins‒44% and 47% respectively.

Based on results of this type, investment with a gender approach is becoming an increasingly more widespread trend among socially committed companies that are assimilating the advances made in inclusion and competitiveness.

Practicing gender equality

If we talk about investing in companies that practice gender equity, we could review rankings like that prepared by Equileap, one of the most important organizations in the promotion of practices related to gender equality. In the most recent report published in February 2019, General Motors is the leading company in gender equity practices in the United States, among the 3,000 companies studied.

There’s a long way to go, as only four of these companies have a gender balanced board: General Motors, Starbucks, Wells Fargo and ConocoPhillips.

But there are other gender equity leaders like L’Oréal that give us an idea of what lies ahead. Some of the ideas put into practice include mentoring programs, women’s empowerment programs, gender equity certifications, daycare centers within companies, salary gap diagnosis, total support during maternity leave, etc.

Is this effort worth it? In the case of L’Oreal, the results speak for themselves: women make up 31% of senior management, 50% are employed in operations, 66% are leading global markets, 48% hold key positions in the group. This results in keeping and retaining talent, greater security in the production plants and, of course, increased innovation.

Investing by seeking women’s well-being

The third and final point‒investing in companies that develop products or services that benefit women‒involves social stakeholders, whether as investors or consumers. We can all contribute to gender equality in our purchasing decisions; we have more information than ever for learning, among many other things, who heads up a company whose product attracts us, whether its advertising is respectful of women or whether the company applies salary equity among its workers.

It as simple as asking yourself, when choosing one brand or another of coffee, for example, where the product comes from and how women have participated in the productive chain.

Beleza Natural is a rising Brazilian beauty salon in Rio that uses products for women who have curly hair. Nearly 70% of the women in Brazil have curly hair and, while conventional hair parlors lack treatments specializing in this type of hair, Beleza Natural is meeting an underserved need. In late 2013, GP Investments purchased a 33% share in this initiative for US$32 million. Beleza Natural has grown by 142% since the original investment, with projected income of US$680 million in 2020.

Many things are happening in the fight for equality between men and women. Women represent a growing force of consumers, investors, and entrepreneurs. This is the perfect moment to boost the virtual circle that generates investment with a gender approach as part of a sure path to a more egalitarian, diverse and just world.■

AUTHORS

Financial Institutions

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