Growth In Public Products Accelerates As GLI Marks 10th Anniversary
The flow of assets in Gender Lens Investing (GLI) continues to grow rapidly.
According to a new analysis by Veris Wealth Partners, asset growth in GLI products accelerated and totaled $3.4 billion as of June 30, 2019. In our 2018 GLI analysis, we reported $2.4 billion invested in GLI products.
As important, the size of the funds continued to grow, reflecting their growing popularity among individual and institutional investors. There were 10 investment products with over $100 million and six with over $250 million as of June 30, 2019.
Our analysis also showed that the gender lens market is still primarily a North American phenomenon and that the investment focus continues to be global and US large cap equities. However, there are now eight funds open in Asia/Pacific, two funds in South America and one in Africa.
Ten years after the term Gender Lens Investing was coined by the Criterion Institute, there are now more than 50 publicly available GLI products, a 300% increase since 2015.
The GLI Impact
The growth of GLI investments continues, but the real question is how is GLI improving the lives of women and girls?
The good news is that GLI is having a real impact.
More than 50% of public GLI investment products focus predominately on women in leadership and increasing gender diversity, according to Veris. This is defined differently with each product strategy, but most often is women on boards, women in the C-suite, and women in management. The focus on leadership, coupled with increasing shareholder advocacy efforts to increase board diversity, have helped. In 2009, women comprised 16% of S&P500 boards, and today they represent 26%1. Progress, yet still a lot more work to do.
The Business Case of GLI
We believe this trend is likely to continue because there’s a very compelling business case for GLI.
McKinsey & Company’s Power of Parity Report (2015) estimates global annual Gross Domestic Product (GDP) could be $12 trillion higher if gender inequality was addressed. Diversity also produces terrific results. Over the past decade, many studies have confirmed the superior financial performance of public companies with strong female representation at the board level and in senior management.
The positive impact of GLI goes beyond greater representation at the leadership level.
Research now shows connections between higher proportions of women in leadership with increased environmental, social and governance performance.2
Investors are also looking for broader impact and product sponsors are starting to take notice.
More than 20% of public GLI investment products focus on broader gender factors, according to Veris. They include reducing the gender pay gap; increasing women in the workforce; lowering barriers to women working outside of the home; improving health and well-being; increasing employee engagement; and expanding products and services serving women.
And, a handful of funds are incorporating UNSDG goals including UNSDG #5: Achieve gender equality and empower all women and girls.
Another significant area of asset growth has been providing access to capital for women in girls. Capital flows to those initiatives are typically made by angel, venture and private equity investors. In the public markets, access to capital for women is provided primarily through CDs, CRA qualified bonds and the growing number of gender bonds.
Just the Beginning
Clearly, there is much to celebrate as GLI marks its 10th anniversary.
The brave women who dared to ask if capital markets could improve the lives of women and girls have started a movement that is increasingly gaining momentum. From a handful of investment strategies with only one CD and one mutual fund, there is now an expanding number of stakeholders who believe in the possibilities of Gender Lens Investing.
The goal for all of us is to keep pushing and demonstrating the value of GLI to an expanding universe of investors for the benefit of all.
The Veris team is especially grateful to Suzanne Biegel, Catalyst at Large and Co-Producer, GenderSmart Investing Summit for her generous collaboration, and Diana van Maasdijk, Equileap.
12019 U.S Spencer Stuart Board Index Highlights
2Cristina Banaham and Gavrial Hasson, “Across the Board Improvements: Gender Diversity and ESG Performance” Harvard Law School Forum on Corporate Governance and Financial Regulation, September 6, 2018
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Linda Pei had a vision. In 1993, she launched the Women’s Equity Mutual Fund, the first U.S. fund investing in companies with positive track records ofhiring, promoting and generously compensating women.
Her fund marked the birth of “gender lens investing” (GLI), which is founded on the premise that investing intentionally for gender balance and equity can generate both financial and social returns.
For decades, however, there wasn’t much progress. Over the next 20 years, only four new strategies emerged explicitly incorporating gender into their financial analysis of publicly traded securities.
Fast forward to 2018. Over the past 12 months, we’ve seen more growth in GLI in a single year than we have in the past two decades.
As of June 30th, 2018, investors had poured $2.4 billion into 35 GLI vehicles holding publicly traded securities, according to the 2017 Gender Lens Investing report from Veris.
This is a 23-fold increase from $100 million just four years ago.
These investment vehicles range from U.S. and Canadian ETFs, to French and Nigerian mutual funds, to Australian ‘gender equality bonds.’
