Investing with a Gender Lens

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    Stockholm (NordSIP) – Gender lens investing (GLI), or the deployment of capital for addressing gender inequality, is a practical and potentially impactful way to tackle the chronic underfunding of women’s empowerment and gender equality initiatives. Integrating gender analysis into investment decisions can take many forms: from considering the gender dynamics within companies and industries to promoting diversity in leadership and governance, investing in businesses that address the needs and preferences of women as consumers, or supporting initiatives that advance women’s economic empowerment.

    To gauge the current state of GLI across investment models and asset classes, UN Women, in collaboration with Phenix Capital Group, Politecnico di Milano – Tiresia, and Bocconi University – AXA Research Lab on Gender Equality, has compiled a new report, Empowering women, building sustainable assets: Strengthening the depth of gender lens investing across asset classes. The publication, officially released on 13 February, highlights the urgent need to transform the global financial architecture in advancing SDG5 on gender equality and women’s empowerment. It considers in particular how impact funds can strengthen GLI to pave the way for inclusive and sustainable development that leaves no woman or girl behind.

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    “The report was inspired by the observation of SDG5’s low ranking in the breakdown of capital allocated by institutional investors across the Sustainable Development Goals,” comments Chiara Borneman, Director at Phenix Capital Group. “It outlines opportunities to invest with a gender lens objective alongside investment returns, across asset classes. It has been very exciting to see the different ways investments can make an intentional positive impact on women and girls,” she adds.

    Rather encouragingly, there is evidence that in recent years, a growing number of institutional investors have begun to consider the effects of their portfolios on gender equality. As of July 2023, investments targeting SDG5 reached a remarkable amount of USD 56 billion, reflecting the growing demand for such strategies.

    However, investors’ interpretation of the issues covered by this broadly defined area varies considerably and a unified definition of GLI is still a work in progress. Some common approaches appear to be “investing for the direct benefit of women”, “investing in companies that promote equality”, or “investing while taking care of minorities”. Whereas their interpretations differ, most of the investors interviewed in the report highlight the fundamental intentionality of advancing gender equality through adopting a GLI approach.

    The data collected by UN Women and their collaborators underscores the comprehensive nature of GLI, emphasising the wide-ranging consideration of asset classes, geographies, and sectors when allocating capital towards SDG5 and gender equality. Evidence also shows that applying a gender lens is relevant at every phase of the investment process, from strategy and decision-making through screening and due diligence, measurement, and reporting.

    Despite acknowledging the universal applicability of gender considerations, the authors of the report deem private equity to be the most mature gender impact strategy. The asset class boasts the largest number of investment funds (41) and significant allocated capital. Investments in real estate and infrastructure have also seen an increase in initiatives in 2022, despite the limited number of funds.

    The report also raises some concerns about superficial GLI approaches that focus on symbolic representation without challenging systemic gender inequalities. “Not all investing practices that are labelled as adopting a ‘gender lens’ contribute to the effective change that is needed to level the playing field for women’s empowerment,” state the authors, pointing to the risk of co-optation, where feminist ideals are commodified and diluted for financial gain.

    Image courtesy of Pixabay
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.
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