Gender Lens Investing: Strong Returns for Investors and Society
Once viewed in terms of number of women in leadership roles, focus now looking at pay equity, anti-harassment policies, benefits, supply chain, access to mentorship, and other issues.
When what is now known as “gender lens investing” started a decade ago, the focus was largely on the number of women in management/CEO roles, but a more nuanced and far-reaching approach is now emerging and it is likely to find increasingly wide acceptance among investors, according to the recent report published in October 2020 by the wealth management firm Glenmede alongside an advisory board of gender lens investing experts.
Titled Gender Lens Investing in Public Markets: It’s More Than Women at the Top, the new paper identifies five gender equity areas of concern to investors: women in leadership; access to benefits; diverse supply chains; pay equity; and talent & culture (including access to mentorship and how a company advances — or fails to advance — women to management). Each of the areas are shown in the paper to either quantifiably or potentially lead to stronger overall financial results for investors in publicly traded companies.
The paper concludes: “As the field of gender lens investing matures in terms of asset size and sophistication, investors may look beyond the women in leadership metric to accelerate progress towards corporate gender equity… the existing data seem to indicate that inclusive corporations demonstrate good financial performance and clearer impact metrics for investors seeking to confront remaining gender inequities in the workplace. In the face of an ongoing pandemic and vulnerable economy — both of which are affecting women disproportionately — considering how to embed a gender mandate into our strategies is more relevant than ever.”
Natasha Lamb, managing partner, Arjuna Capital and advisor to the paper, said: “Not only is fair treatment of women and minorities in the workplace the right thing to do… it also is the smart thing to do. Women who are paid fairly and advanced equally, who have access to benefits, mentorship, and real protections against harassment, not only stay with companies, but they also make those companies stronger, smarter, and more resilient. The data are clear: Investors who focus on gender equity profit by investing in a better world and a stronger bottom line.”
Laura LaRosa, executive director of client development, Glenmede, said: “Metrics like pay equity, parental leave, family health care benefits, and anti-harassment policies are critically important to how we evaluate corporate gender scorecards and attribute positive, sustainable change.”
Suzanne Biegel, cofounder of the GenderSmart Investing Summit, catalyst at large, and an adviser to the new paper, shared that the demand from investors, globally, for investment products that take the analysis and engagement to the next level is tremendous. She said: “Investing in women is smart not only because of what it does for gender equity but for what it means for society to have access to the products and services that are better informed by diverse voices and that solve the problems we face today; to the talent that is represented from diverse sources; and to the value chains that are more resilient because of diversity.”
Julia Enyart, officer on the Sustainable & Impact Investing team at Glenmede, was originally motivated to initiate this research after hearing concern from endowments, foundations, and individuals that existing gender lens strategies focused only on the experience of women at the highest level of a company. She said: “These investors sought strategies that would peer deeper into a public company’s access to benefits, pay equity reports, and culture, corporate features that contribute to creating a more inclusive and equitable environment for women- and men- at all levels.”
“It is time to advance the gender discussion beyond the very real need to grow the number of women in senior roles in public markets to reflect a holistic approach that can lift up the lives of all women at all levels,” said Patience Marime-Ball, founder & CEO of Women of the World Endowment. “As the Glenmede study makes clear, creating an enabling environment for diversity to be reflected and thrive across all teams leads to more positive outcomes, and ultimately greater profitability. Furthermore, investors seeking to optimize their investments for both financial returns and positive impact on some of our most critical social and environmental issues, whether it is COVID-19 or climate, must therefore incorporate investment strategies at the intersection of gender and these other issues or risk missing out on some of today’s most exciting opportunities.”
Among the Key Findings Cited in the Report:
- The fast-growing gender lens investing market reached $3.4 billion in 2019.
- Glenmede’s analysis of Equileap’s gender equity data indicated that companies in the top quintile of gender equity—including pay equity, access to benefits, training and career development, anti-harassment policies, and diverse supply chains—experienced greater returns of 2.3 percent and 0.8 percent less risk than the bottom quartile firms from December 2014 through June 2020.
- Women are increasing their wealth faster than ever before, adding $5 trillion to the wealth market globally and outpacing the wealth market overall between 2016-2019.
- As of 2019, women constitute 46 percent of the incoming class of S&P 500 boards of directors (whereas minorities represent 23 percent), reflecting gradual changes to board demographics. US large cap companies with at least four women on their boards outperformed those with fewer than four by a difference of 10 basis points. In Credit Suisse’s gender diversity report scanning 3,000 companies across 56 countries, researchers found that companies with more women on management teams outperformed their less equitable peers by over 4 percent a year.
- Vodafone instituted global minimum maternity pay (16 weeks) after an analysis from KPMG showed a worldwide cost savings of $19 billion dollars per year. Likewise, Google increased paid maternity leave from 12 weeks to 18 weeks, cutting by 50 percent the rate at which new mothers left the company.
- As of 2019, women earned $0.82 for $1.00 earned by men, indicating an annual compensation gap of $10,122. Compounded over the course of a career, women’s pay gaps can amount to nearly half a million dollars. A gap in equal pay takes a toll on women’s health. For women, the gap in life expectancy between those in the top 1 percent of wage-earners and those in the bottom 1 percent is approximately ten years.
- The US lags much of the world. For example, looking at gender pay equity reports, only 5 percent of all Russell 1000 companies publicly disclose this information. In Equileap’s 2019 assessment of over 3,500 companies, 78 percent of UK-based companies disclosed report gender pay information compared to only 2 percent of US-based companies.
- While women and men enter the workforce in roughly equal numbers, men outnumber women nearly 2:1 when they reach the first step into management.
- One study found that 34 percent of female employees have been sexually harassed by a colleague with destructive follow-on effects: 38 percent of harassed women left a job early and 37 percent found that it disrupted their career advancement.
About Arjuna Capital
Arjuna Capital is a sustainable and impact investment firm that works with high-net-worth individuals, families, and institutions to invest with a lens toward Environmental, Social, and Governance (ESG) risk and opportunity. Lamb and Arjuna Capital have been recognized for using shareholder resolutions to promote gender and racial pay equity in the tech, banking, and retail sectors. Natasha Lamb was named to the “Bloomberg 50” list of influencers who defined global business in 2017.
An independent and privately held investment and wealth management firm, Glenmede was founded in 1956 to serve in perpetuity as the investment manager and trustee of the Pew family’s charitable interests—The Pew Trusts. Today the trust company provides highly customized investment, fiduciary and advisory services to high-net-worth individuals and families, endowments, foundations, and institutional entities, representing more than $40 billion of assets under management.