The Gender-Lens Companies and Their Impact on ESG Investing

Gender equity is fast advancing as a focus in the social, environmental, and governance investing movement as the gender-lens has been receiving much attention. Gender-lens investing favors companies that have high representations of women in management positions and in boards. It also takes into consideration companies that value pay equity and other workplace policies that particularly help women.

What Financial Advisors are Saying about Gender-Lens Investing

Financial advisor at Artemis in Boston, Kathleen McQuiggan, said they’re now seeing more women investors who apply gender lens principles in building their investment portfolio.
Gender-lens research and advisory firm Parallelle Finance reported that around $3.6 billion is invested in over two dozen exchange-traded funds, mutual funds and other equity products using this investment strategy.

According to Morningstar, the $3.6 billion is only a fragment of the $330 billion invested in the category of the Environment, Social and Governance (ESG) financial market. This category comprises companies that takes ino to consideration the impact of the business and its operations on the well being of employees, protection of the environment and growth of the community.

Over the past five years, the funds coming from gender-lens investors have been steadily increasing, along with the launch of campaigns in support of women, such as the #MeToo movement. The number of high-profile sexual harassment cases that have been filed also contributed to the growing support for companies with policies that encourage gender equity; or those that are largely represented by women.

How Well are Gender-Lens Businesses Performing?

Although several of gender-lens companies underperformed during this year, some others did well. Nonetheless, Morningsta’s Director of ESG strategy, Jon Hale countered there is no reason to believe that gender-lens companies are bound to underperform all the way. Hale added that giving focus to gender equality does not mean disregarding important investment criteria.

McQuiggan believes the funds will be more profitable in due time as women women in a firm;s workforce are the real secret ingredient why investors are choosing gender-lens companies over other business organizations.