Stranded No More: Emerging Gender Lens Investing Approach Highlights Gender As Critical Factor In Investment Analysis by Luisamaria Ruiz Carlile
Impact investing is a disruptive innovation. It’s upending traditional investing, crashing through old assumptions about how investors determine risk and assess value.
Take for example, the concept of “stranded assets.” These are assets which are losing economic value well ahead of their anticipated useful life due to changes in technology, regulations, legislation, societal norms, environmental shocks or other powerful forces.
By that definition, carbon intensive assets – particularly fossil fuels – are increasingly at risk of being ‘stranded.’ It turns out that we cannot possibly consume all of our buried treasure without raising the planet’s temperature to the point of our own extinction. And as the economics of wind, solar and other alternative fuels have improved dramatically, we now wonder if we bid up fossil fuels to the point of creating a “carbon bubble.” The climate change math has exposed more risk than opportunity in those vast reserves.
Michael Gelband’s Exodus Point launched in 2018 with $8.5 billion in assets. Expectations were high that the former Millennium Management executive would be able to take the skills he had learned at Izzy Englander’s hedge fund and replicate its performance, after a decade of running its fixed income business. The fund looks to be proving Read More
But just as impact investors are writing down the value of oil and gas in the ground, many are realizing that for too long, vast reserves of human talent have been languishing — stranded — on the economic sidelines. Across borders and cultures, strong social biases have undervalued the economic contributions of too many people, whether grouped by gender, religion, ethnicity, economic class or some other identity.
Shining a spotlight on this very issue of undervalued human talent is the rapidly evolving field of ‘gender lens investing.’ This approach sees gender as a critical factor in the analysis of all investments – both for spotting opportunities and identifying hidden risks. Its premise is that gender matters, and that it matters all the time. Companies, communities and entire countries gain – or lose – depending on the gender balance they achieve in allocating capital, services, jobs and leadership opportunities.
Long a pioneer in this approach, the Criterion Institute has just released an important report titled “The State of the Field of Gender Lens Investing: A Road Map for the Field.” It’s a comprehensive look-back at how the field has evolved, and a push-forward of an approach that sits squarely at the “intersection” of systems of finance and investment, and movements to create gender equity in the world.
Its goal is ambitious: to transform how finance — a massive system of power — values women and girls. And in so doing, make it work for more, if not all. As it states in the executive summary: “…For gender lens investing to fulfill its promise, it needs to not only move money to investments that have gender as part of their analysis, but to demonstrate how finance can be part of a strategy addressing issues such as sex trafficking, biases in the media, the wage gap and equitable health access.” Ultimately, gender lens investors see finance as a major lever for systems change.
Increasingly the research is making the business case for inclusion of women at all levels of economic participation: from shop floor to board room to C-suite and from entrepreneurs in emerging markets to those in Silicon Valley. Companies with more women on boards outperform those with none. Start ups with women in leadership roles outperform those with none. And women-led hedge funds consistently outperform those led only by men.
Strong investor interest in applying a gender lens has spurred development of investment options across all asset classes, in both debt and equity products, and in public and private markets. A few individuals and foundations are now pioneering ‘gender lens portfolios’ populated with investments that in a myriad of ways support women and girls.
When the on-ramps to opportunity grow, less and less of our immense reserves of human talent will be stranded on the economic sidelines. As we re-calibrate how we value our resources and citizens, the future is flashing its message, and it appears to be saying:
“Go Female Positive and Carbon Neutral!”
Luisamaria Ruiz Carlile is a Senior Wealth Manager at Veris Wealth Partners, where she manages client portfolios and designs comprehensive strategies to meet a wide range of clients’ financial goals. She graduated summa cum laude from Wellesley College with a B.A. in Economics and has a Certificate in Financial Planning from New York University.