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Commentary

Gender Equality: A Compelling Case for Impact Investment

Undervaluation of and underinvestment in women is leaving money on the table, says Sandra Osborne Kartt, Deputy Chief Investment Officer, ImpactAssets Capital Partners.

Sound the alarm – we stand to miss out on US$290 billion a year in the US economy.

In an era focused on capturing every bit of economic growth, it’s almost inconceivable that such a vast sum – the equivalent of nearly US$800 million every day – could slip under the radar. And yet, that’s exactly what may happen with the care economy.

According to BCG, the care sector commands a valuation of up to US$6 trillion, nearly a quarter of the total US GDP. Roughly half of care work – which underpins much of the economy at large – is unpaid, and it is disproportionately performed by women. Addressing the issue requires solutions that reduce the unpaid care burden as well as boost the supply of paid care. For example, improved access to child and elder care would enable more women to enter and stay in the workforce. But the way our mainstream discourse often overlooks the sector represents a glaring blind spot about work and productivity.

And unfortunately, the care economy oversight is just the tip of the iceberg – one element of a broader social disregard to pervasive and systemic gender inequality. Persistent undervaluation of and underinvestment in women is leaving money on the table and holding back progress toward true equality.

For the world’s four billion women and girls, there is too much at stake to stall any longer.

Catalysing gender equality

While impact investing alone cannot be a panacea for gender inequality, it is an indispensable component of a larger solution. There are three essential areas of need where the patient and flexible capital of impact investors can be most effective at driving gender equality: advancing economic inclusion; delivering products and services that improve lives and outcomes; and increasing representation and voice.

Gender equality is, fundamentally, a moral imperative. It is an objective worth striving for, even in isolation. But it also supports a host of broader global goals – driving progress toward a healthier, less violent, increasingly productive, and more stable society.

And yet, at our current pace, the UN estimates it will take an unacceptable 286 years to achieve such equality. To make meaningful progress more quickly, impact investors must focus on the targeted areas of need where they can do the most good.

Advance economic inclusion

A natural starting point emerges in economic inclusion — the cornerstone of gender equality. By championing financial inclusion, access to capital, and home- and landownership for women, impact investors can catalyse profound economic and social transformation.

Beyond providing economic resources, this channel of investment is critical for rewriting the narrative of financial power and empowering women with the tools to build their own wealth, autonomy, and resilience. Impact investors can help bridge the vast financial divide, turning gender gaps into gateways of economic prosperity.

Financial innovations in this area are becoming increasingly common. Small business lending, for example, is taking all sorts of exciting new forms – delivering vital capital to small business owners, a disproportionately high percentage of whom are female. The Impact Investment Exchange’s Women’s Livelihood Bond Series is one illustration of such innovation. As the first listed gender lens investing instrument, it provides access to capital for women entrepreneurs and women-focused enterprises, empowering women across emerging markets.

Improve lives and outcomes

Deep and sustainable impact toward gender equality requires holistic thinking that extends investment to all sectors pivotal to the lives and well-being of women and girls.

Purposefully driving investments in healthcare, education, housing, childcare and agriculture can directly translate into empowering women. These are sectors in which gender equality-focused investments can most profoundly impact women and girls’ daily lives and long-term prospects. For example, the economic toll from healthcare disparities faced by women is significant. McKinsey Health Institute estimates that women spend 25% more of their lives in poor health compared to men, resulting in unrealised global economic growth of as much as US$1 trillion annually. Some key players in the women’s healthcare space are committing venture funds to address the health gap and revolutionize care, from maternal health and contraception to menopause.

Indeed, improving women’s lives and their associated outcomes creates ripple effects of change, because women’s well-being helps catalyse a host of broader societal benefits – ranging from reduced poverty to improved family health.

As such, this strategy is a testament to the belief that when impact investors uplift women, they uplift entire communities – taking advantage of a powerful multiplier effect.

Increase representation and voice

Elevating women in decision-making roles is another crucial lever for accelerating progress toward gender equality. This involves more than just increasing numbers; it’s about embracing women’s insights and leadership styles in business, politics, and society at large.

This area of need includes proportional representation in positions of power, stable employment, career progression, and presence in corporate leadership roles, as well as politics. Women often face challenges in employment stability and career advancement. For instance, women are more likely to be vulnerable workers with less job security, and their representation diminishes as they ascend the corporate ladder: Only one in four C-suite roles are filled by women, even fewer of whom are women of colour.

Leaders in this space aim to increase representation and voice in a variety of ways, from investing in  to companies that promote workplace equity such as MAS Holdings, to  mutual funds or exchange traded funds, like WOMN, with strong policies and practices in support of women’s empowerment.

By investing in funds and companies that amplify women’s voices, impact investors can generate real progress toward more inclusive decision-making and leadership — bringing diverse perspectives to the forefront, while ensuring that the journey towards gender equality is shaped by those who are most impacted.

Moving beyond gender-neutral

The urgency of the gender inequality crisis is unmistakable, and it demands deliberate and focused action. At ImpactAssets, we are convinced that impact investors must allocate their capital to the realms in which it has the greatest potential to ‘move the needle’. The strategic focal points described above underscore our thesis that targeted investments in these areas can catalyse profound change for women and girls across the globe.

Yet, the conversation about targeted deployment of capital, while crucial, reveals an even more fundamental imperative: Investors passionate about equity must transition from gender-neutral strategies to gender-smart and gender-leading approaches across the board. With an array of tools at our disposal and an ever-deepening understanding of how to drive progress, the time is ripe for embedding these nuanced approaches throughout impact investing efforts. Investors are standing at a crossroads – armed with knowledge and resources and poised to drive meaningful progress.

Anything less would be a missed opportunity in our collective quest for equality, for a world in which all genders have equal rights and opportunities.

Disclosure: ImpactAssets Capital Partners PB LLC (“IA Capital”) is an investment adviser registered with the SEC. The content of this article is not a solicitation or offer to sell investment advisory services, nor is it a solicitation or offer to sell securities. All content of this article is for informational purposes only and should not be relied upon as investment advice. Information is subject to change at any time, and IA Capital is under no obligation to provide updates or amendments. Investment in securities involves the risk of loss. Past performance is no guarantee of future returns. © 2024 ImpactAssets Capital Partners PB LLC. All rights reserved.

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