By: Laura Walton AFC®
Gender Lens Investing? Should I admit that I didn’t know it was a thing? Interest in Socially Responsible Investing (SRI), which, for example, might exclude tobacco companies from your portfolio, has been growing along with investing based on environmental, social and governance factors (ESG investing).
Gender Lens Investing takes those ideas one step further. It requires making financial decisions with the objective of creating greater gender balance and, therefore, a better world for women and girls. It looks at workplace equity, access to capital and female-centric products and services.
Historically, Socially Responsible or ESG investing has meant limited options, higher expenses and lower returns. But increasingly surveys show a correlation between “doing the right thing” and profitability which translates into return on investment.
Some interesting findings:
- The non-profit Catalyst finds that Fortune 500 companies with 3+ women directors outperform those with no women directors (in at least 4 of 5 years) across several metrics including return on equity, return on invested capital, and return on sales.
- A study published in Harvard Business Review finds that there is no meaningful difference in performance between women-led and male-led start-ups when financing is provided by venture capital firms with female partners.
- Morgan Stanley Research reports higher return on equity, lower return on equity volatility and lower accruals for companies with high gender diversity relative to sector peers.
I was introduced to Gender Lens Investing at a presentation by Eve Ellis, CFP®, sponsored by the Women’s Foundation of Southern Arizona. Who knows, there just might be something to “girl power”.