Achieving success in the world of business and finance can be an arduous experience for women. The corporate world has traditionally been dominated by men, with the very bedrock of economic theory rooted in the philosophies and musings of male scholars spanning Adam Smith, George Mason, John Locke, and more recently Friedrich Hayek, John Maynard Keynes, Milton Friedman, Joseph Stiglitz, and Paul Krugman, amongst others. Nevertheless, women have started to take top positions in the world of business, as evidenced by the fact that there are now 20 female CEOs at the helm of Fortune 500 companies in America according to a report released in July.
Despite the fact that this number only represents a miniscule 4% of all CEOs on the US-based Forbes list, it is still a sign that woman’s place in the corporate world is slowly becoming entrenched. Furthermore, at the same time as we are witnessing an increase in corporate female management, the idea of gender-focused investing (aka “gender-lens investing) is also emerging as a new them in social responsibility, and a possible connection to the ascent of women in management would be frankly unsurprising.
Besides the reality that gender equality is quickly becoming a cornerstone of socially responsible companies’ hiring practices, as one can tell by skimming the corporate governance policies of virtually any Fortune 500 firm, there are also positive numbers that indicate female presence is a huge boon to the profitability of corporations across the board. Catalyst – a non-profit foundation which assists in ‘expanding opportunities for women and business’ – has shown that “Fortune 500 companies with three or more women directors gain significant performance advantages over those with the fewest: 112% higher return on invested capital, and 73% higher return on sales.”
North of the border, investors seem to only have stumbled upon the merits of gender-lens investing in the very recent past. However, female-oriented business initiatives do exist in Canada. One such homegrown company is the Sophia Financial Group, based in Vancouver. The ‘Sophia Vision’ is “to inspire and support women to embrace and apply their economic power, creating a groundswell of positive change at the family, societal, and global levels” according to their organizational overview. Another women’s investment venture operating out of Minnesota called Chicks Laying Nest Eggs also works with Canadian gender-oriented investors, as does The Money Club, an investment group launched and operated by the US-based Women’s Institute for Financial Education.
Knowing that investment funds now exist which are tailored to meet women’s needs and focus on issues of importance to female investors is not enough, however, to understand why this bubble developed within the finance industry, and what impact it will make for investors in the long term. One key reason for the emergence of gender-lens investing naturally has to do with the fact that women have different needs than men; longer life expectancies, caring for children, and nursing aging parents are some considerations that Sandy Cimoroni (Senior VP of TD Mutual Funds) says make a difference between men and women’s investment portfolios.
There are also noteworthy societal benefits to consider on the topic of gender-lens initiatives – themes that while inextricably linked to social responsibility – are more likely to resonate with female investors if simply for the fact that women relate and empathize with the plight of other women and girls in less fortunate circumstances than themselves. Some important reasons that women might consider investing in gender-specific funds is due to the economic, social, and financial changes that may be spurred by their hard-earned dollars. Plan Canada – one of the world’s largest and oldest charities – has been working on encouraging investments crafted to help women and girls around the world. According to a recent brief issued by the organization, there are five key areas in which gender-based investing can make a difference for women and girls around the world:
- Economic growth: “there is an increasing body of evidence that shows countries that invest in girls’ education will experience more economic growth than those that do not.”
- Social impact: “When girls are given the tools and training to succeed, they grow into women who become role models for children of future generations.”
- Improved health and welfare: “Secondary education for girls leading to better jobs, and ownership of land and assets translates into lower maternal mortality rates, improved child nutrition and a lower risk of contracting HIV/AIDS.”
- Better loan repayment rates: “Studies have shown that women are more likely to repay loans than men, so extending credit to them not only produces economic benefits, but it makes good business sense.”
- Global development: “The vast majority of companies identify growth in developing countries and emerging markets as an important component of their own long-term growth strategy. Investing in women within those countries facilitates that growth.”
With more and more women enrolled at post-secondary institutions and an increasing number of women entering the workforce, there will likely be a resounding shift in investment choices as well due to the assets coming under female ownership. With women projected to own 70% of all financial assets in Canada by 2019, and the risks of short-term investing crystal-clear after the past four years of global economic turmoil, the emphasis will likely turn to long-term, ethical investments which will be informed by gender-lens investing and other social considerations.
As one observer noted, gender-lens investing is still in its infancy in both Canada and the US. Still, with the rapid emergence of female leaders in management and authority positions, their success has shown womankind that achieving success in finance – and assisting other women and girls with the same – is both a worthy and socially responsible decision where money and time are concerned.