APRIL 2018

Implementing a Gender Lens

Category: Impact Investing, Impact Team

By Kate Huntington, Managing Director, Research

Gender bias is responsible for major inefficiencies in the way economies and markets function. For investors focused solely on maximizing risk-adjusted financial return, adopting a gender lens is an investment best practice that can help identify avoidable risks and profit from overlooked opportunities. For others, gender lens investing is part of a broader commitment to promote gender equality. There are a number of steps investors can take to implement a gender lens that will satisfy both of these objectives.

Implementing a gender lens begins with introspection and awareness of what is often an unconscious bias. The pervasive nature of gender norms means that investors may themselves be subject to certain biases, and women are not immune. In June 2017, the Harvard Business Review reported on an innovative study examining the role of gender bias in the venture capital industry. Using linguistic analysis of a series of pitch meetings held between entrepreneurs and venture capitalists, the researchers found that the venture capitalists, regardless of gender, “tended to ask [male entrepreneurs] about the potential for gains and [female entrepreneurs] about the potential for losses.”[1] Using statistical analysis, they found that the bias in these questions fully explained the relationship between the amount of funding an entrepreneur received and his or her gender.[2]

Controlling for these kinds of hidden influences requires investors to consistently and deliberately assess the gender dynamics of their investment processes. Dr. Iris Bohnet, Professor at Harvard University and author of “What Works: Gender Equality by Design,” offers thirty-six research-grounded actions to reduce unconscious gender bias. For example, to maximize investment team performance, “make sure every subgroup [such as women] is represented by at least three people or makes up about a third of the total” in order to “seize the benefits of diversity.”[3] Investors may also consider standardizing certain elements of their investment due diligence to ensure every investment opportunity is judged on the same basis of fact.

Investment Analysis
Once investors are confident their investment processes are robust enough to both detect and manage bias, they can turn to assessing the gender-related attributes of the investments. In 2010, the UN consolidated its various female empowerment strategies into a new entity, UN Women, which is tasked with promoting women’s empowerment across the globe. Among UN Women’s first actions was to collaborate with the UN Global Compact to develop the Women’s Empowerment Principles (WEPs).

The WEPs provide valuable guidance for investors and serve as a benchmark against which to assess both asset managers and the companies in which they invest. Just as investors might change their view of a company’s value based on the durability of its profit margins, they may also adjust their analysis based on the extent to which its business practices align with these principles. Companies that treat women and men fairly at work, for instance, may be more likely than peer organizations to attract and retain the talent needed to support their growth. Those with gender-related problems in their supply chain, such as forced labor, may be susceptible to value-destroying scandals.

An increasing number of institutional investors are integrating such considerations into their investment processes. Both the New York City Retirement System and APG, two of the world’s largest pension funds, have added sections to their due diligence questionnaires about gender.[4] In fact, gender analysis is consistent with the broader practice of environmental, social, and governance (ESG) investing, which embraces the idea that non-financial factors can have a material influence on company or investment performance.

Asset managers have also crafted a number of investment strategies designed to target companies that exhibit positive gender-related characteristics. The Pax Ellevate Global Women’s Index Fund, launched in 1993 as the Women’s Equity Fund, was “the first broadly diversified mutual fund [to invest] in the highest-rated companies in the world for advancing women through gender diversity on their boards and in executive management.”[5] A number of similar strategies have since followed, including the Glenmede Women’s Leadership Fund, the BMO Women in Leadership Fund, and State Street Global Advisor’s SSGA Gender Diversity Index ETF. Among the most sophisticated strategies is the Women’s Inclusion Strategy available in separately managed account format from Aperio Group. The firm uses optimization techniques to tilt an investor’s preferred index exposure, such as the S&P 500, towards companies with positive gender-related characteristics, while controlling risk.[6]

Though fewer in number, gender-focused strategies are also available in the fixed income markets. Community Capital Management, for instance, offers fixed income funds that include a gender lens component. In one of its strategies, the firm invests in customized mortgage pools providing capital exclusively to low- and moderate-income women borrowers.[7]

Moving to Action
Just as lenses in a telescope can allow us to see galaxies light years away, a gender lens can be used to see, more clearly, a distant vision of a more gender inclusive society. Before deploying capital, gender lens investors make sure to evaluate the gender-related attributes of an investment alongside its financial characteristics. My colleague and Athena Capital founder and CIO, Lisette Cooper, authored a blog post that explores the ways in which investors can allocate capital to have a meaningful impact on gender inequality, including by increasing women’s access to capital, advancing workplace equity, and creating new services and products designed for women. I also invite you to read our white paper, “Investing in Gender Equality,” to learn more about Athena Capital’s experience working with clients that invest to achieve gender equality.



[1] Dana Kanze, Laura Huang, Mark Conley, and E. Tory Higgins, “Male and Female Entrepreneurs Get Asked Different Questions by VCs— and It Affects How Much Funding They Get,” Harvard Business Review, June 27, 2017. Accessed via: https://hbr.org/2017/06/male-andfemale-entrepreneurs-get-asked-different-questions-by-vcs-and-it-affects-how-much-funding-they-get

[2] Ibid.

[3] Iris Bonnet, What Works: Gender Equality by Design (Cambridge, MA: The Belknap Press of Harvard University Press, 2016), p. 242 and p. 232

[4] Nicholas Neveling, “Gender diversity at private equity firms improving,” realdeals, July 11, 2017. Accessed via: https://realdeals.eu.com/ news/2017/07/11/gender-diversity-private-equity/

[5] “Pax Ellevate Global Women’s Index Fund,” Pax World Management, LLC. Accessed via: http://paxworld.com/funds/pax-ellevate-globalwomens-index-fund/

[6] “Women’s Inclusion Strategy” (Investor presentation, Aperio Group, 2017)

[7] “Community Capital Management Adds Gender Lens Criterion to its Customized Mortgage Pools for Low- to Moderate-Income Borrowers” (Press release, Community Capital Management, June 13, 2017). Accessed via: https://www.prnewswire.com/news-releases/community-capital-management-adds-gender-lens-criterion-to-its-customized-mortgage-pools-for-low--to-moderate-income-borrowers-300473166.html