Gender has a material effect on social, economic, and political experience. In nearly every aspect of life, there is a discernible difference between the opportunities available to men, women, and non-binary or non-conforming individuals; this in turn results in gaps in attainment along various dimensions including education, health, and livelihoods. These gaps pose persistent challenges to policymakers who strive to minimize the differences in policy impact across various segments of their target populations.
This post discusses the ‘gender lens’ in social investment, its investment thesis, application, and impact. Operating within the gender binary, this investment strategy is not geared to advancing persons situated elsewhere on the gender spectrum; so, the ‘queer lens’ is a necessary complement to gender lens investing and will be discussed as part of a later post in this series.
Applying the gender lens to social investment
A gender lens may be applied to social investment through two types of investment strategies: those that seek to solve gendered problems or promote gender equality, and those that examine the gender dynamics applicable to a particular investment. Global Impact Investment Network offers several examples of these strategies.
In the first strategy, investors focus on women-owned or women-led enterprises, those that promote workplace equity for women, or offer products and services that substantially improve the lives of women and girls. Here, gender serves as a screening mechanism applied in identifying prospective investments.
The second strategy adopts investment processes informed by gender consideration or examines enterprises’ commitment to promoting gender equality prior to investing in them. This helps investors to detect assumptions embedded into the process and the hidden biases that influence the processes they follow, thus presenting them with an opportunity to address and overcome them.
These strategies, if appropriately implemented, can help increase women’s access to capital, improve their living conditions, and create more equitable workplaces for them. Early in the life course, these strategies can also impact the socio-economic prospects of girls and young women by influencing the four dimensions of women’s lives that are most in need of intervention worldwide: education, health, personal safety, and economic empowerment.
What enterprises and projects are targeted by gender lens investors is determined by the Impact objectives of each. Investors with focused impact investment objectives set out measurable outcomes and impacts that must flow from their investments, and carve-out a portion of their funds for this purpose. Those looking to make a holistic impact on the advancement of women and girls often opt to do so using an integrated approach to impact investment: here, gender is factored alongside other environmental, social and governance (ESG) considerations. Neutral impact objectives are met by ensuring that investments do not conflict with the gender equity priorities of investors: a requirement that can be met by a screening of investment prospects against stated criteria, to exclude industries that contribute to gender disparities, before making investment decisions.
Investment thesis
The case in favour of adopting these strategies is twofold: first, women and girls are an underserved segment of society and it is in the public’s interest to close these gender gaps; and second, even modest improvements in gender equality can have significant economic benefits, and gender-equal companies can yield considerably greater financial returns relative to their less gender-equal peers.
The transformative social and economic effects of gender equality make the gender lens a compelling proposition within the social investment space and can be applied to sectors as diverse as finance, healthcare, agriculture, education, and housing. Further, investment opportunities have been identified in areas of telecommunications, contraception, child care, water and energy. Actors in these sectors may reach women through their value chains—through the products and services they offer, skills development efforts, or even indirectly as a result of third-party effects.
Drivers
Current interest in gender-lens investing is attributable to several factors: the growing recognition and acknowledgement of gender inequality, a growing body of evidence that women’s empowerment creates economic value, and an improved policy environment. These factors also helped raise the profile of gender-lens social investment—80% of funds adopting a gender lens approach today are less than five years old. Similarly, investor profiles have also changed: from a landscape predominantly occupied by women, the gender-lens impact investing space has expanded to include institutional investors including private sector banks, impact investment firms, and multilateral financial institutions like International Financial Corporation (IFC). Increasingly, smaller impact funds are also joining the fold.
Outlook
In late 2019, gender lens investing had a promising outlook: investments in the space had doubled between 2016 and 2018, and continued to grow in 2019.Gender lens investments, especially in developing countries, were trending upwards as of end-2019.
However, initial estimates of the socio-economic impact of the COVID-19 pandemic indicate that women have sustained disproportionately greater losses since the crisis unfolded compared to men, and gender inequalities are likely to worsen in the aftermath of the economic crisis. These factors may moderate the impact of investments made for the advancement of women, at a time when the global economic fallout from the pandemic is expected to result in an overall reduction in the quantum of investments globally in the near future.
However, the disproportionate impact of the present crisis on women serves to draw greater attention to the vulnerabilities of women and their livelihoods relative to those of men, strengthening the investment thesis at the heart of gender lens investing.
The case in favour of investing in girls and women is more compelling today than ever before. However, it remains to be seen whether the deep disparities uncovered by a global pandemic will spur a shift towards gender mainstreaming.
This article is part of SIG’s series on gender lens investing.
