A call to motion: aligning gender lens investing and ESG

Gender Lens Investing (GLI) is a thematic environmental, social and governance (ESG) strategy inspired by women in leadership (WIL) and related gender equality criteria.

The essential publicly traded GLI equity funds available to retail investors These include 12 global and 16 regional funds that ended 2020 with combined assets under management of $2.67 billion. Overall, they weathered the economic storms of the yr well. Only one fund was closed and three recent funds were launched..

In fact, GLI equity funds The performance was in keeping with the general market. Although there are not any clear industry winners by way of gender equality, information technology and financial services are the highest performers, in keeping with a AUM-weighted allocation evaluationdespite their very own well-documented inequalities in gender equality. The country weighting is dominated by the United States with 58%, followed by Canada and several other European countries.

Despite the continued demonstration of WIL advantages, Progress was painfully slow, especially for ladies of colorGender equality must encompass racial, ethnic and socioeconomic diversity.

Stakeholders have begun to grapple with the disappointing pace of change. In the UK, the government-backed goal for a 3rd of board members to be female by the top of 2020 is for all FTSE 350 corporations was achieved by the index components. In the US, the NASDAQ stock exchange submitted a groundbreaking proposal to the SEC in December that will require board diversity for newly listed corporations..

How do the GLI equity funds reflect the ESG approach and the way well do they implement it?

WIL’s investment philosophy is predicated on corporate governance and related policies that promote inclusive gender diversity. This reflects the governance aspect – the G in ESG – in relations with internal stakeholders. Some GLI funds also give attention to supplier diversity and product safety, which applies a component of social or the S in ESG to external stakeholders.

But what about E? How do GLI equity funds perform on the environment? This is a critical query, given how severely and disproportionately women are affected by environmental crises.

The unequal burden that weather disasters, sea level rise and other climate change-related events place on women, particularly in developing countries, is well researched. Women usually tend to live in poverty, less more likely to own land, and more more likely to lose their education and livelihoods attributable to the climate crisis. Discriminatory laws, lack of access to financial services, and the burden of unpaid care exacerbate the unequal gender burden of climate change.

One consequence of that is the greater role women play in developing climate solutions. In developing countries, women are the important thing actors in lots of community-based initiatives to handle local climate impacts. Empowering women and girls ranks second amongst dozens of solutions to combat global warming. In developed markets Studies show that ladies are relatively more focused on climate changeand lots of environmentally friendly products are marketed to women.

At least 4 of the 28 GLI equity funds are fossil fuel-free, indicating their alignment with the climate component of ESG. These include the PAX Ellevate Global Women’s Leadership Fund, the Desjardins SocieTerra Diversity Fund and the Adasina Social Justice All-Cap Global exchange-traded fund (ETF).

Additionally, Robeco, the manager of the RobecoSAM Global Gender Equality Impact Equities Fund, announced that each one of its funds could be fossil fuel-free by the top of 2020.. Five GLI equity fund managers recently committed to aligning with the Paris Agreement’s emissions targets.

Where are there opportunities for these funds to speculate in women in leadership positions in climate protection? It is estimated that 32% of renewable energy jobs are held by women, in comparison with 22% of all energy jobs. However, most of those positions are low-paying administrative jobs somewhat than better-paying STEM-related jobs. However, strong growth in renewable energy jobs is projected for the approaching many years, so clean energy industries can have a chance to advertise inclusive gender equality and reap the advantages of diverse leadership.

The 28 GLI equity funds held 155 unique top 10 holdings at the top of the fourth quarterThe table below shows the clean energy corporations in these ranks and their WIL data.

Clean and renewable energy corporations in the highest 10 GLI equity funds, listed alphabetically

Of course, there’s one other side to the equation: how do ESG investments integrate the gender lens philosophy? After all, different ESG reporting standards are jockeying for leadership on this area.

Whatever frameworks prevail, they need to include comprehensive gender inclusive metrics. Indeed, all ESG reporting standards and requirements needs to be considered from a gender perspective. The leading standards tended to give attention to the materiality of ESG metrics by company and industry.

However, ongoing research on the advantages of gender-diverse leadership – and the prices of falling behind – just isn’t sector-specific.

ESG standards should measure all corporations against the G of internal inclusive gender equality, the S of diversity and equity in external relationships, and the E of addressing the gender-unequal impacts of climate change and the environmental crisis.

ESG funds should then align their investments with the leaders in these metrics.

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Photo credit: ©Getty Images / Watchara Kokram / EyeEm