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.
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Gender Lens + ESG Investment Criteria
As a thematic environmental, social and governance (ESG) investment strategy, gender lens investment vehicles tend to incorporate two pillars of ESG. By definition gender lens investments cover the G of ESG, relationships with internal stakeholders. Our research shows that many gender lens vehicles also incorporate a focus on the S, relationships with external stakeholders. E, – to varied degrees. In Environmental, Social and Governance (ESG) Pillars in Gender Lens Investing, we explore how gender lens equity funds can also incorporate the E, impact of products and services on the environment and climate change risk.
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Environmental, Social and Governance (ESG) Pillars in Gender Lens Investing (GLI)
Gender lens investing (GLI) is seen as a thematic environmental, social, and governance (ESG) investment strategy. Within GLI, global and regional gender lens equity funds grew from a wide body of research demonstrating the performance and other benefits of higher women in leadership (WIL). How well do gender lens equity funds reflect an ESG approach? By definition, the WIL investment philosophy captures the G of ESG, relationships with internal stakeholders. Our analysis shows that many GLI funds and indexes also capture an element of the S, relationships with external stakeholders, through a focus on supplier diversity, human rights exclusions, and product safety.
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Q2 2021 Review
Gender Lens Investing Q2 2021 Review examines the second quarter 2021 performance and composition of gender lens equity funds, expands our coverage of diversity, equity, & inclusion funds, offers an update on gender lens fixed income activity and explores the dynamics shaping publicly available gender lens investing.
Including A Country Analysis.
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Gender Lens Equity Funds: Key Stats
This table lists funds that are multi-cap or larger-cap, have relatively low investment minimums, and charge average fees. Most have launched since 2015, and they all utilize investment criteria centered on a WIL philosophy, typically combined with ESG screens. Many employ internal WIL tracking indexes. Solactive Equileap is the main provider of external WIL indexes, built from a universe of developed market stocks with market caps of over $2.0 billion. According to the latest Morningstar data on mutual funds and ETFs, 14% of all portfolio managers globally are women and 11% in the U.S., a figure that has not budged in many years. In the gender lens sector, the available data shows that management teams are well ahead on this front, with 49% female portfolio managers.
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Gender Lens Investing: Corporate Equality Metrics Beyond WIL
For public sector GLI equity and fixed income offerings to meaningfully reflect – and capture the benefits of – gender diversity at the company level, investment criteria should encompass inclusive gender equality metrics beyond WIL. Women’s representation at all managerial levels is the key to the leadership pipeline. Investors need to be able to measure inclusive gender equality across a range of data points, including pay parity, a company’s commitment to supplier diversity, the provision of corporate benefits in support of caregivers, and true inclusivity in the work environment. The inclusiveness and safety of products and services also needs to be assessed. Increased data availability is key to investing in companies making progress on broad-based inclusive gender equality, with the glaring need for pay data leading the charge.
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