Click here to download Gender Lens Investing: Bending the Arc of Finance for Women and Girls.
Fully Diversified GLI Portfolios
As the number of GLI vehicles has increased, investors have begun making the leap from investing in single products to constructing entire, fully diversified GLI portfolios with clear missions.
Our 2018 report highlights three of these portfolios, each tackling distinct social issues: gender-based violence, women’s chronic under-representation in leadership, and the need for innovation in women’s health care.
This week, Alison Pyott and Luisamaria Ruiz Carlile of Veris will be sharing this research at theGender-Smart Investing Summit, taking place in London on November 1-2. The goal of the summit, expected to attract 300 champions of GLI, is “moving gender-smart capital with vision and velocity.”
Linda Pei would be proud that her vision endured.
Even greater would be her delight at the accelerating flow of capital into public market GLI products: the first $1 billion took 25 years. The second $1 billion took 12 months. How long to $100 billion? The first $1 trillion?
Editor’s Note: This blog is a complement to a new analysis of gender lens investing (GLI) strategies by Veris Wealth Partners and Women Effect. Gender lens investments direct capital to companies and organizations that support the status and well being of women and girls. To access this information, please visit Women Effect. To read Veris’ GLI analyses from 2013 and 2015, please go to our Research page.
In a few short years, Gender Lens Investing has moved from promising concept to potentially one of the next big things in impact and sustainable investing.
That’s one of the clear takeaways from a new, joint analysis on Gender Lens Investing by Veris and Women Effect published this week.
Consider the following:
- Assets Under Management (AUM) disclosed by GLI strategies investing in publically traded securities grew from $100 million as of Sept. 30, 2014 to $561 million as of June 30, 2016. That’s approaching a 500% increase.
- As of June 30 2016, there were 15 public market GLI equity and debt solutions, up from nine as of Sept. 30, 2014. Two of the new vehicles target non-U.S investors, including Canadian and those in select European and Asian countries.
- More than half of the growth in AUM has been in the Gender Diversity Index ETF (SHE) from State Street Global Advisors. The ETF was launched in March 2016 and was seeded with an initial $250 million from Calsters (California State Teachers Retirement System).
The growth is the result of an accelerating desire by individual and institutional investors to place capital in investments that directly benefit women and girls.
Investment in Gender Lens Strategies Reporting AUM
($561 Million as of June 30, 2016)
“Expanding The Pie”
While the growth in GLI strategies has been heartening, equally important is the philosophical change they are engendering in the way we think about impact and sustainable investing.
For so long, many of us have viewed the world in “either/or” terms. Do we invest for societal and environmental benefits or purely financial returns? Do we opt for economic growth or a sustainable future? Ingrained (and often subconscious) biases may lead us to believe that for minorities and women to advance, others must lose. Or, that if we choose inclusive companies, we are settling for less than stellar investment performance. Our reality is seemingly zero-sum. I win, you lose.
This represents a scarcity mentality, as if life’s opportunities were a static pie and sharing it with more people means less for everyone.
However, people, communities and the environment are not pies! We all exist in a dynamic ecosystem that constantly responds to new inputs. GLI is a way to move beyond “either/or” thinking to “both/and” investing. More money invested in women and girls means more opportunities for society as a whole, men and boys included.
The good news is that GLI is taking off. More investing solutions will emerge as momentum grows for investing for gender parity. At the same time, a more holistic view of GLI’s benefits will bring more investors into the space, and that will benefit every segment of society.
Interested in a new way to create impact in your portfolio?
Gender lens investing is emerging as one of the most exciting new ways of using capital to create positive social impact for women or girls.
Click here to download the Veris white paper, Women, Wealth & Impact: Investing with a Gender Lens 2.0.
An innovative way of allocating capital, gender lens investing is about accelerating diversity and inclusion in the workplace. It’s also about creating opportunities for women entrepreneurs and executives to obtain capital, secure leadership roles and have greater influence over decisions.
In the developing world, gender lens investing is helping to lift women and girls out of poverty and create opportunity where previously there was none. By facilitating the flow of capital to women-led enterprises and organizations that benefit women and girls, gender lens investing has the potential to meaningfully improve their quality of life.
A New Way Of Thinking
Traditional financial analysis has mostly ignored gender considerations in capital allocation decisions. By contrast, gender lens investing integrates questions and data about gender to inform and guide investment decisions. As an analytical tool, a gender lens helps investors identify investment risks and opportunities with greater effectiveness.
