Blog

Blog

Mohan Chen

Mohan Chen is currently an SME Finance Forum intern. She is a second-year graduate student in M.A. in Arab Studies program at School of Foreign Service, Georgetown University. Her research interests include Sino-Middle East relations, technology and development in MENA region, and social movements. Mohan graduated from College of the Holy Cross, Worcester, MA, with a double major in Political Science and Computer Science and a minor in Middle Eastern Studies. Prior to Georgetown, Mohan worked as a research assistant at the Development Research Center of the State Council of China, a journalist at Palestinian News Network in Bethlehem, and a knowledge management analyst at CARE International. She has experience in data analysis and visualization, video/audio editing, and social media outreach. She is a native speaker of Mandarin Chinese and is proficient in Japanese and Arabic as well. In her spare time, she enjoys photography and traveling.

Gender Lens Investing, the Quest for Gender Equality

Apr 27, 2021
African business woman center surrounded by business men looking at a laptop
An open webinar summary.  
 
To address the inequalities between women and men, an increasing number of investors and financial institutions have adopted a new approach, gender lens investing. Since women were more severely impacted by the COVID-19 pandemic, it has become increasingly imminent to direct the capital towards the objective of achieving gender equality. In this webinar, four female industry leaders shared their experience of how companies can unlock opportunities for increased profit, growth, and innovation. Maritza Cabezas (Triodos Investment Management), Heather Mae Kipnis (Gender and Economic Inclusion, IFC), Inez Murray (Financial Alliance for Women), and Debbie Watkins (Lucy) joined the panel. The session was hosted by Minerva Kotei from the SME Finance Forum. 
 
Gender lens investing is an investment strategy to intentionally direct capital towards solutions that drive gender equality. Firms investing with a gender lens raised $4.8 billion in capital in 2019, which was more than double the amount raised in 2018. And the recent pandemic has further accentuated the importance of more capital being allocated with a specific and explicit gender focus.  
 

IFC partnered with CDC Group (CDC), the UK’s development finance institution, with support from the Government of Canada, to develop guidelines on gender-smart investing, aiming to help investors strengthen gender diversity within their firms, and make investment decisions that promote gender equality. According to the CDC and IFC’s Fund Manager’s Guide to Gender-Smart Investing, investors should first examine their firm internally in terms of how they recruit, promote, and retain their staff, and then strengthen diversity. Secondly, firms can implement a firm-wide gender strategy by training, and rewarding people within the firm, and engaging partners. How an investor looks at gender equality within their staff and leadership is reflected in their types of investments. Investors can select a gender lens strategy based on their portfolio and apply the chosen approach across operations including deal origination, due diligence, deal structuring, and exits.  It is best practice for investors to be intentional about how a gender focus and commit to targets on gender over an investment period in order to achieve optimal outcomes. Heather Mae Kipnis pointed out a few concrete cases of gender-smart investment strategies. For example, IFC research found that investor teams with women represented in leadership are twice as likely to identify and invest in female led businesses. Other emerging examples are investors allocating capital to companies committed to gender-inclusive value chain. They are opening up markets for women-entrepreneurs by increasing opportunities to sell goods and service to corporate buyers and expanding distribution networks to include more female-led retailers.  For more information on gender lens investing strategies, please review the IFC and CDC report

 

Maritza Cabezas shared the experience of Triodos Investment Management in impact investment and advocating for gender equality, explaining that the mission of the company is to change finance by financing change. As an investor in financial inclusion, the major objectives are to provide underserved client groups in traditional banking system with access to finance, build robust, transparent financial institutions by sharing sustainable banking knowledge and expertise, and promote access to basic needs such as affordable housing, quality education, and clean energy. The investment approach of Triodos IM is driven by its value. The company invests in the high-risk countries and in the lower segments of income and seeks to collaborate with the financial institutions that share the same mission and vision. In the process of deal sourcing and screening, we take a positive approach and identify the areas in which Triodos IM has potential to have a large impact. At the same time, we exclude those candidates engaging in negative activities. Triodos IM has around 50 professional investment officers from 17 different countries with a good understanding of the region to conduct the due diligence and negotiation, in order to eliminate the cultural differences and personalize the cooperation with investees, which is especially important in gender lens investing. Another important component in the value-driven investment approach is monitoring. To achieve sustainability of financial inclusion projects, Triodos IM is not only focused on the quantitative and qualitative improvements but also interested in personal experiences. Through this strategy, Triodos IM constructs an investment system that realizes positive changes, combined with a long-term healthy financial return. 

 

Financial Alliance for Women has conducted a research to understand the attitude of fintechs towards women’s market and how they can profit from the multi-trillion-dollar female economy. According to the 168 participants in the survey, a relatively high percentage of them know the sex of their customers, but few use the sex disaggregated data to analyze the customer behavior, which led to the limited awareness among fintechs and their investors of the women’s market opportunity. The report also reveals the current gender biases across dimension of the fintech sector, including in team composition, population data, profitability, and data interpretation. To address these biases, the fintechs have taken various actions. For example, 34% of them have set up “Design Thinking,” 26% have sourced “Gender Balanced” data, and 23% have created a Diverse and Gender Balanced team. On the other hand, the fintechs that track key performance indicators by sex suggested a compelling case for targeting the women’s market. 64% of participants found that female customers have similar or higher usage rate than man. 95% of fintechs found that customer acquisition cost for women is less than or equal to that of men, and 86% found that loan-to-value for women is larger than or equal to that of men. In addition, the research revealed a strong appetite among stakeholders to make fintech sector gender intelligent. In the theory of change, it is important to embrace the business case, cultivate investors to have gender intelligent investment thesis. Then the institutions should mainstream data messaging in the fintech system and build appropriate gender intelligent approaches, such as women centered customer value propositions and customer journey maps, that can be scaled through partnerships.  

 

Debbie Watkins, the co-founder of Lucy, shared her experience of building a platform that helps women set up and grow their businesses. The mobile app provides financial services and growth tools for women entrepreneurs, aiming to support and inspire the online community. While women-led businesses often create more jobs and use their profits more wisely, they encounter consistent lack of access to financial services compared to their male counterparts – all around the world, at all socio-economic levels. Lucy recognizes these difficulties and is designed to provide tools for women entrepreneurs to take control of their financial future, realize their potential, grow and thrive. Lucy has tailored its products to serve different segments of entrepreneurial women through a range of customer-centric tailored financial services, combined with an online library, e-training, business forums, and a marketplace platform. Lucy’s technology platform and business model enables them to be value-added partners for various institutions, especially banks, in different countries. The investment team consists of 21 women, which allows Lucy to better understand the needs of women entrepreneurs. 

 

Through gender lens investing strategies and technological innovations, financial intermediaries are increasingly making efforts to promote gender equality through their portfolios. The process towards gender equality requires everyone’s active participation.