Themes on Gender Lens Investor Radars
Overview
The investors, intermediaries and gender experts we spoke to referenced multiple investment themes of interest (although not necessarily action). For some - like financial/digital inclusion and the care economy - the ongoing pandemic was a strong driver of attention, exacerbating existing inequities. Others have been blown into focus by global events (such as the murder of George Floyd in the US) or controversial policy changes like Roe v Wade. Across themes, as we have seen elsewhere in the report, there is a growing awareness of intersectional impact and complexity - for example, between climate and gender finance, supply chain finance and gender-based violence, or reproductive rights and justice, equity, diversity and inclusion.
The chart below illustrates the percentage of investors in the GenderSmart community focused on key report themes. The data was extracted from our Salesforce CRM in September 2022, based on a sample size of 646 investors across asset classes.
71% Financial Inclusion
64% Climate and Gender
52% Justice, Equity, Diversity and Inclusion
36% Gender-Based Violence
38% Supply chain/Procurement
34% Care Economy
33% Sexual and reproductive rights/health or femtech
THEME 1
Care Economy
The COVID-19 pandemic – and subsequent ‘Great Resignation’ – has had an overwhelming impact on labour force participation, making it clear that failing to invest in a stable, resilient care economy is a significant economic risk.
The care economy consists of both paid and unpaid (and often invisible) labour and services that support caregiving in all its forms. In an investment context, the term refers to market-based solutions that recognise, reduce, redistribute and reward care and domestic work.
While in some regions, such as the US, the care economy is currently a political and economic priority, in others – including many emerging markets, where data is lacking – the sector remains undervalued and underappreciated. Many private investors see care enterprises as high risk, particularly those companies which aren’t technology-enabled.
Further collective efforts are needed across social structures, government and policy to formalise the care economy and address the specific challenges of economically marginalised groups (and particularly lower income women, who are disproportionately affected). At the same time, investors must be alert to opportunities in the sector by adopting a broad definition of care-related investments rather than focusing solely on digitisation.
“COVID has put a big spotlight on this issue. And I think we’re starting to see more people interested in this space, the care burden trying to shift, realizing how much women and girls carry. I think the big question is what’s the entry point? It’s hard to do everything for everybody.”
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“It’s not necessarily that the commercial teams are now saying, Oh, great, another exciting sector. I think there’s much less awareness there. But those who are leading the field, I think they are definitely looking at care economy”
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“We would want people to be alert to opportunities in that sector and taking a fairly broad definition of care related investments. They’re not just, you know, building daycare centers. ”
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THEME 2
Climate and Gender
It is now widely acknowledged that climate and inequality are two sides of the same coin, both in terms of impact and of how we address them.
This is a critical opportunity to take an intersectional lens to gender smart investing, as indigenous, local women’s knowledge is crucial to unlocking climate solutions and moving towards a just transition. It is a complex balance to strike, however; the majority of impact capital goes towards and is driven by climate strategies, meaning that gender goals are in danger of being deprioritised unless properly integrated.
While much of the ongoing investment activity is happening within emerging markets, there is increasing focus on finding women-led climate solutions within private markets and unlocking private, non-developmental capital in the process. Biodiversity, nature and the blue economy were all listed as strong emerging sub-themes within climate justice, although many investors are still at the due diligence phase.
“Diversity is seen as the poor relation of sustainability. And sustainability has, for very good reason, got lots of attention. And I suspect in the aftermath of the Ukraine war it is going to continue to get a lot of attention because of the energy issue, apart from anything else. To my mind diversity is at least as important because if you want to make the right decisions about efficiency and allocation of resources for sustainability reasons, you need to have an efficient decision making body which is going to record diverse inputs and an inclusive culture.”
“There is no climate justice and climate anything without consideration of gender at the same time. That’s a very important nexus that [our organisation] is also focusing on and trying to find a more intentional way of approaching.”
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“The reality is that in any public market opportunity, there is some exposure [to extractives], whether it be 3%, or lower, which is completely unacceptable in the feminist activist community. So I think it’s going to be a while before some of these things can really be addressed”
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“DFIs are not present in the nexus of climate and gender - due to their volume targets, they invest in mitigation which is a safer choice but there are no women in mitigation. Their targets and objectives are volume driven, which does not match the reality of women-led ventures on the ground who need finance and are smaller in size.”
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THEME 3
Justice, Equity, Diversity and Inclusion
There is a growing understanding that Justice, Equity, Diversity & Inclusion (JEDI) strategies must be multifaceted and intersectional, working across gender, race, ethnicity, religion, disability, income, sexual orientation and cognitive diversity. This recognition has led more investors to take a broader, deeper and more systemic look at JEDI practices.
Several are now examining where ultimate impacts are occurring and how power dynamics are playing out, as opposed to counting numbers or integrating rubber-stamp processes without considering outcomes. On the other hand, capital is still not flowing as rapidly as some would like, with concern that gender is being deprioritised within broader JEDI strategies.
JEDI uptake is happening at different speeds for different asset classes, as well as along the capital continuum. Institutional investors, for example, are now entering the field more strongly than ever before. However, there is some confusion around language in different geographic contexts, with marginalised groups varying from region to region (or even within regions), and some areas lacking the vocabulary entirely for this approach. There is some disagreement, too, about whether investors should expand their definition of gender to go beyond women, or whether this would create a fracture between mainstream gender investing and those integrating a LGBTQ+ lens.
