Investing for gender equality

On the 9th of August, South Africa will celebrate its 23rd Women’s Day. The day was first observed in 1995 to commemorate the 1956 march of approximately 20?000 women to the Union Buildings in Pretoria in protest of the country’s pass laws that required black South Africans to carry passbooks. We have certainly come a long way since that march, and the recent Sustainable Development Report by the United Nations (covered in a previous newsletter) reveals that SDG (Sustainable Development Goal) 5: Gender Equality is the only SDG where South Africa is on track to achieve the goal, though challenges remain.??

Globally, the world is not on track to achieve gender equality by 2030. According to research by the United Nations, at the current rate, it will take 140 years for the world to achieve equal representation in workplace leadership. This trend is highlighted in South African private markets. The 27four ESG Survey, released in June this year, found that among the private equity firms surveyed, only three indicated that 50% or more of their board members are female. Additionally, three firms indicated they had neither 50% or more female representation nor 50% or more black representation in leadership positions across their boards, investment committees, or executive management teams.??

While it is certainly worthwhile and necessary to focus on gender equity, it is important to take an intersectional lens as gender diversity does not necessarily translate into other forms of diversity (PRI). An intersectional approach recognises that the effects of multiple forms of discrimination (such as racism, sexism, and classism) can combine, overlap or intersect.?

Beyond the moral imperative, there is a strong investment case for promoting diversity in the workplace. According to the PRI, “Strong DEI (Diversity, Equity, and Inclusion) within a company can positively affect decision-making, levels of employee engagement, reputation amongst stakeholders, innovation and access to untapped markets.”??

One approach investors can take to address gender inequality is to adopt a gender lens in their decision making processes. This means, integrating gender analysis into investment decisions and investing in companies that promote gender equality and women’s empowerment. According to Gender Smart (2021), firms owned by women and people of colour manage a mere 1.3% of the investment industry’s $69 tn in assets. Additionally, an estimated $47 tn in value is missed by not investing in more diverse founders with the IFC reporting that gender-diverse fund management teams deliver an incremental 10-20% in returns compared to non-gender diverse teams.?

If you are interested in learning more about investing with a gender lens, a useful resource is The 2X Challenge. The 2X Challenge is a global initiative at the forefront of gender lens investing aiming to mobilise unprecedented amounts of capital for private sector investments in markets that, “empower women as entrepreneurs, as business leaders, as employees, and as consumers of products and services that enhance their economic participation.”?

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Brooke L. : Brooke Leaf-Wright, sits within the ESG team at RisCura and each week she will bring you stories highlighting key issues and themes in the world of Responsible Investment that have caught her attention.

The content in this newsletter is not intended to serve as a recommendation or endorsement of any specific product or company.