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Impact Investing 101: Investing With A Gender Lens

By Brenna McCallick, Research Associate, Pacific Community Ventures

In the first two editions of Impact Investing 101, we brought you some of the best resources for getting acquainted with the field, and for zeroing in on the all-important issue of public policy. This month, in honor of International Women’s Day, we’re thrilled to present you with information about the exciting ways impact investors are working to empower women around the world.

The Problem

It is well known that women throughout the world face numerous political, economic and social barriers to full equality. A statistical examination of the state of equal rights and opportunities for women is beyond the scope of this post (though we do offer several resources below for accessing the most up-to-date information and statistics on issues impacting women). It’s worth noting, however, that within the context of global financial markets, women are hugely undervalued.

Women have been core to the emergence and growth of impact investing. The microfinance industry, for instance, realized early on the value of supporting women entrepreneurs. Not only does investing in women have enormous impact potential, it’s smart from a financial perspective: studies have shown that women borrowers have higher rates of loan repayment and lower rates of defaulting, and are associated with lower risk for microfinance portfolios across the board.[1],[2]

And yet the IFC currently estimates a $320 billion (that’s billion with a “B”!) gap between the financing that women need to start and grow businesses, and what they receive.[3] Women-owned businesses are slated to grow by 90 percent over the next five years. In the U.S. alone, expect to see 500,000 new businesses launched by women each year![4] Amidst this growth, it is critical that women entrepreneurs have access to the capital and technical support they need for their businesses to thrive — and in the process, create jobs, boost their local economies, and improve their own and their families’ financial self-sufficiency.

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The Emergence of Gender Lens Investing

In the emerging impact investing lexicon, many women-centered investment initiatives have taken shape under the umbrella of “gender lens investing.” While the concept has existed for years, the phrase gained widespread popularity when, in the Fall 2014 edition of the Stanford Social Innovation Review, authors Sarah Kaplan and Jackie VanderBrug declared:

[A] movement focusing on the nexus of gender and investment is emerging. This movement, which encourages the use of capital to deliver financial returns and improve the lives of women and girls and their communities, is known as “investing with a gender lens.”[5]

VanderBrug and Kaplan go on to describe the concept of applying the lens of gender to an investment strategy. In the most basic sense, lenses affect how we view something. As such, assessing our investment decisions with a keen awareness of gender allows us to see both existing inequalities, as well as opportunities for value creation we hadn’t considered before.

Approaching investing through a gender lens can include supporting women-owned enterprises, ensuring gender equity in the workplace, and investing in businesses that offer goods and services that increase women’s wellbeing. It also includes connecting women investors to women fund managers and entrepreneurs, and in so doing, empowering them throughout every step in the lifecycle of an investment.

In short, advocates of the gender lens approach recognize that by understanding how their dollars impact women and girls, they can begin to chip away at long-standing gender biases that have left many women – and as a result, entire communities – disenfranchised. In the process, a gender lens helps identify new avenues for creating immense social and financial value.

Get Educated, Get Involved

Below, you’ll find reports, videos, articles and other media illustrating the theory behind gender lens investing, as well as information about existing initiatives and ways to put your money to work in support of women around the world:

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This report from Veris Wealth Partners — pioneers in the gender lens investing movement — outlines not only the social and financial opportunities presented by investing with a gender lens, but also the steps individual and institutional investors can take to design a gender-focused investment strategy.

This practitioner-focused guide provides concrete information for those looking to support women around the world through their financial activities. In addition to providing a list of dedicated gender lens products, US SIF outlines alternative options for aligning one’s capital with women’s empowerment, including (among others) portfolio screening, shareholder activism, and banking with credit unions that support women-owned enterprises.

In this article, Jackie VanderBrug and Sarah Kaplan contextualize gender lens investing within the broader concept of “gender capitalism.” They describe three key ways investing with a gender lens can promote greater social and economic prosperity for women, and make the compelling case that gender lens investing can bridge the worlds of investors and women’s rights advocates – and in the process, create more effective and holistic approaches to furthering gender equity.

