Gender-smart investing is not only the right thing to do. It is also smart for business.
Research shows that investment teams that have gender balance at senior decision-making level produce higher performing portfolios and that gender-smart businesses are better performers commercially.
Despite this strong case, many investors are not intentionally investing with a gender lens and are therefore missing out on significant impact and commercial opportunities.
To truly move the needle on gender-smart investing, we need to engage both men and women to close gender gaps. Yet many initiatives within investment circles solely focus on what women can do differently – for example; how female fund managers network or how women lead a business. This can alienate men or create the perception that addressing systemic inequality is a woman’s issue and responsibility.
Research shows that engaging men in this space can be encouraged through establishing gender equality as a business issue with a clear commercial as well as impact case; setting an agenda for change through top-down leadership; creating space for dialogue; and making gender equality a personal and measurable priority both internally and across the portfolio.
As the field of gender-smart investing grows it is important that men are part of this journey and that those within the field recognise this. This is why, ahead of the 2021 Gender-Smart Investing Summit, sessions were held on Engaging Men in Gender Finance.
To add to the conversation, we asked two of our male colleagues who are championing CDC’s gender-smart investing efforts – Stephen Priestley, MD and Head of Financial Services and Elias Habbar-Baylac, Gender Equality Associate – to share their experiences.
Why should gender-smart investing matter to investors?
SP: It’s simple: empirically it has been shown that gender-smart investing improves financial returns. Whether at fund manager level or portfolio level, greater gender diversity delivers better outcomes. Stronger and diverse human capital in a company makes it more competitive, more able to adapt, more innovative and ultimately more profitable. That’s why it should matter to investors, and it increasingly does.
EHB: There is plenty of innovation coming from women-owned ventures that continue to be under-funded. There is demand for capital across the board, all the way from early-stage businesses to larger established women-owned firms. Firm-level data also shows how gender balance at every stage of a business’s product or service delivery, benefits productivity and performance.
As a male investment professional, what was your motivation for championing gender-smart investing?
SP: It struck me as a sensible approach to investing. I wanted to contribute to and promote a strategy that so clearly benefits investors as well as the livelihoods of such a large proportion of the population. It is absolutely right that we should be investing in a way which includes women at every stage and every level.
EHB: Being raised by a single mother and exploring equity and inclusion from different perspectives have been key drivers for me. My main motivation for building and championing the gender-smart investing agenda has been to inspire other men, operationalise gender strategies at an investment level, and develop an inclusive approach which builds on women’s empowerment to tackle other forms of economic exclusion – for example for LGBTQ people, or people with disabilities.
3. What are your recommendations for engaging more men in this space?
SP: We need to keep repeating the message that gender-smart investing is just common sense, and everyone should embrace it (not just women) if they believe in driving better outcomes, both social and financial. Men have a lot to contribute in this process – they need to alter mindsets, including their own, and be agents for change.
EHB: My top three recommendations would be:
- Moving closer to investments. There is a gender imbalance in the gender-smart investing community. More men are represented in investment teams and women are concentrated in impact teams. By bringing gender-smart investing specialists closer to investments, we can build career opportunities that attract men who are traditionally over-represented in finance functions.
- Championship! Building networks of internal champions can be a great way to engage men. For example, EBRD has a Gender Champions Network and Google recently launched its Product Inclusion Network. On a bigger scale, the UN’s HeForShe mobilised two million men as champions across the world.
- Recognising the complexity of gendered experiences. I once had a conversation with a client in the Balkans who told me how he felt that men were victims of gender-based harassment in his sector, and had been pressured to deliver and sustain the economy since the fall of the Berlin Wall. More should be done to research masculinities and help investors think about ways to establish an agenda inclusive of all gender identities and experiences. This is where a diversity lens can be powerful.
4. What’s next for gender-smart investing at CDC? What is the dream?
SP: To make gender-smart investing something that happens as a matter of course and is central to mainstream investing practises. It should be done automatically by all, and particularly by those delivering top financial results who are recognised as best in class investors.
EHB: Members of initiatives like the 2X Challenge have made tremendous progress in developing and sharing guidance, aligning impact metrics and identifying solutions to maximise impact. The next step is to develop gender finance products that better equip investors to address bias, reach women entrepreneurs and tackle systemic barriers to opportunity. There is also growing demand to consider what broader diversity finance could look like: from establishing the business case, to developing the tools to tackle intersecting inequalities including for racial and ethnic minorities as well as other underserved groups (e.g. people with disabilities, LGBTQ).
Written by Marijn Wiersma and Sanjana Sunnak