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More than a zero sum game: Gender lens investing means we all do better.


16 March 2022 at 4:29 pm
Abhilash Mudaliar
Manita Ray and Abhilash Mudaliar offer an intro into the world of gender lens investing and highlight the importance of asking the right questions.


Abhilash Mudaliar | 16 March 2022 at 4:29 pm

Manita Ray


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More than a zero sum game: Gender lens investing means we all do better.
16 March 2022 at 4:29 pm

Manita Ray and Abhilash Mudaliar offer an intro into the world of gender lens investing and highlight the importance of asking the right questions.

You’ve probably heard the term “gender lens investing” (GLI) and, indeed, are coming across it more and more each day. But what is GLI exactly? 

Broadly speaking, it is an impact investment strategy that seeks to intentionally and measurably address gender inequities, achieve gender equitable outcomes and/or examine gender dynamics to better inform investment decisions. 

It can be about what one invests in, how one invests and who is doing the investing.

  • The “what” strategies can include: investing in women-owned or led enterprises (including those from marginalised groups); investing in enterprises that promote workplace equity (e.g. board representation); and/or investing in enterprises that offer products or services that improve the lives of women, girls and/or other marginalised groups.
  • The “how” strategies can include investing with a focus on achieving gender equity at every step of the investment process (from sourcing to exit); and/or investing with an approach that examines investee enterprises with respect to how their operations seek to address gender equity issues and reflect a commitment to gender equality.
  • The “who” strategies look within an investing organisation to create more diverse investment teams and committees, and also how to select, influence and work with consultants and managers to ensure equitable outcomes.    

It is also critical to acknowledge that GLI is intersectional: effective GLI strategies consider equity in terms of race, class, ethnicity, ability, LGBTQIA+ and other social factors in better informing investment decisions.

The volume of GLI activity is growing. In 2017 there were 58 private funds that considered gender as part of their investing focus. By the end of 2021, this number had grown to 206. As for publicly traded gender lens equity funds, their assets under management grew 51 per cent in 2021 to US$4 billion.

As with most things in the impact investing space, the drivers behind the growth in GLI activity are two-fold: both a desire to do the right thing and a desire to do the smart thing. The data is staggering.

  • Women account for two-thirds of total work hours globally, yet earn only one tenth of the world’s income.
  • The IFC has identified a $1.5 trillion SME financing gap for women entrepreneurs.
  • Women are expected to control 75 per cent of discretionary spending worldwide by 2028.
  • The pandemic has exacerbated gender inequality: not only have women been disproportionately hit by job losses across the board, but women in senior positions have also seen setbacks with companies reverting to more “traditional” hiring criteria.

Not surprisingly, there is a large volume of literature that shows that investments in the potential of women have disproportionally high social returns, because of the follow-on effects in areas such as healthcare and education.

Increasingly, evidence also shows that investing in women can drive better economic (or financial outcomes) – which is the key driver for most investors. In the crude language of Wall St: there is alpha on the table.

McKinsey has calculated that if women participate in the economy identically to men, as much as US$28 trillion, or 26 per cent, could be added to annual global GDP in 2025. And several studies – both practitioner and academic – have shown that more women in leadership and governance leads to longer-term value creation and lower volatility. Why? Because increasing the number of women not only disrupts groupthink but also brings new and different perspectives on important issues.

So, this is far more than a zero sum game.

We are starting to see a growth in GLI activity in the Australian market, both investors focused domestically and those raising capital locally but with a focus on Asia. These include asset owners (such as Verve Super, Aware Super and QBE), and asset managers (such as Melior, Beacon, SWEEF and other newcomers).

Ultimately, GLI strategies vary by investor type.

  • Leading asset owners tend to have strong gender equitable and inclusive internal systems and some also select companies based on gender-related factors (such as women in leadership).
  • Leading fund managers ensure their investment processes have a strong gender lens, typically a detailed framework of indicators through which they evaluate target companies.
  • Some investors also have a focus on advocacy and influence, recognising that to achieve true gender equitable outcomes, a variety of stakeholders need to be part of the solution.

What may be “best in practice” in GLI approach is however those investors who consider intersectional gender equity both within their organisation’s structures and systems, in their investment processes and in their ability to influence externally.

The growth in GLI activity locally comes at an opportune time, as Australia is slipping on various gender-related measures. Today we are ranked 50th out of 156 countries in the global gender gap index (down from 15th in 2006). Meanwhile, only 6 per cent of Australia’s 300 largest companies have a female CEO and, in 2021, out of 23 new CEO appointments only one was a woman.

The range of GLI offerings in the market is broad, so as a potential investor, it’s important to look deeper and ask the right questions:

  1. What is the fund’s precise impact strategy and theory of change?
  2. Which cohorts of women and girls (and other marginalised groups) does it seek to target, and how?
  3. What information will it provide about its portfolio and selection process?
  4. How will it measure and monitor impact performance, and will this be verified?
  5. What is the composition of the investment and leadership team across various diversity considerations? How does the fund consider equity in decision making at all levels?
  6. What is the fund’s strategy should investments fall short of gender equitable targets and outcomes?

Answers to these questions, and others, can not only help a potential investor dig beneath the surface of self-identified GLI funds, but help answer the guiding question of “how exactly does this fund align with my values and specific goals?”. Investing with intent, we all do better.


Abhilash Mudaliar  |  @ProBonoNews

Abhilash Mudaliar is chief portfolio officer at the Paul Ramsay Foundation. He has over 15 years of experience in impact investing, research, evaluation and social enterprise. Before joining the foundation, he was part of the leadership team at the Global Impact Investing Network.

Manita Ray  |  @ProBonoNews

Manita Ray is managing director and founder of Capital Human.

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