If Covid was the top story of 2020 investment markets, then ESG investing was not far between, and investors who followed the research on sustainable investing were richly rewarded over the year. Yet the avalanche of ESG webinars, research reports and fund launches has tended to focus on the environment, climate change risks and opportunities from green innovation. It is important to understand the breadth of ESG goals, and the investment case relies on good research being done across a much broader range. So, let’s not leave opportunities to invest using a gender lens behind, because the research that we do receive demonstrates the indisputable opportunities for those who look at this perspective.
The Global Impact Investing Network (GIIN) defines gender lens investing within two broad categories:
For some reason, US investors were slower to pick up on the ESG risks and opportunities, but conversely, US firms have led the way in gender lens research and investment solutions. Investors deserve to have their fund manager search out every area of opportunity, so why have European fund managers seemingly lagged behind as evidenced by the focus of the research being shown to us?
It certainly is not because of the lack of potential for enhanced investment returns. Goldman Sachs’ recent report “Womenomics; Europe moving ahead” (Link here) focuses on the benefits of investing in companies with relatively high percentages of women in senior positions. The Goldman Sachs Europe Womenomics Basket includes companies with a relative high share of women at all levels and their report concludes that more women equals better performance.
“Whatever time periods we take, the greater the representation of women higher up organisations, the better the performance uplift from having a larger percentage of women.” Goldman Sachs Global Investment Research.
The double benefit of gender lens investing is that investor outperformance also has a strong impact and aligns with the UN Sustainable Development Goal (SDG) #5 – Achieve Gender Equality and empower all women and girls. This goal is linked to many other SDG’s, with strong evidence that investing in girls’ education and women in business is a powerful way to alleviate poverty along with other societal benefits.
On International Women’s Day, we would encourage fund managers to reach outside of the index and find opportunities in the gender lens approach to investing. The broad range of products in the ESG space will somewhat overlap the gender lens space, which was acknowledged in the Goldman Sachs report.
At IAM we are proud to have 41% women, including our Head of Research.
As investment advisors, we aim to provide our clients with a clear understanding of the many complexities of investments in a fast-moving environment. With increasing investor focus on wanting both investment returns and impact, gender lens is one area that could do with more research and more solutions to assess the risks in not having such a screen and to access the opportunities.