For a synopsis of the practice, watch Jackie VanderBrug of the Criterion Institute describe the gender lens investing movement in a short video, and read more about the practice of applying a gender focus to an investment strategy.

In this post, Village Capital’s Director of Investments, Victoria Fram, lays out her organization’s approach to ending gender inequity in investing: essentially, bring seed-stage entrepreneurs together for peer-reviewing and selection. By allowing business owners to assess each other against Village Capital’s investment criteria (rather than pitch to investors) more women have been selected to receive investment than men in three of Village Capital’s most recent cohorts – a trend that runs counter to traditional venture capital.

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Launched by the Goldman Sachs Foundation in 2008, the 10,000 Women initiative is an ongoing partnership with academic and nonprofit organizations to support female entrepreneurship around the world through education and management training. Last year, Goldman Sachs teamed up with the IFC and other investors to launch The Women Entrepreneurs Opportunity Facility, designed to grant access to capital to as many as 100,000 women entrepreneurs.

This fund offers investors the opportunity to support companies that excel in maintaining gender diversity on their boards and in their management teams, and otherwise advance women through their business practices. The fund is designed to deliver returns at or exceeding the performance of the Pax Global Women’s Leadership Index, a customized index of the most highly rated companies committed to furthering gender parity.

In its Women Investing in Women Initiative (or WIN-WIN), the Calvert Foundation has striven to empower women throughout the full lifecycle of the investment process. Access the website to find out more about their pilot program and their recently launched fund focused on clean energy technologies that improve women’s health.

Root Capital believes that ending cycles of poverty and hunger in the developing world requires increasing women’s access to land and capital for farming. In their Women in Agriculture initiative, the organization seeks to support gender-inclusive businesses and offer lending and advising services for female agricultural producers.

In partnership with the Women’s Foundation of California, US Trust has developed a strategy to provide options for investors to support women’s empowerment holistically. Rather than adopting a place-based focus or limiting their offerings to a specific asset class, US Trust has developed a set of criteria for investing in U.S. equities and taxable corporate bonds from companies that further gender equity in both their business practices and their products and services.

Learn more about Women’s World Banking, a nonprofit organization that conducts market research, pilots innovative financing programs and – through its network of microfinance institutions – offers access to microcredit, insurance and savings plans for women around the world.

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While the growth of gender lens investing is promising, there still exist very real barriers to women’s full social, economic and civic participation throughout the world.  In case you’re feeling discouraged by the long road ahead, we’ll leave you with this: Five Reasons For Optimism This International Women’s Day.

 Still have questions? Stay tuned.

In future “101” posts, we will point you toward more prime information about impact investing.  We look forward to sharing the best resources available on different topics in the field, reflecting a variety of perspectives.

Let’s collaborate.

If there’s a topic you’d like to learn more about, or a report, article, blog post, video, infographic or other informational resource you think belongs on one of our lists, let us know: info@iipcollaborative.org.

[1] http://www.microfinancegateway.org/sites/default/files/mfg-en-paper-women-and-repayment-in-microfinance-mar-2009_0.pdf

[2] http://wmionline.org/aboutus/whatmicro/whatmicro.html

[3] http://www.businessinsider.com/gender-lens-investing-2014-8

[4] http://www.womenseday.org/facts/

[5] http://www.ssireview.org/articles/entry/the_rise_of_gender_capitalism

Photo by Amir Jina: Thin Threads

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Brenna McCallick serves as Research Associate for InSight, supporting PCV’s domestic and international impact investing policy initiatives. She conducts research on public policy as it relates to impact investing, produces content for InSight publications and monitors global trends in the field. Prior to joining PCV, Brenna worked as a Development Assistant at Room to Read, an international nonprofit that promotes literacy and gender equality throughout impoverished regions of Asia and Africa.  She holds a BA in History from the University of San Francisco. She can be reached at bmccallick@pcvmail.org.