Harmonise the Discourse on Gender Equality

Dr Shefaly Yogendra, Director of the Board at Harmony Energy Income Trust, explains the risks of over-emphasising the business case for gender diversity in the workplace.

For years, surveys and academic papers have promoted findings about financial performance benefits from increased gender diversity in the workplace.

These arguments typically dwell upon three things:

  1. Enhanced decision-making and innovation

According to Boston Consulting Group, women are more likely to have multi-disciplinary backgrounds, a quality linked to an increased ability to navigate change and the ability to lead corporate transformations. A wider range of experiences, training, and hence perspectives enhance creativity and can lead to more innovation and better decisions.

  1. Improved financial performance

A survey of nearly 22,000 firms by the Women’s Economic Empowerment Research Institute found a correlation between having women in the C-suite and an increase in profit margins, greater resilience, and more innovation. These are all assets that most, if not all, companies would gladly welcome in their business, especially in environments of uncertainty and change currently present.

  1. Reputation and stakeholder trust

Fortune’s ‘most admired companies’ were found to have double the female representation at senior management level compared to less reputable companies (GFP Index). Status, reputation and admirability attract talent. Conversely, the inability to attract and retain talent has a direct impact on the growth and performance of the business.

The problem with the business case

While professors, academics, and consultants have been busy making the case that increased female representation at all levels benefits financial performance in business, gender equality in the workplace remains a far-off ideal. McKinsey’s Women in the Workplace 2023 report found that only 28% of corporate jobs were held by women. In the energy sector, female representation is at a mere 16% (IEA).

This naturally begs the question: if the business case for women’s inclusion in business is so strong, then why is female representation in business not greater?

Inverting the inquiry, one could also ask: where are the studies on the financial detriments of over-representation of men?

Somewhere between these two extremes of proving a business case and assuming a business case, there is a need for change.

What better time to seek to drive that change than now – as many of the business and macro-economic assumptions underpinning business for the last 30-40 years come unstuck in front of our eyes?

Let’s start by reconsidering why we do business in the first place.

Blame it on Friedman. Or should we?

It has been nearly 54 years since Milton Friedman’s doctrine titled ‘The Social Responsibility of Business Is to Increase Its Profits’ was published. Its concluding words – “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is which is to say, engages in open and free competition without deception or fraud” — have been read uncritically and adopted reductively.

The often-cited punchier motto “the business of business is business” looks around smugly as it sets socially responsible behaviours into some kind of oppositional binary with profits.

The critical thinking business leader however notes that Friedman clearly defined the business of business within the “rules of the game” and “open and free competition without deception or fraud”.

Over half a century on from Friedman, the “rules of the game” have changed.

A whole new generation of millennials is now in the workplace, and they are much less likely to engage with employers with poor environmental performance and dubious ESG credentials. The generation right behind them – Gen Z – is demanding equality in pay and treatment, and leaves employers who do not provide it.

Crucially they expect an alignment of values and a sense of belonging in the workplace, and they will make an estimated 30% of the workforce by 2025. Not for them the misogynistic business culture and daily microaggressions that keep women from the “free and open competition” that would make workplaces more meritocratic and inclusive.

The readers of this publication know these issues of critical importance in business today are wrapped up in the acronym ESG.

Harmonise to inspire inclusion

Women make up over half the people on this planet. It is not a radical idea to suggest that a business case need no longer be made for greater gender equality and women’s inclusion.

A context-aware reading of Milton Friedman’s doctrine today would translate to the need for business to harmonise purpose, people, and planet to make profits.

This International Women’s Day, we propose this purposeful harmony to inspire inclusion.

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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