Investing in Gender Equality
During her acceptance speech at the 2015 Academy Awards, actress Patricia Arquette spoke to the continued discrepancy in pay between Hollywood’s males and females. The move was likely spurred by the Sony hack of 2014 where confidential documents revealed stark differences in compensation at various levels of the film industry. Though it’s remerged in mainstream consciousness now, pay discrepancy in the workforce has been highlighted for years. As of 2012 the Pew Research Center noted that, all else being equal, women earned 84 cents on the dollar compared to men.
While discrimination in any form is an ethical problem by itself, investors are becoming aware of its impact on corporate value and performance. According to MSCI research, companies with boards and executive management inclusive of women above regulatory standards have demonstrated lower risk and better governance indicators such as less fraud, bribery and corruption incidents. In response, a group of investors are collaborating with the Thirty Percent Coalition using shareholder engagement efforts to ask companies to disclose board recruitment practices. The coalition’s ultimate goal is to boost the average number of women’s seats on boards from the teens to at least thirty percent on all publicly-traded companies.
By applying a ‘gender lens’ to their corporate analysis – in areas such as pay, position, parental leave - investors are banking on having a positive impact on their bottom line. However, in addition to lowering risk by identifying misaligned value within a portfolio, there is the general motivation to support one half of the world’s population.
Gender equality and empowerment of women, especially in underdeveloped nations, is duly identified as a key goal in the UN Millennium Goals and Beyond 2015 for global growth and economic stability. Therefore, the Criterion Institute defines gender lens investing as financing that promotes gender equity in the workplace, provides better products and services tailored for women, or that increases access to capital for female entrepreneurs. Supporting women in business and finance has other benefits as well for the financial services industry. An educated female workforce with enough income to provide for their needs plus capital to spare is an attractive target market of potential investors.
Accordingly, the market has seen a range of investment opportunities developed in recent years, from public equities to microfinance loans, specifically related to gender equity as a strategy. Individuals wanting to learn more about integrating a gender lens to their portfolio should speak with their advisor about the options available to them. In the meantime, it will be interesting to see Hollywood’s progress in addressing gender discrimination. Perhaps it will release a biopic on the Lily Ledbetter Fair Pay Act passed in 2009. Perhaps Ms. Arquette will be available to play the titular role.