Ringing the Bell for Gender Equality: Using Investments to Accelerate Change

Have you ever taken the tube in London? If you have, you probably heard the audio, or read the message on the floor, asking you to “mind the gap”. This phrase is used throughout the tube to warn passengers to be careful - to avoid the risk- to mind the gap.  Jo Andrews, a friend and co-founder of Equileap, the organisation we set up together in 2016 to accelerate gender equality in the workplace, takes the London tube every day. She recently told me how tired she is of “minding the gap”. I live in Amsterdam and don’t take the tube, but I am just as fed up as she is. We don’t mean the gap between the train and the platform; we mean the social and economic gender gap which is taking so long to close.

A report on FTSE 100 published last year underscored the blatant gender gap and imbalance when it comes to men and women in corporate leadership. The report mentioned that among the top 100 largest public companies in the UK, there were actually more male CEOs named David—eight—and CEOs named Steve or Stephen—seven—than there were women chief executives—six. And the women CEOs earned on average much less than the men (GDP 2.6 compared to 4.7 million).

Reports from the past months show that unequal pay is alive and kicking, and affecting not only wealthy corporate directors and Hollywood stars. Supermarket Tesco (and at least 3 other supermarkets) are presently being hit by billions in claims for paying women shop floor workers 8 pounds an hour while men in the warehouse are paid 11 pounds an hour. These women rightfully claim their work is of the same value, given that men in the warehouses take the goods off the trucks and into the shops, and women take the goods from the floor and onto the shelves, as well as talk to customers.

“Mind the Gap” was a hot topic over 25 years ago when I studied Political Science and minored in (what was then called) Women’s Studies. But, it is an even hotter topic today. The difference is that today’s discourse is no longer only happening in classrooms and at feminist gatherings, where the converted tend to preach to the choir. The gender equality discourse of today, for better or worse, has gone mainstream. I am quite happy with this development and remember smiling from ear to ear when I heard Prime Minister Trudeau call himself a “feminist” and explain to reporters that Canada’s first gender-balanced cabinet had 50% men and women for one simple reason: “because it is 2015”.

Last year talk of gender equality went from gentle stream to becoming a social media tsunami of #metoo and #timesup to raise awareness of sexual harassment in the workplace. The number of sexual harassment claims has spiked dramatically since then and Mark Thompson, HSBC’s chief investment officer, is quoted in the Financial News this week saying he wants his external fund managers to now scrutinise the sexual harassment policies of the companies they invest in.

The past 10 years has also seen a constantly growing pile of academic and research papers making the business case for gender equality in the economy. The latest one of these reports was published this week by the Business and Sustainable Development Commission, titled Better Leadership, Better World: Women Leading for the Global Goals. It claims to make “the business case for investing in gender balance”, and it is not alone. Many other reports from large, accredited and mainstream institutions like EY, Credit Suisse, McKinsey, MSCI, Harvard Business School and many more, conclude the same – gender balance in the workplace is key to unlocking significant business growth. McKinsey Global Institute claims that women’s equality in the economy could add as much as $28 trillion to global annual GDP by 2025.

At the beginning of this year, Larry Fink, founder and CEO of BlackRock sent a letter to all Russell 1000 companies with fewer than two women directors asking them to justify the lack of gender diversity on their boards and to report on their efforts to address this gender imbalance. In his letter to chief executives he wrote, “We also will continue to emphasize the importance of a diverse board. Boards with a diverse mix of genders, ethnicities, career experiences, and ways of thinking have, as a result, a more diverse and aware mindset. They are less likely to succumb to groupthink or miss new threats to a company’s business model. And they are better able to identify opportunities that promote long-term growth.”

I hope he sends the same letter next year- but then to 5000 companies adding that gender balance should be present at all levels of a company, not just boards, and that companies need to ensure equal pay, parental leave and anti-discrimination policies, not only for women, but for men as well. You see, it is not that women are better than men, or that women are the silver bullet to economic growth. There is no business case for women, just like there is no business case for men. And the gender gap affects both men and women. It means lower opportunities and salaries for women, but also old fashioned and unhealthy roles for men- reflected in how few fathers can spend time nurturing their children without sacrificing salary and careers and the higher stress- related illnesses and suicide for men.  

The business case is for fairer and more inclusive work environments for all employees. Only then can companies attract and keep the best people, and form the most competitive teams able to develop new ideas, balance risk and take advantage of opportunities. The business case is not for more women per se- it is for gender balance.

So yes, people in the mainstream, from CEOs, to movie stars and average folk are starting to mind the gender gap. But, how fast are things really changing? Not quickly enough, as shown by the constant threats from policy makers to enforce a 30% quota of women on non-executive boards due to the lack of commitment of companies to meet that goal voluntarily. Even Dutch Minister Van Engelshoven, in charge of emancipation, is so disappointed, this week she called the lack of corporate commitment to gender balance something to “cry about.”

Change has been happening for the past century, but it has been slow. The first observance of National Women’s Day was held almost 110 years ago, in 1909 in New York when a group of women got together to discuss the labour conditions of female garment workers. European women followed at a conference in Copenhagen in 1910 and came up with International Woman’s Day as a strategy to promote equal rights for women, including suffrage. In 1917, March 8 became a national holiday in the Soviet Union. Over the next decades it was predominantly celebrated in communist and socialist countries, until 1975 when the UN adopted March 8 as International Women’s Day. Today, few people know the history of March 8, and despite its socialist roots, it has become one of the top 3 most popular commercial holidays to send chocolate and flowers to women, together with Valentine’s and Mother’s Day. Now, don’t get me wrong, I like the attention gender equality is getting, I also like flowers and I really love chocolate, but I would rather have change.

 According to the World Economic Forum it will take another 217 years to fully close the economic gender gap. So in short- 100 years of women’s rights got us to where we are today. Most women in the world can vote, wear pants, inherit money, get divorced, open a bank account, study and keep a job after marriage. But, at this pace we will still need to wait another 200 plus years in order for women to stand on equal footing with men.

There is one strategy to close the gender gap that has yet to go mainstream, and which Equileap believes has powerful leverage to close the gender gap faster: investment capital. The power of investment capital is immense- and we need to use it for good. The really great news is that this tool has a double impact- both social and financial. Why not try it? When we founded Equileap we realised we could not invest with a gender equality-lens because we were missing two things- a way to measure gender equality and data.

Equileap has developed two essential tools to assist investors to match their money to their values:

1)   a unique methodology to score companies on gender equality, covering a broad-range of issues including gender balanced leadership and workforce, fair treatment, equal pay, sexual harassment policies and judgements, gender in the supply chain and paid parental leave for both genders.

2)   the largest database of gender equality in the workplace covering 3000 public companies researched with our scorecard

Equileap’s gender equality data, scores and rankings can be used to create investment products and engage directly with companies. We have also launched a family of indices (global, US and European) designed to track companies that are leading in gender equality. Our indices screen out unethical and harmful companies and include only those with the best gender equality scores. Over the last six years, the Equileap Global Gender Equality index has outperformed the MSCI World Index by 10.7%.

Since last November, our data and indices were used to launch 3 passive equity investment funds, one fixed-income fund (21 times oversubscribed), and a number of asset managers have started to licence our data.

Today, as more than 60 stock exchanges around the world celebrate “Ring the Bell for Gender Equality” for International Women’s Day, let’s start a call to action. Let’s put the power of financial capital behind this goal so that companies integrate gender equality into their core business and more investors can reap the benefits of the gender dividend.

Let’s stop just minding the gap, and let's close it - for good.

March 8, 2018

Diana van Maasdijk, CEO & Co-Founder of Equileap