As an impact-led and inclusive investor, promoting gender balance and diversity at all levels of business operations is a core part of our investing approach.
Globally, we know that female-led fund managers and businesses continue to face challenges accessing capital compared with their male counterparts. Only 3 per cent of private equity and venture capital flows to female fund managers. This needs to change; as a matter of principle in terms of ensuring women have equal opportunities to men, and because it makes economic sense. Beyond this, we also believe that investment in more gender-diverse owners and leaders has the potential to support wider development outcomes for women.
To better understand how our past investments have supported positive outcomes for women, we commissioned Kore Global, a women-led consultancy specialising in gender equality and social inclusion, to carry out an evaluation of our gender-focused investments. This report covers our investments made between 2019 and 2021 that qualified for the 2X Challenge. It seeks to better understand how and under what enabling conditions investments with gender-diverse leadership and/or ownership (i.e. meeting the 2X Leadership and/or Entrepreneurship Criteria) have supported more positive outcomes for women as employees, suppliers and consumers.
What did we find?
- Our investees with gender-diverse ownership and/or leadership are implementing a range of gender-smart business practices that support gender-diverse and inclusive workplaces. These investees demonstrate higher standards in terms of gender-smart business practices than investees meeting other 2X Criteria. Investees meeting the highest standards demonstrate a commitment to gender diversity at all levels and focus on addressing gender-specific barriers to women’s employment and participation.
- Fund managers with gender-diverse ownership and/or leadership show commitment to integrating gender considerations within their investing strategies. These fund managers demonstrate greater adoption of gender-smart investing practices than funds meeting other 2X Criteria, and a majority are exceeding or on track to exceed 50 per cent of their portfolio investments meeting at least one 2X Criteria.
- Investee-specific factors linked to gender intentionality, rather than geography or other contextual factors, are more robust predictors of whether investees adopt gender-smart practices that have the potential to positively impact women. Five factors in particular stand out: senior level buy-in, gender capacity and resources, strong and explicit commitments to gender equality, accountability mechanisms, and (for fund managers) the qualitative strength of relationships with investees.
How can we refine our approach to gender-lens investing?
The evaluation findings help us to better understand and evidence how our investments in companies and funds with gender-diverse leadership and ownership can support positive outcomes for women.
They support the notion that we should deepen our efforts to proactively map and source investments meeting these 2X Criteria to support our ability to achieve development impact for women. They also provide valuable recommendations for assessing the potential gender impact of our investments by going beyond 2X Criteria alignment and analysing investee-level factors likely to support positive outcomes for women employees, suppliers and consumers. Finally, they point to strategies and tools we can use to support our investees to achieve impact for women once we are invested, including to track performance against targets and support the adoption of gender-smart business and investing practices.
Given their wider relevance, we hope these insights will inspire and inform the gender-smart investing approaches of our development finance institution (DFI) and multilateral development bank (MDB) peers.
