It’s a sad state of affairs that in 2015, women still earn only 78 cents to every dollar a man earns. It’s not as if women are a small fraction of the workforce, nor are they unqualified or lacking the skills and education needed to succeed in top positions. The exact opposite is true in many cases. In efforts to combat this unacceptable issue, focus is turning toward a rapidly growing market known as gender lens impact investing. This technique uses gender as a category of analysis to target and invest in companies led by women, those that benefit women through their products and services and those that promote gender equity.
Jackie VanderBrug, senior vice president and investment strategist at U.S. Trust is a pioneer of gender lens impact investing, recently speaking on a panel at SOCAP 15 in San Francisco about the emerging demographics that are powering impact investing. The hope is that this technique will not only grow and revitalize our economy, but will galvanize social change as well. I got the chance to interview VanderBrug on the ins and outs of gender lens impact investing, how to engage these populations effectively and what it will take to truly achieve gender equity for women in the workforce.
Dustin McManus: For those who maybe don’t know, could you explain what impact investing entails?
Jackie VanderBrug: Impact investing is investing with intention to generate measurable social and environmental impact alongside financial returns. We see investors increasingly thinking beyond philanthropy and looking to drive their capital with purpose. Sustainable, responsible and impact investing assets grew over 76% in just two years, passing $6.5 trillion in 2014. Through impact investing, investors can tailor their portfolios to reflect their values and integrate some of the major economic themes of today.
DM: What kind of strategy is employed to identify worthwhile companies for impact investing?
JV: There is a spectrum of impact investing approaches and techniques. Some investors want to avoid particular industries (such as coal) or practices (such as all male boards). Others find it more compelling to seek the best performing companies among sectors using environmental, social or governance factors. They are looking to see who’s leading in innovative practices rather than who to avoid. Still, other investors have particular thematic interests such as education, resource efficiency or gender equality.
It’s important to note that these strategies, while allowing the investor to direct their wealth towards a particular purpose, can also earn market rate returns. For instance, U.S. Trust has created an investment strategy, called Social Innovative Investing, which is based on a growing awareness that strong corporate financial performance and social responsibility are not mutually exclusive; rather, they are mutually beneficial qualities.
DM: Since your focus is on gender lens impact investing, what do you think it will take to close the wage gap between men and women?
JV: Research on the wage gaps shows it is multi-faceted. That is, factors including sector choice, negotiation strategies, bias, legislation, career interruption and caregiving responsibilities all play a role. And the gap is more significant for minority women. The good news [is that] increasingly women and men find it unacceptable. We will need everyone to close the gap – managers to review practices for implicit bias, women to negotiate earlier, schools to support girls in STEM, men to play caregiving roles and legislators to support progressive policies. Gender lens investors also play an important role in asking companies about their policies, and increasingly companies are becoming transparent about their progress. I see encouraging progress on all these fronts, supported by the research that full economic participation of women is good for everyone.
DM: Statistics show that women are outpacing men in terms of college and higher education enrollment. Do you think this will begin to translate into the composition of the workforce, opening doors for more women in positions of power and management?
JV: Education is essential, but not sufficient. In the United States, women began earning more bachelor’s degrees than men in the 1980s. It is important to look at the details. We see the workforce changing, but also see entrepreneurship as a transformative force. As of 2012, 126 million women were starting or running businesses, and 98 million were operating established (over three and a half years) businesses– that’s 224 million women impacting the global economy. This growth among women in business will not only expand the job pool for other women but for the entire workforce globally.
DM: Could impact investing be utilized to similar effects for other groups, such as people of color and LGBT people?
JV: Yes. We already offer a Human Rights and Recognition strategy as part of our U.S. Trust Social Impact Investing (S2I). The process includes reviewing management practices relating to equality, social justice, anti-discrimination and LGBT community support. Impact investing can be geared to the investor’s values. Working with a financial advisor can help the investor to truly understand and apply goals to her investments
DM: It’s no secret that gender equity is an obstacle for women in the workforce, but besides that, what do you feel is a big, maybe overlooked issue facing women in the workforce?
JV: The full economic participation of women will support the innovation and execution needed to address some of our global challenges. Research shows that diverse teams are more resilient; they solve problems better. But for women to be fully engaged, our society has to value and structure for caregiving throughout life stages. Our 2014 Insight on Wealth and Worth survey showed, of high net worth women, three quarters (71%) have equal or primary responsibility for child care and 39% care for or share care for an elderly relative. These numbers don’t change for executive women. The good news is that men, especially millennial men, are increasingly clear they want to be both breadwinners and caregivers.
DM: What do you see as being the ultimate goal or outcome of gender lens impact investing?
JV: Utilizing a gender lens enables investors to identify risks and opportunities. Investors use a gender lens for different reasons – some are looking for alpha, others to reduce risk, others to create social change. But all will agree that increased gender equality drives economic growth and accelerates social change.