Specifically, a gender lens assesses opportunities to empower women by evaluating how an investment supports: 1) women’s leadership, 2) women’s access to capital, 3) products and services beneficial to women and girls, 4) workplace equity, and 5) related shareholder engagement and policy work. Investments that satisfy one or more of these criteria are presumed to deliver greater impact to women and girls.
A Growing Number Of Options
Just a few years ago, only a handful of investments were designed to achieve these objectives. Today, more than a dozen dedicated gender lens investment opportunities exist. Many other creative investment opportunities are in development. These options range from fixed-income to equity investments in private and public markets. Some investments are open to all investors, while others are proprietary or restricted to accredited or qualified investors.
Gender lens investing opportunities come in two broad categories: (1) Dedicated gender lens solutions that explicitly adopt one or more of the goals stated above; (2) Funds and managers that do not offer a specific gender lens mandated product, but who integrate significant gender criteria into their security selection and/or engage in shareholder advocacy and policy work to advance gender inclusiveness.
Each gender lens investment has its own gender criteria. Some products have women’s leadership as a singular focus and select securities based solely on the number of women on boards or in the C-suite. Still others channel capital to women – whether as coffee growers in Latin America, first-time home buyers in the U.S. or entrepreneurs seeking angel investors.
Another type of gender lens opportunity funds innovative products and services beneficial to women, such as banking services to older women in Japan, HIV prevention in South Africa, and medical devices tailored specifically to women’s needs. Lastly, a number of gender lens solutions promote diversity and gender inclusion through significant shareholder engagement and policy work. Most products apply more than one gender lens criteria.
Let’s Own Our Collective Future
As a society, we own and shape the social constructs and financial systems that govern our lives. We make the rules. We assign the value. Yet, we can feel removed from these processes and our power to bend the arc of our institutions. At its core, investing with a gender lens challenges the financial system and investors to better allocate capital with much more thought to gender imbalances.
Investing for all, and by all, has to be our ultimate goal.
Click here to download the Veris white paper, Women, Wealth & Impact: Investing with a Gender Lens 2.0.
By Jem Hudson, CEO of Caldy Group
“As a society, we own and shape the social constructs and financial systems that govern our lives. We make the rules. We assign the value. Yet we can feel removed from these processes and our power to bend the arc of our institutions.”
– Veris Wealth Partners
In celebration of International Women’s Day on March 8th, we came across a myriad of thoughtful articles, studies, and other discussions focusing on women’s issues. One of the resources that especially caught our eye is a study by Veris Wealth Partners, a boutique wealth management firm that has been leading the way in sustainable and impact investing.
Titled “Women, Wealth & Impact: Investing with a Gender Lens 2.0,” this highly informative study aims to shed light on the latest developments in gender lens investing and outlines some of the more commonly seen investment strategies used today. It also offers commentary on the importance of gender lens investing and its growing popularity.
What is gender lens investing? It is an investment approach that aims to encourage greater gender inclusion in our communities, our workplaces, and our boardrooms. It is important to note that gender lens investing is not one-sided. It does not focus solely on women’s issues, to the exclusion of other considerations. Quite the opposite! The Veris study explains:
“Gender lens investing is about making the world better for everyone through our investment choices. Investing in all of us, by all of us, has to be the ultimate goal.” (p. 1)
Gender lens investing typically looks at companies, funds, and other investment opportunities with an eye for how these investments align with the following criteria:
- Women’s leadership
- Women’s access to capital
- Products and services beneficial to women and girls
- Workplace equity
- Related shareholder engagement and policy work
Some investors target investments that explicitly focus on these issues, while others choose to invest in funds and portfolios that integrate these considerations into a broader set of factors or address these issues through stakeholder engagement. This is fairly consistent with what we see in the broader sustainable investing space, where some investment solutions deliver targeted impact, while others cast a wider net and deliver impact a bit more indirectly.
Gender lens investing is often categorized as a sustainable investment strategy because of its focus on non-financial considerations. As we discussed last week, many investors still have questions about the financial viability of sustainable investing, and there is a sense that focusing on non-financial considerations will have a negative impact on financial performance. However, we agree with the Veris study in noticing that those investors who have studied the sustainable investing space in some detail increasingly “realize [that] they can generate both financial gains and positive social and environmental impact.” (p. 2)
In particular, if we look a bit more closely at some of the most recent research in the space, we will uncover mounting evidence that gender lens investing can deliver strong, if not superior, financial returns, as well as meaningful impact toward greater diversity and inclusion. This superior financial performance starts at the board level; studies find that Fortune 500 companies with three of more women on their boards of directors outperform those with no women directors by 84% on return on sales. In addition, according to a recent study by Gopal Krishnan and Linda Parsons, companies with greater gender diversity among senior executives tend to deliver stronger financial results than their less diverse peers. Lastly, women-led companies in Silicon Valley generate 12% higher revenues than similar venture-backed companies run by men. They are also run more efficiently and have lower failure rates than their male-led peers.
