Gender Lens Investing is the Future of Sustainable Finance. So How Can You Lead the Change?
Want to know how your investments can really advance gender equality? Here’s how to do it
If you’re here reading this, you’re likely interested in the broader mission of accelerating gender equality in the world. And whilst there are already many progressive initiatives tackling gender inequality head on, one that you might not have heard of, and therefore considered for your own investment decisions, is gender lens investing. Growing within the financial landscape, gender lens investing allows us to be active agents and change makers by investing in those that play an active role in making this vision a reality.
So how can you be at the forefront of gender lens investing to make sure that the way you invest contributes to gender equality? I’ve been doing months of research into this up-and-coming area – let me explain what I’ve learned so you can be a force for change.
What is gender lens investing?
Gender lens investing has recently emerged as a powerful tool to channel more capital to women-led and owned businesses and promote products and services that benefit women’s lives.
Particularly exciting is how gender lens investing has evolved to include the whole investment process, from sourcing to monitoring. This means that investors can put pressure on companies to create safe and empowering work environments for women, such as establishing policies on sexual harassment. We therefore have the power to make a difference through our investments.
Holding businesses to account on gender inequality
Through gender lens investing, businesses are being encouraged to set standards around issues surrounding gender inequality. This means a ‘gender analysis’ can be applied to the entire structure of a company, including its strategies and policies – such as the strategy of a portfolio, how investments are monitored, and what incentives there are to investment funds raising and directing gender lens capital. It can also include how women are engaged at every step of the process, from recruiting the executive management team, to how women working in supply chains are treated.
As you’re starting to see, women are at the heart of this new approach to investing. With our investment decisions, hopefully all those marginalised by their gender can be too.
Gender lens investing is on the rise
Gender lens investing is gaining momentum, with established champions such as development finance institutions, foundations, donor agencies and a wide constituency of engaged stakeholders getting involved. With much work done by Criterion Institute, the broader vision for gender lens investing began to shift to consider how financial systems overall can be transformed to advance gender equality.
They have opened the door to imagine how gender lens investing can be used to reshape systems. This means putting the microscope on entrenched power dynamics that underpin the systems of finance we see today. From assessing how relationships and processes contribute to or inhibit gender equality, to actually holding companies accountable through every step of their work.
Gender lens investing allows us to consider the power our voice and our dollars have in demanding accountability and investing in what is important to us.
Why is gender lens investing important?
Women are at the forefront of investing in sustainability, and gender lens investing provides another layer of opportunity for investors to get more specific about the issues they care about. This allows investors to assert with their choices that gender equality matters. Carefully cherry picking what to invest in, and by choosing companies that intentionally contribute to gender equality, we therefore have the power to affect wider change – and it’s about time too.
"We are being given the opportunity to loudly assert that gender equality matters"
Challenges and opportunities
Challenges of gender lens investing
Data actually shows that investing in women is a smart financial decision, given that women founders are delivering more revenue on each dollar invested than men. In fact, a 2015 report by McKinsey & Co identified that advancing women’s equality will contribute a staggering $12 trillion to global growth. While this is significant, a downside is that it reinforces a gendered binary that uses economic gain as a primary reason to invest in women.
Gender-washing is real
The reality is that there still remains little to no industry-wide standards on what exactly gender lens investing actually entails. This can lead to investment funds easily saying they are investing your capital with a gender lens without actually engaging in gender analyses and without clear evidence to support any substantial benefit for women, girls, trans individuals, or anyone marginalised by their gender. So just as many companies are ‘greenwashing’ their operations, ‘pinkwashing’ is certainly on the rise too. It is important to use a discerning eye and stay on the lookout when choosing who to invest in.
This is not to disincentivize you. Gender lens investing can be seen as a win-win, allowing you to invest in women and receive higher returns in the process. However, I caution against getting swept up in this tale and placing your investments wherever a gender lens label appears.
Rather, my key tip would be to continuously dig deeper - beyond companies only claiming to add increased numbers of women on executive boards, in leadership roles, and for overall gender parity. Though this is important, it also risks reinforcing cycles of privilege by only increasing the engagement of women already with the closest access to these spaces. I urge us to do the more challenging work of continuously and honestly questioning whether our investments are advancing gender equality on a systemic level. By doing our due diligence, we can demand more opportunities to invest in tangible, structural change.
