Gender Lens Investing and Foundations

We are working with Community Foundations of Canada on its Communities for Gender Equality program. In 2021 we led the first cohort on a series of sessions and roundtables to enable them to invest for gender equity; from 2022-2024 will be working with the second cohort. Below is a summary of some discussion points from the first cohort.

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Gender Lens Investing (GLI) is an investing strategy that takes into consideration gender-based factors across the investment process to advance gender equity. Taking a gender lens means:

• Focusing on gender, from pre-investment activities (such as sourcing and due diligence) to post-deal monitoring (including manager oversight and exiting)
• Examining the enterprises you are invested in for their:
  • Vision or mission to address gender issues
  • Organizational structure, culture, internal policies and workplace environment
  • Use of data and metrics for the gender-equitable management of performance and to incentivize behavioural change and accountability
  • Overall commitment to gender equity, as reflected in their financial and human resources

Gender is part of a larger conversation about diversity that is essential to investment. Traditionally, the focus of GLI has been on women’s equality and empowerment. Contemporarily, we understand that gender refers to both a biological and a socially constructed identity.

Consideration of gender includes looking at the socially constructed roles, relationships and expectations of all genders and the ways that these are reinforced by educational, political, economic and cultural systems.

Foundations wanting to undertake GLI can:

• Adapt their investment policy statement
• Engage with investment managers
• Make direct investments

1. Adapt the Investment Policy Statement

There are many ways foundations can incorporate gender lens investing (GLI) into their Investment Policy Statement in both simple and sophisticated ways, as the following table shows.

Section	Simple	Sophisticated
Purpose / Mission / Investment Philosophy	Define the organization’s mission and mandate and state that the organization is aligning its assets to the defined mission, which should refer to thematic areas related to GLI, such as diversity and inclusion and gender equity. State the organization’s investment philosophy and indicate definitions for the relevant investment strategies, such as impact investing, responsible investing and venture philanthropy.	Move from a Diversity and Inclusion scope to a Justice, Equity, Diversity and Inclusion mandate. Be explicit about a commitment to GLI throughout the investment process, not just in certain targeted investments.
Objectives	Consider whether there are return expectations required to support organization activities and define how this might interact with your GLI objectives. Define GLI objectives and measurable goals or metrics.	Specify what the balance of risk-return to impact is – whether prioritizing impact objectives, prioritizing a target market-rate return, or balancing both objectives.
Asset Allocation and Mix	Acknowledge that GLI is possible across all asset classes and consider the balance of your risk-return-impact goals when determining your asset mix. Set a portfolio-level target for GLI investments either on a dollar or percentage basis. In a carve-off model, specify how much capital is to be allocated to GLI and contextualize that as a percentage of the total portfolio. Mention future potential increases to this allocation or the role of a carve-out as a proof of concept before application to the greater portfolio.	Commit to GLI across the entire portfolio. Determine specific GLI goals per asset class. Commit to integrate GLI concepts throughout the investment process, not just in certain targeted investments.
Thematic Areas	Explicitly align to SDG 5: Gender Equality and its targets. Overlay thematic areas with population lenses that focus on beneficiaries including those facing gender-based discrimination.	As with all SDGs, SDG 5 intersects with many other issue areas and population lenses (newcomers, those experiencing homelessness, BIPOC). Acknowledging and understanding how the other issue areas addressed by your organization intersect with gender issues will deepen your GLI work. For instance, the UN recognizes achieving SDG 5 as a pre-condition for achieving the 16 other SDGs.
Impact Measurement The IPS should specify the organization’s expectations for impact measurement in general and for GLI specifically.	Develop basic metrics to  assess the status of gender equity across the portfolio. Develop basic metrics to  assess the status of gender equity across investment managers.	Develop an impact measurement system to report on and manage GLI impact goals based on a theory of change. Report periodically on metrics that assess the progress of GLI investments across the portfolio, specifically evaluating the gender impact of goods or services provided.
Governance	Include a gender balance mandate for the board and investment committees. Ensure alignment with GLI principles outlined in strategy.	Include a detailed diversity mandate inclusive of gender for your board and committees. This might include: Terms of two to three years with no automatic extensions to encourage new voices; Appointment based on GLI or gender equity experience or expertise; Cognitive bias training to all members.
Investment Managers	Seek out investment managers who share your values on gender equity and display that in their own commitments, process and governance (See Guide on GLI with Investment Managers). Ensure proxy voting policy aligns with GLI principles set out in your IPS or with the UNPRI and other ESG best practices.	Require GLI experience or expertise in your manager selection. Tie incentives and compensation to GLI targets.