Despite all this evidence, women are still underrepresented on boards of directors, in executive suites, and among venture-backed entrepreneurs. It’s clear that more work needs to be done to achieve greater gender inclusion, and much has been said on this topic. But it’s important to remember that, as the Veris study so astutely notes “[a]s a society, we own and shape the social constructs and financial systems that govern our lives.” (p. 7) While it may be easier to simply discuss issues of gender inclusion, we can play a much more constructive role by leveraging our capital in a way that supports and encourages solutions that work.
To help in identifying solutions that work and funds that support them, the Veris study offers a list of investment funds that have demonstrated a strong commitment to gender lens investing, including Golden Seeds (private equity), PAX Ellevate (public equity), and Breckinridge (fixed income). There are several other funds that one can choose, and we are confident that many more funds will launch moving forward.
Regardless of which investment solution one selects, it’s important to remember that gender lens investing is not merely a niche strategy, but something we should aspire to for all of our investments. At the end of the day, we want to see a world where gender inclusion doesn’t need to be discussed in a white paper, but is simply a natural state of things.
Jem Hudson is Founder and CEO of Caldy Group, where this post was first published.
On March 5th, Veris Wealth Partners and Criterion Institute hosted the webinar Women, Wealth and Impact: Investing with a Gender Lens. Increasingly individuals, families and foundations are exploring how to use their consumer dollars, philanthropy and now their investment portfolios to address gender inequality. This webinar outlines several easy steps to shift your investments to support and empower women.
The program starts with Joy Anderson, President and Founder of Criterion Institute interviewing Patricia Farrar-Rivas, CEO of Veris Wealth Partners. Together they explore the webinar’s big take-away — moving beyond the ‘why’ and into the ‘how’ of investing to support women. This is followed by a short presentation and Q&A led by Luisamaria Ruiz Carlile and Alison Pyott, both Certified Financial Planners and Wealth Managers at Veris Wealth Partners based on their recently published thought piece Women, Wealth and Impact: Investing with a Gender Lens. This paper explores the business case for gender lens investing, but more importantly provides tangible steps you can take to increase gender equality with your investment portfolio.
Presented by: Criterion Institute & Veris Wealth Partners
Veris is proud to announce the release of our 3rd annual Impact Report, highlighting the collective achievements of its clients, the Veris team, and the investment managers we work with.
Among the milestones of the past year: Veris celebrated its 10th anniversary, reached $1 billion in client assets under management, and was named as a B Corporation Best for the World company for the sixth consecutive year.
The 24-page report describes the environmental and social impact resulting from our clients’ collective investments in our five thematic areas: Climate Change & the Environment, Community Wealth Building & Social Equality, Sustainable Agriculture & Food Systems, Gender Lens Investing, and Mindfulness & Sustainability.
The report also focuses on how Veris measures impact, both quantitatively and qualitatively. As part of our ongoing due diligence, we look at the role public companies, shareholder advocacy, private social enterprises, and community development solutions play in creating a more inclusive and sustainable economy.
We’re pleased to note that we have seen great progress each year in terms of understanding and communicating the impact of portfolio companies.
In 2017, impact reporting took a leap forward with the development of systems-level frameworks, such as the U.N. Sustainable Development Goals. To encourage more common language in impact reporting, Veris also reports metrics established by the Global Impact Investing Network’s (GIIN) Impact Reporting and Investment Standards (IRIS). IRIS facilitates comparison and best practices, transparency, and accountability in impact measurement.
What is also interesting about this year’s report is what it says about the positive direction of impact investing. We’re seeing increased momentum across the field – such as major commitments from conventional investors and growth of the Green Bond market and assets invested with a Gender Lens. If you haven’t seen our 2018 analysis of Gender Lens Investing, please feel free to download it here.
We believe these trends validate what Veris clients and our team have recognized for a decade: that investors can align their wealth with their values. The 2017 Veris Impact Report demonstrates our commitment to delivering the most impactful investment opportunities and supporting the overall growth of sustainable and impact investing.
We hope you will read our report, and we look forward to your feedback.
Click here to download the full report.
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