Gender lens investing can drive profit
31 March 2022 at 8:19 am
A new gender equity roadmap for Australian investors says top-down ownership of the issue won’t just drive real change, it will increase profit.
Business performance and investments are at risk if you’re not adopting a gender lens, argues a new report targeting Australian investors.
A Roadmap for Australian Investors – How to invest to achieve gender equity, racial equity, diversity and inclusion, was collaboratively prepared by Capital Human and Impact Investing Australia, and launched at the 2022 Impact Investment Summit Asia Pacific this week.
As well as offering a business case for gender lens investing, the roadmap also sheds light on how investors can integrate this into their investment frameworks and decision-making processes.
According to the World Economic Forum’s Global Gender Gap Report (2021), Australia ranks 50th out of 153 countries in closing the gender gap, and 70th in a sub-category reflecting economic participation and opportunity. By 2028, 75 per cent of the world’s discretionary income will be controlled by women.
By definition, gender lens investing is an idea whose time has come.
Citing McKinsey Global Institute data, Capital Human founder and CEO Manita Ray said adopting a strong diversity lens when investing could lead to stronger profits.
“Companies in the top quartile of gender diversity are likely to perform 21 per cent higher on market profitability, and 27 per cent more on value creation,” she told Pro Bono News.
“These stats are widely used when looking at intersectionality and racial equity. But when it comes to considering ethnic and cultural diversity, companies are 33 per cent more likely to outperform on profitability.”
Capital Human works specifically with investors, funders and organisations to integrate gender equity, racial equity, diversity and social inclusion practices.
While the report’s roadmap gives investors a strategic pathway to race and class equity, its backbone is a stronger gender lens within investor classes, predicated on the idea that stronger gender equity will lead to greater awareness of racial equity, ability, class and more.
As one of the roadmap’s authors, Ray says while she increasingly saw international investors leveraging gender lens investing, Australia was being left behind, as it lacked the local expertise to affect real change. It was left largely reliant on knowledge imported from North America, Europe and more recently Asia.
“I asked myself, ‘why aren’t we seeing the rate of uptake amongst Australian investors’? In the last several years, we were speaking to a lot of investors, and we found that in Australia the concept of gender lens investing was still nascent. And when it came to racial equity investing, it was even less,” Ray said.
The aim of the roadmap is to guide investment professionals within the commercial world to build better strategies and create inclusive cultures. But Ray is at pains to point out that it’s adaptable to other professional and social settings.
“The internal strategies and actions we’ve created can be applied across every sector, every industry. Context is really important. One size doesn’t fit all: but these are human issues,” she said.
“We were informed by multiple perspectives: the investment sector, gender specialists, all of us who have different experiences, different regions and different investor types. And we wanted to do that, because something like this has not only a wide-ranging impact and outcome, we also have to recognise that investors don’t work in a silo.”
Firm in her view that a plan is nothing if not executed effectively, Ray emphasises that gender lens investing – or any equity model – must be lead from the front.
“We ask for commitment from the top. It’s really important that the CEO, the board and leadership take complete ownership of these issues, and lead on these issues. If you walk the walk and talk the talk, it creates an environment that is safe for others to do so,” she said.
According to Ray, simple actions can have powerful results.
“This comes to things as simple as taking leave. You can say you provide paternity leave, [but] if the CEO is a man, and he doesn’t take leave when his family has children – then no one’s going to do it,” she said.
Another reason a widely available tool is necessary lies in the historical lack of acknowledgement of equality issues in Australian workplace culture – and while Australia is hardly alone in dragging its feet, the reality is that business leaders, historically, have not placed these issues at the forefront.
“You can become a CEO here without ever being able to articulate what gender inequity is, and what racial inequity is. It’s not taught to us in master’s degrees or undergrads,” Ray said.
“We need leadership to firstly develop an understanding of it, then create that space and say ‘it is okay to have these conversations’.”