RoI through Gender-Lens Investing: Tapping on the Market Potential by Advancing Gender Equality

February 8, 20178:44 am350 views

The potential economic and development gains from gender equality are vast and well-documented — and yet they are currently being bypassed. This joint report by BNY Mellon and the United Nations Foundation explores the market potential of advancing gender equality.

The report, Return on Equality: Investment Opportunities to Help Close the Global Gender Gap highlights a less-common type of gender-lens investing, stating that if given more focus it has the potential to earn investors “return on equality” by seizing profitable, under-tapped market opportunities and at the same time advance gender equality at scale.

Achieving gender equality is essential as a matter of justice and human rights, as it also unleashes a range of positive economic and development outcomes. While women and girls have made significant gains in the past decade in terms of education, health, economic participation, and political leadership, gender equality has yet to be attained in many critical areas, and at the cost of substantial and unrealized social and market benefits.

In fact, the McKinsey Global Institute estimates that narrowing the global gender gap could add US $12 trillion in annual gross domestic product. The report outlines four initial steps that this group can take in order to drive financial returns and advance gender equality.

The urgent need to close the gender gap was underscored in September 2015 with establishment of the 17 Sustainable Development Goals (SDGs), which were adopted by 193 Member States of the United Nations and defined an ambitious global and universal sustainable development agenda. SDG 5 is dedicated exclusively to achieving gender equality and empowering all women and girls.

Bridging the global gender gap will require leadership and investment by the public and private sectors. In particular, institutional and individual investors have both a significant market opportunity to realize and a unique role to play in accelerating the advancement of women and girls.

To date, private investment for financial return that simultaneously supports gender equality goals (commonly known as “gender-lens investing”) has typically taken the form of investing in women-led businesses and investing in companies that promote gender diversity in their workplaces.

Increased focus is needed on a third, less-common type of gender-lens investing: investing in companies that advance gender equality through their product and service offerings. The need for such offerings is clear, both in developing and developed markets.

See: Is there Gender Equality? Employees in Singapore, Hong Kong and Malaysia Prefer Male Bosses

Globally, 1.7 billion women still do not own a mobile phone and 1.1 billion women are unbanked — both major barriers to pursuing and benefiting from economic opportunities. Every day, women around the world spend 200 million hours collecting water to sustain their families due to inadequate infrastructure — hours they could otherwise invest in education, gainful work, or leisure.

Approximately 225 million women have an unmet need for modern contraception, preventing them from determining the number, spacing, and timing of births that best align with their aspirations for themselves and their families. Of course, these are not simply supply side issues.

Women’s access to and usage of products and services is shaped by prevailing social and gender norms, as well as constraints on women’s mobility and control over assets—obstacles that must be addressed to ensure women realize the full benefit of product and service offerings.

Many of these challenges are disproportionately faced by women in low- and middle-income countries, but women in high-income countries are also disadvantaged by product and service offerings that fail to reach them or meet their needs, often due to deeply rooted gender biases in product design, market segmentation, and marketing.

For instance, among women who have financial advisers, 67 percent stated in a recent survey that their financial adviser does not understand them or is not interested in their needs or goals.

In addition to the moral imperative of closing the gender gap, the potential market impact is likewise substantial, creating significant opportunities for investors. In fact, achieving parity across products and services in just five sectors—water, contraception, telecommunications, energy, and child care could unlock a market of more than US $300 billion in incremental annual spending by 2025.

Investors, asset managers, and companies can seize this opportunity to advance gender equality and drive financial returns initiating these steps:

Institutional Investors:  Incorporate products-and-services approach into existing gender-lens investing and Environmental, Social and Governance (ESG) investing strategies.

Individual Investors: Shift investments towards companies that offer products and services that support gender equality, focusing on companies that have committed to quantifiable goals or measures.

Asset Managers: Create new funds and financial instruments for institutional and individual investors focused on companies offering products and services that support gender equality.

Companies: Assess the gender equality impact of the company’s business strategy and current operations, such as the gender mix of the customer base. Assess whether and how the company’s products and services can evolve in new ways that promote gender equality, measure and report progress against targets to help communicate the company’s potential social impact to investors and consumers alike.

By investing in companies offering products and services that promote gender equality, investors can earn the “return on equality,” seizing profitable, under-tapped market opportunities.

Given how the use of products and services shape the health outcomes, livelihoods, and opportunities for billions of women on a daily basis, this investment approach has the potential to help advance gender equality at scale.

Also read: Paradox along the Road to C-Suite Gender Equality By 2030

Image credit: freedigitalphotos.net

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