 

2. Engage with Investment Managers

Foundation executives, board members and investment committee members can advance gender equity by engaging with their investment managers around GLI.

Discussions with your investment manager will help you understand the degree to which they consider gender equity in their investment analysis, and their current GLI practices, views, expertise and goals. Such discussions can happen when you are searching for a new investment manager or during a standard review of an existing relationship.

 

Oversight and Collaboration are Key

By gaining more insight into GLI with your investment managers, investment committees will be better equipped to provide investment oversight. The best performing investment committee recognizes its primary role is one of governance, not investing. The committee is there to ensure that those responsible for investing the institution’s assets are doing so in compliance with the agreed investment policy or strategy.

With the growth in the impact investment space, many investment managers are changing their policies and approaches. Working with your investment managers should help to build a committed and inclusive culture and help you find managers eager to learn and collaborate with clients and industry leaders, to share best practices and further their GLI knowledge. Asset owners can create urgency and increase the pace of change by prioritizing ongoing engagement on GLI.

GLI should be used in conjunction with your existing ESG considerations and in addition to financial performance, risk management, and cost structure to provide a holistic assessment.

 

3. Make Direct Investments

Foundations can support gender equity when making direct investments in community ventures and social enterprises.

The tools to incorporate gender into investment analysis vary based on the type of capital and the level of influence and ownership that capital affords you. Private investments, which is what make up the bulk of local community investments, inherently offer a more direct relationship to impact. Equity investors can have a more direct impact than debt investors.

 

Increase Access to Capital

Despite decades of data that show gender-diverse teams deliver better results, women and non-binary people continue to lack access to investment capital. There remain disconnects between women’s entrepreneurship policies and funding allocated to small business programming. Many businesswomen are not accessing commercial credit, an essential driver of business success.

Foundation can invest in women-owned and women-led businesses by:

• Offering financial assistance and technical services
• Establishing partnerships and networks, such as a concessionary lending partnership with local credit unions
• Offering patient capital that retains capital in the investment to allow the venture to grow over time instead of extracting return immediately
• Creating deal terms that align return with the growth and success of the venture, such as revenue sharing
• Providing post-deal engagement to support the success of investees

 

Improve Workplace Equity

Foundations can invest in ventures whose employees, leadership team and board of directors meet diversity and inclusion metrics that indicate inclusive cultures and policies that advance gender equity in the workplace. For example, you can look for ventures that score highly in these metrics:

• Boards and senior leadership
• Wage equity
• Equal employment opportunity
• Workplace and supply chain safety

 

Improve Opportunity and Quality of Life

Foundation can look for ventures that provide products or services that increase the quality of life (including safety) and access to opportunity. Impact is not always obvious and requires careful consideration. For example, while it may be obvious when considering a menstruation products company, it may not be as clear when considering a marketplace platform that empowers small-scale craftswomen to grow their businesses.

Products and services that address gender equity can be found across sectors; for example, in:

• Financial services – increasing financial literacy and independence
• Healthcare – providing health services specifically to women or creating innovative, sustainable and accessible femcare products
• Education – increasing access to education or certification
• Arts and media – gender-positive publications
• Employment services targeting gender equity
• Affordable housing targeting gender equity
• Childcare
• Safety, transparency and accountability specific to gender equity