“Who is really benefiting? When we talk about women on boards, when we talk about gender diverse teams, even gender diverse supply chains, are marginalised women or non-gender conforming identities in poverty benefiting from this gender lens discussion?”
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“If you’re working in the LGBTQIA space, it’s very hard not to have an intersectional approach because it touches on so many different aspects of people’s lives that it plays into education, plays into race, it plays into socio economic status. All of these different elements come together and culminate in people’s lived experience.”
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“I would like to see all of these conversations around diversity start to include economic factors. I still think people are responding to the way that people’s profile pictures look on a website, and then they go, Aha, that is a diverse team. And there’s so many other nuances.”
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THEME 4
Financial & Digital Inclusion
Women-led small and medium enterprises have been disproportionately affected by the pandemic, with limited access to financial cash flow and digital connectivity restricting their capacity to adapt to market disruption.
However, widespread efforts towards financial inclusion are beginning to pay dividends. In 2021, the gender gap in account ownership across developing economies fell to 6% from 9% (where it had hovered for many years). This uptake was supported in part by restricted travel, which forced many businesses to pivot to a local and/or digital model.
Now, investors are increasingly focused on closing the digital gap for women entrepreneurs in emerging markets and rural locations. But with this economic transition to online spaces comes a risk of moving backwards in terms of inequality and discrimation. From AI to P2E, digital finance solutions must be designed carefully and holistically across markets to ensure they protect individual rights and promote equitable access.
“The importance of ethical AI is critical. It’s just so important, protecting individual rights, protecting privacy, non discrimination, non manipulation, and it’s relevant from a gender perspective. If AI is being used, and inherently biased by gender, it’s going to have a huge impact.”
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“Digitisation – supporting entrepreneurs with digitisation in particular – is super important. That’s a critical area, half of our portfolio. As you see more of an economic transition to online spaces, that’s an area of high risk of going backwards around Workplace Gender Equality”
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THEME 5
Equity in the Supply Chain
As the gender smart investing field grows more sophisticated, investors are looking beyond the board across the supply chain to remove exploitative practices and identify new opportunities.
The disruption caused by COVID-19 has shifted supply chains and driven more local approaches, leading to increasing procurement opportunities in emerging markets in particular. These include companies and sectors that sit at the intersection of climate and gender, such as sustainable agriculture.
Supply chain financing, too, is an important area, with small businesses struggling to shoulder rising procurement costs. Investors have been looking for ways to lower margins by domesticating supply chains and procuring goods and services from diverse, women-owned enterprises.
“So for aquaculture, there are resources. But how do the women then tap into [those] so that apart from somebody investing in production, there is also someone who’s helping to invest in the supply chain?”
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“We’ve seen a fair amount of work on the distribution side. But we haven’t yet really fully understood what the private sector can do to increase procurement. What are the best practices of procuring goods and services from diverse suppliers, particularly women owned enterprises?”
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“There’s a larger question mark around supply chain financing. We’re looking at all kinds of new mechanisms that weren’t a thing before, because people could just piggyback on systems. But now it’s really challenging to do that. The biggest pain points I see are around supply chains - can we actually domesticate our supply chains? Can you bring manufacturing back home? What’s that going to do to your model? What does it do to your margins?”
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THEME 6
Gender-Based Violence
While gender-based violence can be a challenge to identify and mitigate throughout the investment process, the links between it and other systemic issues like power dynamics, JEDI and financial inclusion are being seen increasingly clearly.
Some investors are attempting to integrate preventative mechanisms and frameworks, such as screening investments for gender-based violence across the supply chain or educating investors on how to broach the subject with fund managers. For example, the Criterion Institute created a tool for assessing the risk of gender-based violence, which has been integrated into the recently-announced 2X Certification Mechanism.
“We have a very strong, robust ESG process that is part of every single investment. For example, every single investment is screened for gender-based violence risk. We will not make an investment unless that screen has been worked through.”
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THEME 7
Women’s Health & Reproductive Rights
As a theme, women's healthcare is highly investable, with momentum gathering around sub-sectors including femtech, maternal health, mental health and reproductive health.
Both investor and government interest is strong: in the US, Rhia Ventures is building out a healthier ecosystem via Medicare strategies, while in Japan, the government is offering subsidy programmes to support the femtech sector. As more femtech companies validate their investment hypotheses, global momentum will continue to grow.
Political change and cultural talking points are also influencing investor decision making and stakeholder engagement. In developed markets, shifting conversations around the menopause have triggered an interest in solutions, while the overturning of Roe vs. Wade in the US has pushed some investors to engage with portfolio companies on their healthcare policies.
“One of the areas that we’ve been looking very actively at is in women’s health. We haven’t made an investment in that space yet because we haven’t found something that has a high tech component, is scalable, VC, investable, that has all those components, but we are seeing more activity. Particularly in the COVID pandemic space and post-pandemic, you’re looking at how healthcare can be delivered in a more efficient and effective way.”
“I also think that the needle is really moving on menstrual health globally. But again, more from an impact standpoint. I’m still really craving and looking for the return data, that you can invest in menstrual health and get an exit with a return. I’m hoping to produce that in the next 12 months.”
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“I think we need to really look at an uptick in investing in the areas of non traditional pharmaceutical supports for medicated abortion and medicated services as well as technology and communication support. So that we can create alternatives for people to connect with each other, find the services they need, and provide the support for those services.”