Gender-Aware Investing Gains Momentum; What is Gender Lens Investment?

As we inspect the trajectory of economic growth of the world, it is vividly visible that the participation of women in different sectors has risen in number.  Even though the numbers might be small in magnitude in some sectors compared to others, a change in the positive direction is nevertheless a step towards progress. Representation of women in the economy is an issue that needs immediate attention. Along with attention, there is a firm requirement of intention and investment.

The intention is abstract, therefore investment needs to compensate for the numbers. But the one crucial sector where women lack participation at a significant level is the investment industry. Research shows that the investment business that includes investment management, mutual, hedge, private equity, and venture capital funds might have only 4% of women at the top of the pyramid. Also, women only control between 1% and 3.5% of assets under management, depending on a specific class.

Over time, the issue has been raised on numerous platforms and deliberations have been conducted to find a solution to this. Gender diversity is key to many problems. Not only does it promote diversity in ideas and opinions but also there’s a surety of positive returns. Thus, it is imperative to acknowledge it. The presence of women investment sector or promoting sectors where investment in women is promoted is also important because it creates a domino effect. More and more women entering the sector would hit two birds with one stone: it'll decrease the gender gap, making the industry more gender-aware as well as including women in financial decision-making.

Gender Lens Investment

So how do we add a gender lens to investment?  The answer is in the question itself, by adding a gender lens to investment.

Gender lens investing is a concept that has gained momentum in recent times. Gender lens investing refers to an approach to investing that involves gender-based factors in the investment process with an aim of improving gender equality and making better-informed investment decisions. In other words, it is simply a process of integrating gender analysis into the investment sector and financial decision making. It is to be duly noted that gender lens investing does not mean only investment in women, rather it implies supporting everybody that in some way or other has the intention to impact women’s lives for the better.

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According to the 'Global Impact Investing Network (GIIN)’, gender lens investing can be defined within two broad categories. 1) Investing with the intent to address gender issues or promote gender equity. 2) Investing with more gender-aware approaches to make well-informed investment decisions.

The former category includes investment in women-owned or women-led enterprises, investing in companies where workplace equity in terms of hiring practices, boardroom representation and management is promoted and investing in enterprises that offer products or services that improve the lives of women and girls significantly.

While the second category uses some distinct approaches. For instance, an investment structure that focuses on gender, from pre-investment activities to post-deal monitoring or devising a strategy that examines certain benchmarks in the investee enterprises. These benchmarks may include, the investee’s mission to address gender issues, their organisational structure, workplace culture and internal policies.

What metrics they are using for gender-equitable management of performance? How do their financial and human resources signify an overall commitment to gender equality?

Gender lens investing is a sustainable way of investing. The market for GLI is both big and diversified, therefore a huge yet to be explored area for the investors. At the same time, there are a few challenges to overcome as well. India has a long road ahead when it comes to making male-dominated industries friendly for the women population. And investment sector needs to be made more welcoming for women who are major consumers in the global market and can be major potential investees.

If we want to become a part of a thriving economy, we need investment with the intention to promote women in the fields where they are capable of becoming major stakeholders. Tools like gender lens investment have entered the global scene recently but they would need to stay for a very long time.

Views expressed are the author's own