The Socially Responsible Investment (SRI) world has long included gender diversity as part of its human rights criteria in evaluating companies. We are now beginning to see investments that are taking this a step further. Not only are gender issues included, but they are making it the focus in an attempt toseize the opportunity of this edge that women in leadership seem to provide.
I have a special interest in issues affecting women due to being blessed with a wife and five daughters. By October all five will be teenagers. If you’ve spent much time with teenagers you know that they can be very passionate about various causes. On top of this, their mamma has taught them not to be content with the state of the world and that change is possible.
So when they see statistics showing how few leadership positions women hold in large companies, they get fired up. When they hear about the lower pay of women who are doing the same job as their male counterparts, they get downright angry. It correctly strikes that justice nerve deep within them and of course hits close to home since they happen to be of this seemingly second class group in the workplace.
What’s even more exasperating about this state of affairs is that statistics show companies who have women in leadership roles tend to be more successful and profitable. In a 2012 study by the Credit Suisse Research Institute, the performance of 2,360 companies was evaluated in an attempt to answer this question: “Does gender diversity within corporate management improve performance?” (credit-suisse.com) The study reported superior share price performance for companies with one or more women on the board, regardless of the size of the company or sector. For the large cap stocks followed during the six years of the study, companies with women board members outperformed those without women board members by 26 percent.
Because of numbers like these, advocates for gender diversity are focusing less on the human rights aspect of the issue to form instead a “business case” to encourage change. In an article which highlighted the Credit Suisse report, the organization, Women’s Equity, summarized this position saying, “The issue is no longer one of fairness or equality, but rather the superior performance of those companies with one or more women on the board. In the long term, this approach may provide the incentive needed for corporations to more aggressively implement policies and programs that encourage women to take leadership positions.” (womens-equity.org )
The Socially Responsible Investment (SRI) world has long included gender diversity as part of its human rights criteria in evaluating companies. We are now beginning to see investments that are taking this a step further. Not only are gender issues included, but they are making it the focus in an attempt toseize the opportunity of this edge that women in leadership seem to provide.
The PaxEllevate Global Women’s Fund tracks an index of companies around the world that are leaders in advancing women through gender diversity on their boards of directors and in management, and through other policies and programs. Joe Keefe, CEO of Pax World Management describes the fund’s objectives.
“Research suggests that where women are better represented, companies actually perform better. The Fund strives to deliver market or above-market returns by investing in the top-rated companies in the world when it comes to advancing women.”
Investors can also gain exposure to this newstrategy through Barclays Exchange Traded Noteswhich are linked to the performance of the Barclays Women in Leadership Total Return Index.
As the investment world begins to recognize the business value of having women in leadership at publicly traded companies, you can expect continued increase of investment options in this arena. Let’s hope so for the sake of our portfolios and more importantly for the sake of the future of our daughters.
