How can ESG investments incorporate a gender lens? As standard setting bodies vie for leadership in ESG reporting standards, there has been a focus on the materiality of ESG metrics by company and industry. Proposed ESG standards tend to focus on metrics with material impact, defined as able to be measured and documented, on financial performance or risk at the company or industry level.
This approach suits reportable metrics around climate risk. But how does materiality fit when looking at gender equality ESG criteria? As spotlighted by ongoing research, the performance, risk management, and other benefits of gender-diverse leadership are not sector-specific, nor are the costs of lagging behind. The performance benefits of higher WIL have been demonstrated in large global datasets of all sectors and industries. These include the Fortune 500, the Bank of America stock coverage universe, the Russell 3000 Index, and repeat results showing WIL benefits from a Credit Suisse research universe of 3000 companies in 56 countries.
Standards should require corporations in all sectors to be measured on the G of internal inclusive gender equality, the S of diversity and equity in external relationships, and the E of addressing gender-unequal impacts of climate change. Publicly traded ESG equity and fixed income funds should then invest in the leaders on these metrics.
The infographic below explores the integration of a gender lens into the traditional ESG investment definitions and criteria.
For more insights on combining the gender lens in ESG investing, see Gender Lens + ESG Investment Criteria.
To explore the inclusion of ESG factors in gender lens equity funds, see Environmental, Social and Governance (ESG) Pillars in Gender Lens Investing (GLI).