High impact investment – what’s gender got to do with it? | Big Society Capital

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High impact investment – what’s gender got to do with it?

A lot more than many social investors realise or are acting on, finds our new research report “The Sky’s the Limit – increasing social investment impact with a gender lens.”

Furthermore, this “gender blind spot” is not only causing investors to miss out on opportunities, it can even lead to investments having a negative or regressive social impact.  More positively though, there is both the opportunity and the will amongst investors to change this. 

Gender lens investing uses capital to simultaneously generate financial return and advance gender equality. Rather than seeing gender equality as merely a compliance driven, box-ticking exercise, it recognizes the major social and economic dividends it offers. For example improving women’s economic position would add billions to our GDP, reduce poverty and the welfare bill. Countries that are more gender equal have less domestic violence and also less violence overall. Greater gender equality also increases the happiness and health of women and men and boys and girls.

Both social and smart investing, it is based on the fact that there is no such thing as a “gender neutral” investor or investment. The practices and investments of all financers – social or otherwise - will inevitably impact, directly or indirectly, on gender and gender equality. In turn, gender and gender inequality will influence the impact and return of investments. For example, an investor that has both women and men in key decision-making roles or invests its money in ventures with fair employment practice will clearly have a more positive gender impact. The evidence also shows their investment is also likely to be more secure and deliver higher return. Whereas an investor where men, and thus “group think” dominate in investment decisions or which invests in ventures that deliver “gender blind” services or products won’t just have a negative gender impact, they are likely to generate less return. 

There is no universal approach to gender lens investing and there is a range of practices or strategies that can be drawn on by social investors. In broad terms, these fall into four main areas: 

  • Increasing capital flow to women entrepreneurs – which both generates more secure and higher return and address the current credit gap between women and men. The European Bank for Reconstruction and Development has established a Women in Business programme which provides dedicated credit lines to women owning or running businesses.
  • Targeting capital at ventures that are gender progressive in terms of both diversity and operational practice. This reflects evidence that more diverse companies are both more innovative and profitable. Root Capital, a non profit lender has identified gender-inclusive businesses to support throughout the ecosystem — rated by a potential client’s percentage of women leaders, women managers, women employees, and women suppliers, as well as inclusive programs and culture.
  • Investing in ventures that deliver goods and services that directly advance gender equality. In the report we distinguish between ventures that recognise current inequalities such as The Spring Accelerator and those who seeking to tackle its root causes and produce alternatives such as Fearless Futures or Timewise
  • Getting your own house in order. The association between gender diversity, good employment practice, progressive values and goals and greater effective business applies to investors too. The King Badouin Foundation has developed a tool for gender mainstreaming in design and management of its projects that prompts staff to ask questions to help them consider the concept of 'gender' in each stage of the project management process. 

Using a gender lens opens up opportunities for UK investors across the “spectrum of capital” i.e. from investors who prioritise financial return to those for whom impact is the priority. However, our research identified that these opportunities are not being pursued. Less than 25% of investors are currently considering gender in their decision-making or wider processes and only one assesses gender impact This is despite some understanding of the benefits of a gender lens, and over 85% of investors believing that they have a role to play in advancing gender equality. So if there is no resistance to the idea and importance of greater gender equality what’s the issue?

The main reason given for by the investors we spoke to was what they perceive as lack of demand from the major asset owners and wholesalers with one interviewee noting “There is no compulsion to do so – either from our funders or from sector norms." The second most common reason was a lack of knowledge and skills in how to use a gender lens. Addressing these issues are key recommendations in our report. We are already engaging with wholesalers, including Big Society Capital who have already started thinking how they can respond. We also want to develop more practical guidance and support for both investors and ventures.

To date, the UK has led the world is developing the field of social investment. Its time to stop playing catch up on gender and take pole position.

By Ceri Goddard, Director of Equality Innovation, The Young Foundation

Last updated | 
12 May 2016