Since my previous post on the subject, I’ve continued to delve into gender lens investing, i,e. investment in women-led firms, businesses that promote gender equity, and companies that benefit women through products and services.
In analyzing our metrics and engaging the ecosystem, it’s become clear that this paradigm shift calls for a much more holistic approach and holds us investors much more accountable.
At last month’s Social Capital Markets conference, I attended the session Accelerating Use of Gender Lens in Impact Investing — one of two such panels at SOCAP14. I found it really encouraging to hear from panelist Jenny Everett, deputy director of the Aspen Network of Development Entrepreneurs (ANDE), that many of the association’s 200-plus members are examining or implementing gender lens investing in recognition of the impact women have in their portfolios.
I also found it really interesting to learn of the growing appetite for women-only impact investment funds. Like the other ANDE members adopting gender lens investing, Root Capital’s approach to women’s empowerment has been marked by a value chain approach, as founder and CEO Willy Foote (also on the panel) himself detailed in a NextBillion post recently.
The term “gender lens” should imply a focus, but not one that merely puts the blinders on. There’s an almost palpable shift away from a gender-specific silo towards a more holistic vision of empowering women as investees, employees, consumers, suppliers and beyond.
This has a few implications.
Firstly, the metrics for qualifying as a gender lens investment go far beyond female ownership of portfolio companies. For example, Calvert Foundation’s WIN-WIN initiative centers on microfinance, clean energy, health and education, channeling investment through sectors with disproportionate impact on women’s living conditions.
Secondly, the resulting social outcomes are far more extensive than just the number of women entrepreneurs financed and the number of dollars invested. There’s a much bigger ripple effect that we are only beginning to quantify. For example, Root Capital determined that by creating equity in women’s access to capital & productive assets alone, agricultural output in low-income countries could increase by as much as 4 percent. And this is just one implication.
We already know women tend to invest a higher percentage of their earnings into health, food and education for their children. For a sector-agnostic small- and medium-sized enterprise portfolio, gender equitable investment could translate into increased years of education and life expectancy, for example. As data improves, this enables us to compare social outcomes from gender lens investments to counterfactuals.
Just like the evidence base for gender diversity in the workplace and in leadership, the business case will eventually become irrefutable.
In just a short time, gender lens investing has gained tremendous traction, as evidenced by articles and commentary in the mainstream media, catalyzing the formation of gender lens funds and more. In the short term, the attention is seemingly making gender into a bigger issue, i.e. causing us all to both talk more about gender, and measure gender development metrics. But what it’s really allowing us to do is find the blended value of equality. In quantifying both the social and financial results with increased accuracy and sophistication, we can and are resolving the asymmetries of the past, including our own biases.
Another SOCAP14 panelist Katherine Collins, founder and CEO of Honeybee Capital, gave an example of these biases, noting that until recently financial analysts did not assess the gender mix in most of their research. Women were routinely overlooked as consumers and investors dealt with the risks of neglecting market data from more than 50 percent of the population. In most of the world, these biases remain pervasive, which is why women still are disproportionately held back by limited access to capital. Women will, of course, benefit from correcting these biases — but so will their children, communities, investors, the economy and society at large.