Gender lens investing is a type of impact investing that aims to create a beneficial social or environmental impact and an expected financial return. What differentiates gender lens investing is that it is an investment that, from its inception, is intended to benefit women and girls.
Gender lens investing considers gender-based factors in investment decision-making to advance gender equality. Gender lens investing may benefit women and girls in two distinct ways:
#1- Investing with the intent to address gender issues or promote gender equality by:
- Investing in women-owned or women-led enterprises.
- Investing in enterprises that promote workplace equity (in staffing, management, boardroom representation, and along their supply chains).
- Investing in enterprises that offer products or services that substantially improve the lives of women and girls.
#2-Investing with the following approaches to inform investment decisions:
- A process that focuses on gender, from pre-investment activities (e.g., sourcing and due diligence) to post-deal monitoring (e.g., strategic advisory and exiting).
- A strategy that examines, with respect to the investee enterprises:
- Their vision or mission to address gender issues.
- Their organizational structure, culture, internal policies, and workplace environment.
- Their use of data and metrics for the gender-equitable management of performance and to incentivize behavioral change and accountability.
- How their financial and human resources signify an overall commitment to gender equality.
Source - Gender Lens Investing Initiative, Global Impact Investing Network
The Gender Lens Investing Framework prescribes three entry points for investors to consider when selecting investments:
- Investing in companies that provide capital to women-led and gender-forward businesses.
- Institutions and investments that apply a gender lens across the investment process.
- Those that advance gender diversity in their investment firm.
Here are ten ways investors can integrate a gender lens into their investment strategy:
- Decide which gender lens to apply.
- Define what women-led businesses or gender-forward businesses mean for the investment firm.
- Identify women-led and gender-forward businesses already in the portfolio.
- Develop a strategy for allocating capital with a gender lens.
- Evaluate the financial performance of companies with women in leadership.
- Omit companies without women in leadership roles.
- Evaluate if companies are“gender washing” or hiring women for appearances’ sake.
- Examine companies’ promotional materials to see if they include imagery of women and how they’re depicted.
- Review how companies advance gender diversity.
- Assess mentorship programs to determine if they include women in equal numbers to their male counterparts.
It’s essential to understand how gender lens investing impacts our society and your portfolio’s performance. If you desire to invest in companies that benefit women and girls, your financial professional can help you integrate a gender lens to identify companies that aim to meet the above requirements.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by Fresh Finance.
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