Can A Gender-Oriented Investment Lens Boost Financial Performance?
Jackie VanderBrug, managing director of Bank of America/U.S. Trust, discusses gender capitalism.
In the business world, as in so many other parts of society, views on gender are in a state of continuous evolution. It’s no longer enough for companies to merely have women on staff, nor to pay them equally, nor even to place them in the C-suite and the boardroom. The questions today revolve around how fully gender difference is integrated into the whole operation, across a wide range of factors.
The payoff, when it’s done right, can be significant. And for investors who are looking to put their money behind companies that are in line for those payoffs, there is a guiding mantra: gender lens investing. Recently on [email protected], Sandy Maro Hunt, associate director at the Wharton Social Impact Initiative talked to Jackie VanderBrug, managing director of Bank of America/U.S. Trust and a prominent thought leader in the gender lens investing space, about the many lenses people can use, and what they can help us see.
Gender-Oriented Investment Lens
An edited version of that interview appears below.
Sandy Maro Hunt: Let’s start at the beginning, what is gender lens investing?
Jackie VanderBrug: Gender lens investing is a process. It’s the deliberate integration of gender analysis into investment analysis and decision-making. What’s important to understand about that is really two factors. First, the definition includes this aspect of lens, not limitation. Oftentimes, as soon as you say gender, people feel like you’re excluding men. This is not an exclusion. This is a lens, and not a limitation.
A lens is like a pair of glasses: Through my glasses, I’m going to see some things that if I didn’t have them on, I would otherwise miss.
Hunt: That’s a really great point. But your glasses are going to have a different prescription than my contacts — we’ve got different lenses. Can you give us a couple examples of how that might play out in real-world scenarios?
VanderBrug: Some investors, for instance, will say that they are really interested in getting women access to capital, and those women may be micro-entrepreneurs in an emerging market, or in a domestic situation here in the U.S. They might be women film directors, they might be women hedge fund managers. But these investors have realized that there are women who have less access to capital than men, and that’s the lens that the use.
Other investors use a lens where they look across the value chain of a company, and they say, “How do I evaluate this company from the board, through its senior management, through the way that it is working within its organization to the supply chain? How do I gauge the way they are valuing women and men equally in the organization?”
Still, other investors are really looking at that product and service, and how is it that, if this company was wildly successful, given what it does, how would that change gender equality in its markets? Does it have a product that is going to solve a challenge for women, like women’s safety? Has it thought about gender knowledge? There is really interesting research now on how software is designed, and how software design has been predominantly for male patterns of problem solving. Thinking about how you could de-bias software design could open up a whole set of new product offerings.
Those are very, very different lenses, and they all overlap, and none of them are better than others. In general, what happens is I have an expertise, I have an experience, I have a theory of change and that creates my lenses.
Hunt: What I love about those examples is that the lens idea empowers everyone to have a voice. Whatever your experience, you’ve got a unique lens that you are bringing to this space, and it sounds like there is no wrong way to ask those questions. It’s a lens over all sectors. Tell us a little bit more about why that is so important.
VanderBrug: You’re absolutely right: All investments have impact, as you probably often say. All investments have gender impact….
Hunt: Good, bad, or ugly.
VanderBrug: Exactly. Gender lens investing crosses all sectors. It crosses all asset classes. And people use lenses in different ways, so it is also important to understand that my gender lens might not be the same as yours. Why it’s important is because we are starting to realize that so much of the way that we allocate capital is gendered. When we can be aware of that, and we can be aware of our biases, we can be aware of the opportunities, we can make much better investment decisions.
Hunt: Absolutely. That’s a great case for gender lens investing. Why is it important to Bank of America/Merrill Lynch/U.S. Trust?
VanderBrug: It is important because we are looking, as are all investors, to make the best investment decisions. Having additional information about an investment, whether that be the role of women within the company, whether that be the way the company is attacking potential important markets, whether that be the safety and security of the products that it’s creating — gender has a part to play in all of those factors. So that’s important to us.
It’s also important because it’s important to our clients. Increasingly, as many of your readers know, clients are asking about the environment and social impact of their investments. Our research shows that 58% of high-net-worth individuals say that that is important to them. Interestingly, 50% more women say that than men. So we don’t think that gender lens investing is investing for women — it’s investing for smart investors. That said, research does show that women are more likely to start asking these questions. To say, “What is the impact of my portfolio on women and girls?” And also, “How is my portfolio taking advantage of fully diverse organizations and the power they bring?”
Hunt: I’m curious about another demographic group that is of particular interest to the financial services industry, the millennials, who will inherit something around $30 trillion in this boomer wealth transfer that has just begun to happen, and will be happening over the next few decades. Talk to us about what you see from that audience, and how you see gender lens as a part of their priorities and experience.
“People use lenses in different ways, so it is also important to understand that my gender lens might not be the same as yours.”
VanderBrug: That audience, to your point, has a completely different world-view. When we ask them, “Do the social and environmental impacts of your portfolio matter?” 93% of them said yes. They’re almost saying, “Why are you asking us this question?”
Hunt: Right, almost rhetorical.
VanderBrug: Almost rhetorical, exactly. Their view is that they are looking for equality. They want to work in organizations that have diverse management teams, they want to buy products that reflect their identity, and increasingly, their identity is one of community