Opportunities gender lens investing presents
Gender lens investing, as you can begin to see, presents an incredible opportunity for investors to hold investment advisors and companies accountable to ensure their narrative meets practice and benefits women’s lives in impactful ways.
Let’s take the Equality Fund in Canada as an example. This fund engages in 100% gender-aligned investing using criteria and frameworks to ensure these investments are directed towards women, girl and trans -led and -focused funds, products, businesses, and services. In addition to an initial contribution of $300 million CAD from the Canadian government and funding from other governments and philanthropic foundations exclusively for their grant making, their innovative investment model is designed to generate liquidity that can further fuel their grant making – which aims to offer sustainable funding to grassroots feminist organisations and movements in the Global South.
The Equality Fund’s Global Advisory Panel includes a diverse body of investors, feminist activists, economists, and women’s right advocates for accountability. The Equality Fund’s investment model is intended to be replicated at scale to catalyse impact for gender equality, allowing people to fund grassroots feminist organisations who are on the frontlines fighting for systemic change.
What the future holds
With the rise of gender lens investing, there will also likely be those claiming to have a gender lens with little impact to show for their words. This raises the importance of regulation and thorough industry-wide standards to determine what can constitute investing with a gender lens. In response to this need, 2X Global - which has mobilised over US $27 billion in gender lens capital since its 2X Challenge in 2018 - is developing a certification mechanism with the objective that it will be accepted as a global industry standard. This aims to create more transparency, accountability, and credibility.
With the potential of enabling organizations to deliver sustainable impact at scale, there has also been increased advocacy for gender lens investing to be led by feminist actors in the Global South. We can contribute to this demand.
Play your part and be the catalyst of change
Equipped with the knowledge of how companies have greenwashed their operations, we can take a stand by demanding transparency and accountability for exactly how they contribute to gender equality.
1. Follow the chain
Is the company you’re considering investing in contributing to gender equality at every step of the supply chain, in their recruiting and labour practices, in the communities and environments in which they work? Require transparency and accountability by those you invest in. Looking for companies that are B Corp Certified and follow other credible standards that you believe in can help with this.
2. Do your own research
There are key differences across contexts. It’s important for us as individual investors to become informed, demand the impact that we expect to see, and critically invest where we see that active effort and impact across issue areas – including addressing intersectional forms of discrimination, where factors like racial and climate justice merge. Consciously choose to invest in businesses that are working to advance structural change for gender equality.
3. Define the status quo
As we learn from Female Invest to “learn, connect and grow, all in the name of a new status quo”, let us define what this new status quo looks like. Through our carefully selected investments, let’s create ripple effects to begin fundamentally changing the way this financial system works.
4. Reach out to gender lens investors
Learn from those who share these values and from the knowledge they have built from engaging with this work. They may be able to help you avoid some of the traps or pitfalls they encountered and identify what is helpful to keep in mind as you begin your journey to invest with a rigorous gender lens.
5. Invest in those caring about their long-term and intersectional impacts on gender equality
Though a company may have increased the number of women on their executive board, are their operations extractive, have unsafe working environments and/or rely on the extremely low-wage labour of women in the Global South, such as in the garment industry? Does it contaminate the natural environment and therefore hurt the quality of life for local communities, resulting in women needing to travel even farther for clean water? Vocalize this as a problem to the company or your investment advisor and choose to invest in businesses with truly transparent and responsible practices.
6. Find those measuring their impact
How thoroughly do their practices contribute to gender equality? Can they own how much further they need to go, and what are their plans for getting there? It can be useful to look for monitoring frameworks and specific indicators to demonstrate what is working and what more is needed to reach their goals.
Be an active change maker through gender lens investing
As Female Invest aims to democratise finance globally, how can we as individuals, and as women, drive this initiative forward? So that more women and those marginalised by their gender can gain access to invest in what they care about? Investing with a critical gender lens, in those doing the real work towards systemic change, is one key way to do that.
With this momentum and shift in the financial landscape, we are being given the opportunity to loudly assert that gender equality matters through our investment choices. As active agents of your finances, consider shifting your investments to those that employ a comprehensive gender lens - and foster a better future for yourself and the collective.
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