Gender lens investing

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Gender lens investing (also known as gender-smart investing or gender finance) is the practice of investing premised on the understanding that gender is material to financial, business, and social outcomes [1] The term was coined around 2009 [2] and became an increasingly popular practice in the mid-2010s. [3] [4] [5]

Contents

Gender lens investing can include funding women-owned businesses, businesses with a strong track record of employing women, or companies that improve the lives of women and girls with their products and services. Sarah Kaplan and Jackie VanderBurg of U.S. Trust wrote of the practice that "Women launching and expanding ventures around the world have an estimated collective credit gap of $320 billion (the difference between the capital they are seeking and the credit to which they have access), which creates a major opportunity for investors." [6]

History

The practice of using investment to advance gender equality dates back to the 1970s, with the creation of initiatives such as Women’s World Banking and Muhammad Yunus’s Grameen Bank, which granted small loans to mostly- women business owners in the Global South to facilitate their economic empowerment. [7] [8]

But gender lens investing only emerged as a defined field in the 2000s and 2010s, when a group of investors and field builders - including Joy Anderson of the think tank Criterion Institute, Suzanne Biegel of Women Effect and later GenderSmart [9] , and Jackie VanderBrug [9] , co-author of the book Gender Lens Investing: Uncovering Opportunities for Growth, Returns, and Impact - began to work together to grow the portion of capital invested in women founders, and moved by women investors. In March 2018, several development finance institutions (DFIs) hosted by CDC Group (now British International Investment) came together as the Gender Finance Collaborative, created to leverage the combined capital, capacity, networks, and knowledge to advance gender lens investing. This expanded the gender lens approach beyond its initial North American base, to include actors in Europe, Africa, and Asia. In July 2021, the Gender Finance Collaborative merged with the 2X Challenge to become the 2X Collaborative. [10]

Early examples of gender lens investing in mainstream finance include the Valeurs Feminines fund in France, created by the French money-management firm Conseil Plus Gestion in 2005 to invest in women-owned and women-led European businesses [7]

Financial Returns

Supporters of gender lens investing argue that firms with a higher-than-average proportion of women in executive roles tend to perform well, possibly because of an increased diversity of viewpoints or because not discriminating against women allows companies to hire the best available talent. [8] [11] Business Insider wrote of gender lens investing in 2015 that "It is a proven theory as most of the women-focused funds and investment strategies - a tiny slice of the $6.6 trillion-socially responsible investing world - have been standout performers over the years." [12] Early examples of gender lens investing in mainstream finance include the Valeurs Feminines fund in France, created by the French money-management firm Conseil Plus Gestion in 2005 to invest in women-owned and women-led European businesses [13]

Critics of gender-lens investing argue that it asks investors to give up some of the returns they could expect from a gender-neutral investment strategy. [14]

A Review commissioned by the UK Treasury found that supporting female entrepreneurs could generate as much as $250bn for the UK economy. [15] Businesses run by women were less likely, the report found, to deliver a turnover of more than £1bn. Supporting entrepreneurs would help to close this gap.

Joann Weiner of the Washington Post wrote more skeptically of the strategy's ability to deliver above average returns: "Like all the rest, the 'gender lens' strategy will have its good times, and it will have its hard times. follow a 'gender lens' investment strategy if it makes you feel good. Just don’t count on making a killing in the market if you do." [11]

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References

  1. ↑ "Gender Lens Investing Initiative | The GIIN". thegiin.org. Retrieved 2019-01-10.
  2. ↑ Moodie, Alison (17 November 2015). "Investments aren't gender-neutral when female entrepreneurs face a $320bn credit gap". The Guardian. Retrieved May 17, 2016.
  3. ↑ Sullivan, Paul (August 14, 2015). "With an Eye to Impact, Investing Through a 'Gender Lens'". The New York Times. Retrieved May 17, 2016.
  4. ↑ "Voices: Patricia Farrar-Rivas, on Gender-Lens Investing". The Wall Street Journal. May 14, 2015. Retrieved May 17, 2016.
  5. ↑ Kane, Libby (August 14, 2014). "Here's How to Give Back and Make Money". Business Insider. Retrieved May 17, 2016.
  6. ↑ Kaplan, Sarah (Fall 2014). "The Rise of Gender Capitalism". Stanford Social Innovation Review. Retrieved May 17, 2016.
  7. 1 2 "Invest for Equality: Gender Lens Impact Investing - Women's World Banking". www.womensworldbanking.org. 2018-01-22. Retrieved 2024-02-09.
  8. 1 2 "Women-focused funds make money, create controversy". The Chicago Tribune. September 11, 2015. Retrieved May 17, 2016.
  9. 1 2 Davis, Emily (2023-09-05). "ESG Pioneer Suzanne Biegel Wants Impact Investors to 'Get Off the Sidelines'". Environmental, Social and Governance (ESG) Initiative. Retrieved 2024-02-09.
  10. ↑ "Project detail - 2X COLLABORATIVE LIMITED - FMO". www.fmo.nl. Retrieved 2024-02-09.
  11. 1 2 Weiner, Joann (May 7, 2014). "Can investors get rich by looking at their investments through a 'gender lens?'". The Washington Post. Retrieved May 17, 2016.
  12. ↑ "Money making women-focused funds raises eyebrows". Business Insider. September 12, 2015. Retrieved May 17, 2016.
  13. ↑ Ford, Alanna (March 20, 2014). "Celebrate Women's History Month by mobilising your resources". The Guardian. Retrieved May 17, 2016.
  14. ↑ Sullivan, Paul (2015-08-14). "With an Eye to Impact, Investing Through a 'Gender Lens'". The New York Times. ISSN   0362-4331 . Retrieved 2024-02-09.
  15. ↑ Gibbs, Alexandra (2019-03-08). "Supporting female entrepreneurs could add $326 billion to the UK economy, review finds". CNBC. Retrieved 2020-01-06.
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