Making the Most of Gender-Lens Investing
Although investment in gender-diverse organizations, women-owned businesses, and companies catering to women’s preferences has grown substantially in recent years, it is still nowhere close to reaching its full potential. It is being held back by common misconceptions that fly in the face of a mounting body of evidence.
NEW YORK – Over the past decade, gender-lens investing (GLI) has justifiably garnered interest among impact investors seeking to promote gender equality and women’s empowerment. But such strategies are about more than advancing a social good for its own sake. Investing in gender-diverse organizations, women-owned businesses, and companies catering to women’s preferences and needs has been shown to yield considerable financial returns.
This dual outcome represents a rich opportunity for all types of investors – not just those focusing on social impact. But myths and misconceptions continue to limit GLI’s growth potential. Among the five most common myths, the first is that women’s inclusion and empowerment is merely a social cause, rather than an economic issue. In fact, evidence from the past decade clearly shows that investing in women as clients and workforce assets is good for businesses and the economy.
For example, in 2015, McKinsey & Company estimated that if women were to “play an identical role in labor markets to that of men,” $12 trillion could be added to annual global GDP by 2025. Similarly, in 2018, BNY Mellon and the UN Foundation projected that closing the global gender gap in women’s access to financial products and services could unlock $330 billion in annual revenues. And in 2020, Women’s World Banking found that, among its portfolio companies, those with the most women borrowers experienced 6% higher growth in earnings and assets and 3% higher returns on equity, on average, relative to those with the fewest female borrowers.