Using Investing to Close the Gender Gap

Letter from GIIN CEO and Co-Founder Amit Bouri

Investors can seek positive outcomes in just about any sector, from energy and financial services to education and housing. Some goals expand out from the sector level and become a lens across investments, and one we’ve focused on for many years at the Global Impact Investing Network is gender lens investing.?

Gender is one of the biggest areas impact investors focus on, with 71% targeting UN Sustainable Development Goal (SDG) 5: Gender equality, according to 2023 GIIN research. These investors aim to address the pervasive “gender gap” seen in areas like social opportunity, employment and economic attainment around the world. These investments can take several forms, from improving gender diversity in leadership and employment, to investing in products and services that benefit women and girls.?

Women’s representation in business leadership remains low; in 2023 only 10.4% of Fortune 500 companies, which are based in the U.S., had a woman CEO, with a quarter of them becoming CEO in the prior year. Women are underrepresented in leadership roles more broadly around the world, according to the World Economic Forum. When it comes to asset management, a shocking 1.4% of the total U.S.-based assets under management in 2021 were managed by firms owned by women or people of color combined.?

Investment managers can address these gaps by investing in companies with diverse gender representation in their leadership, and asset owners can consider diversifying the managers they work with. Pension funds in particular can play a role in improving gender financing gaps, ImpactAlpha recently reported. And while improving gender diversity in leadership can shift decision making and improve equity, impact investors can consider women at all levels of employment as well.?

Gaps persist in both wage equity and availability of quality jobs for women. Out of every five jobs created for women, four are in the informal economy, a higher proportion than is seen in jobs created for men. By investing in quality jobs and applying a gender lens, impact investors can make strides in addressing this gap.?

Finally, impact investors can focus on products and services that benefit women and girls. This often takes the form of improving access to financial tools that economically empower women. This can mean building their own businesses, where gender-diverse leadership and employment will exist from the outset, or gaining increased economic independence through access to financial products and services.?

While we should invest in women and gender equity more broadly because it’s the right thing to do, many impact investors also know that doing so improves outcomes for societies and economies around the world. Closing gender gaps can improve GDP per capita by 20% and businesses with women in leadership outperform companies without women executives.?

Clearly there’s work to do on closing gender gaps, and in improving gender representation more broadly. Including and beyond gender identity, additional considerations around LGBTQIA+ equality aren’t explicitly referenced in the UN SDGs but represent another opportunity for investors to foster a more equitable society.?

The GIIN is proud to support members and the impact investing industry more broadly in executing rigorous and impactful gender lens investing. Learn more on our website, and stay tuned for GIIN research coming out later this year on impact investments for gender equity.?

- Amit Bouri

News we’re watching:

• The European Securities and Markets Authority, which regulates European Union financial markets, recently published guidelines for funds using terms like “environmental”, “impact” and “sustainability.” These guidelines are intended to prevent funds from using names that exaggerate their purpose, and thus curb greenwashing.?
• A recent analysis of net zero commitments from banks found no evidence of reduced financing of emissions through engagement or any changes in other lending practices related to net zero commitments. Some point out that these shifts will take time, while others emphasize the urgency of more immediate action in the face of the climate crisis.?
• Marine biologist Ayana Elizabeth Johnson recently shared how she thinks about? the climate crisis and what the future could look like — if we get it right: “The climate crisis is going to give us a lot of tests for how we can collaborate across various social divisions. People are excited about the new battery-manufacturing plants in deeply red parts of this country because they’re good jobs. Texas and Iowa have the most wind energy of any place in the U.S. because it’s profitable. The economics of the transition to renewable energy and implementing climate solutions make a lot of sense. So we may have to skip over some of these divisions and let self-interest, in various ways, guide us toward where we need to go, even if we don’t all agree on the contours of the problem.”

The latest from the GIIN:

• Amit Bouri recently joined Frank Altman on Forbes’ A New Capitalism podcast to discuss how impact investing can be a powerful force to tackle major issues like climate change, inequality, affordable housing and more. Listen to part one of their conversation here.?
• The West Coast Impact Forum and Transforming Your Portfolio impact seminar are just a few days away in San Francisco. Join us to connect with leaders in impact investing as we cover topics like climate, endowments, venture capital, data measurement and management, AI and more. Register today to join us June 3 or 4.?
• IRIS+ recently celebrated its fifth anniversary. In those five years it has helped investors access our 730+ impact metrics across 17 impact themes and impacted the work of over 20,000 organizations. Interested in using IRIS+ or getting a refresher on what’s available? Check out our newly released video overview by signing in or creating an IRIS+ account today.?
• The Operating Principles for Impact Management also celebrated a fifth anniversary in May. Signatories and guests gathered in London to celebrate and discuss the future of the impact principles.?
• GIIN Benchmarks are available in IRIS+, allowing investors to analyze the impact performance of their investments and compare results to peers, the SDGs and science-based targets. To be included in our next round of analysis in the agriculture, energy and financial inclusion benchmarks and receive tailored analytics please submit data through IRIS+ by July 3.?
• The annual GIIN Impact Forum will take place October 23 - 24 in Amsterdam. This event is an opportunity to connect with impact investors around the world and build the future of our industry. Learn more and register today.