Investing in Women, Impacting the World

Above: Stella meeting with representatives from SunCulture, an organization connecting rural farmers with solar power.

 

In my 15-year career working as a woman in impact investing and its various facets geared towards investing in women, I have learned that communities and families benefit greatly when women thrive economically.

In December 2021, I had the privilege of visiting several organizations in Kenya supported through Praxis Mutual Funds’ commitment to community development investing. This was alongside a visit to my family in my birth country, after five years of being away. This article is a personal reflection on how impact and gender lens investing delivers real-world impacts – and how advisors can help their clients understand those impacts.

Impact investment moves capital to where it’s needed most. This often revolutionizes the lives of women and girls. During my visits, I saw what capital was achieving, on the ground among rural women, many of whom were poor, and on small farms using affordable products developed and customized to meet their needs. This solidified the importance of this work in my mind.

Gender lens investing (GLI) is critical in closing global gaps in access to capital and thereby increasing human capital wealth, education and helping countries achieve their full developmental potential. In a more diverse and equal society, everyone benefits.

Project in Kenya

Many rural women in Kenya face specific and unique challenges such as a lack of easy access to clean water and affordable clean energy. When there are appropriate interventions, these women are placed on the fast track to achieving economic milestones that can propel them and their families into the middle or the upper-middle class.

The organizations I visited were not founded with the primary purpose of helping women, but by evaluating the results of these investments through a gender lens, it becomes clear that the positive effects on the lives of women and girls are disproportionately greater.

SunCulture – This organization focuses on providing energy access through solar home and irrigation systems. About 65 percent of land in sub-Saharan Africa is tilled, plowed, weeded and watered manually. I met with two industrious women farmers whose lives had been transformed by access to energy.

With access to a water pump for their wells, they could irrigate their farms more efficiently and increase productivity. The energy then led to increased yields and higher incomes for their households, which in turn meant that these women could invest in their children’s educations – creating more opportunities for the future of their families.

BioLite – BioLite developed a clean energy cookstove and home lighting solar system with USB ports for charging devices like cell phones. They aim to bring electricity to the nearly 600 million people in sub-Saharan Africa who are not connected to the national electricity grid and the hundreds of millions more who live with unreliable connections and are plagued by frequent blackouts.

Investors need to appreciate the benefits these stoves offer women specifically. To meet the domestic needs of their families, many rural women often walk hours to fetch water or carry wood for cooking, which can be arduous and takes time away from a girl’s education or a woman’s economic opportunities. These regionally appropriate innovations not only connect the whole families with electricity, but the stoves allow women to cook more safely and redeem precious time to better themselves educationally, economically and socially.

What Does the Future Hold?

Impact investments with a gender lens are projected to increase over the next decade across all asset classes. In recent years, we’ve seen growing demand from investors to take gender into account when considering impact investing.

Additionally, the projected wealth transfer to women is predicted to increase from about $50 trillion in 2015 to $72 trillion, that is two-thirds of the worlds’ wealth, by 2030¹. Women investors are more likely to demand increased inclusivity, diversity, and values-aligned investing, which may lead to increased consideration of gender in impact investing.

Gender-lens investing is a field that will continue to grow, considering the increased attention and engagement with the 17 UN Sustainable Development Goals (SDGs)*. SDGs relevant to gender include SDG 5 (gender equity), SDG 10 (reduce inequality), SDG 8 (sustainable economic growth) and SDG 7 (sustainable energy).

The SDGs aim to end poverty, protect the planet and ensure prosperity for all. As more investors and investment companies call for alignment with these goals, gender equity and equality will become areas of greater interest for impact investors.

What Can Financial Advisors Do?

Advisors interested in impact investing that incorporates a gender lens should initiate the conversation. They can open the door to a discussion on a client’s gender lens investing goals by engaging with clients on how they can better align their portfolios or a portion of their portfolios with their values.

Secondly, advisors can familiarize themselves with gender lens investing topics and be ready to engage with the clients, especially women, as their percentage of global wealth continues to grow.

Another option for advisors is to encourage the use of donor advised funds that hold immense opportunities for increasing a client’s impact. DAFs are a powerful tool that allows investors interested in aligning their investment portfolios with their values to make charitable contributions while simultaneously getting tax benefits.

Advisors and/or their clients can take part in insight trips and observe how their funds contribute to improvement in the lives of women and girls. This is a great way for younger people to be inspired at the start of their investment journeys and for established investors to confirm the difference their investments are making in the world.

One of my hopes is that, as an industry, we might build greater collaborations around gender lens investing themes. For example, investment firms, both for-profit and non-profit, and other stakeholders such as government entities interested in gender lens investing can collaborate on sharing information, participating in deals, spurring innovation, building systems of educating clients and thereby accelerating greater amounts of capital flowing into this theme.

The cumulative effect of all these efforts will deliver real impact and will also help investors understand the range of possibilities available on the investing spectrum — from 100 percent philanthropic to 100 percent market-rate returns and everything in between.

How Praxis Approaches Community Development Investing 

By committing approximately 1 percent of its funds to Community Development Investing nationally and internationally, Praxis has further deepened its commitment to GLI. This investment is managed by Calvert Impact Capital, a nonprofit investment firm that makes loans to roughly 100 mission-driven organizations worldwide with high impact social and/or environmental focus such as micro-finance, affordable housing and cooperatives.

As of 2021, the CIC portfolio had impressive gender impact numbers. Women represented:

• 70% of the end clients of the borrowers.
• 53% of the borrower staff.
• 42% senior leadership in borrower organizations.
• 43% of the board of directors.

Impact investing through a gender lens is an accelerator to gender equity and equality not only in the United States but globally. If we want to effectively give people the tools they need for economic and educational advancements, focusing on raising the economic power of women is a key step in creating lasting change. That is why at Praxis Mutual Funds, we are committed to making real impacts when it comes to gender equity and why we are passionate about showing advisors the effects of gender lens investing.

 

Article by Stella Tai, Stewardship Investing Impact and Analysis Manager

Stella provides primary leadership for the promotion, integration and development of impact investing and reporting. Before joining Praxis, she was assistant vice president of Lending at FINANTA, a Community Development Financial Institution (CDFI) in Philadelphia. Stella has served on the board of Chariots for Hope, a nonprofit supporting a network of eight children’s homes in Kenya, her country of origin. Connect with Stella on LinkedIn.

Footnote:
[1] “Here’s who will benefit the most from the $59 trillion ‘Great Wealth Transfer’”: Bankrate, Sept. 25, 2018
*  In 2015, the UN announced the Sustainable Development Goals as a call to action for countries, governments, funders, and investors to unite to accomplish 17 global goals. These goals recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests. The UN has provided a framework of specific indicators to measure progress and a timeframe to achieve them by 2030, both of which reinforce the urgency and crucial nature of this work.