Ella McCaffrey, Graduate Intern - Researcher, ESG Foundation

‘Gender Lens’ investing: implications for ESG reporting

By January 31, 2022No Comments

Gender Lens investing (GLI) considers how investment capital can be used to have a positive impact on the lives of women and girls. The term was coined by Joy Anderson (Criterion Institute) and Jackie VanderBrug (US Trust, previously at Criterion) in 2009, but the concept has been influenced by many women and men across the financial sphere.  GLI is coming into sharper focus as Environmental and Social Governance (ESG) reporting becomes more prominent.

Suzanne Biegel, a senior advisor at the Criterion institute, explains the 4 different dimensions of gender lens investing.

  1. Investments increase access to capital for female entrepreneurs and businesses, i.e., by supporting female-founded companies.
  2. Investments are made into companies that increase women’s wealth, such as those that are female owned, that provide well-paid jobs to women or that encourage women’s financial participation.
  3. Investments are focused on companies that create products or services that benefit women and girls.
  4. Investment approaches are informed by the gender values within systems and organisations.

KPMG identify two key motivations behind GLI. Firstly, many investors simply want to invest in companies which offer products or services that will improve the lives of women and girls. According to the IMF, investment into such services will have positive social and economic impact because of the spill-over effects in healthcare, education and economic growth and job creation: “Investment in women’s education and health, and attention to their employment opportunities and empowerment, pays big dividends in terms of economic development”.

Secondly, KPMG report that investing into companies with high levels of gender equality within their workforce actually improves the performance of an investment: companies with high levels of gender equality perform better financially and have stronger predicted growth. For example, research conducted by Forbes in 2020 highlights that diverse teams make better business decisions 87% of the time and that these decisions are made twice as fast.

Although companies that offer products and services to improve gender equality or that are female-owned or led tend to attract gender lens investing, this is not a requirement. Rather, organisational structure, culture, internal policies and workplace environment are the key considerations for potential investors.

As detailed in their 2018 ESG report, Private Equity Firm KKR consider ESG issues, including board gender composition and labour relations, when selecting the companies in which they invest. For example, KKR has encouraged clients to invest in Trainline, which has a 1% gender pay gap, a female CEO, and has pledged to reduce gender-stereotyped assignment of roles by supporting the next generation of female engineers and coders.

Goldman Sachs is another corporation publicly committed to GLI. In their 2017 ESG Report they argued that impact investments which are guided by gender-equity and other ESG factors hold potential to drive competitive risk-adjusted returns whilst simultaneously generating social and environmental benefit. The company has restated this commitment to impact investing. In 2020 CEO David Solomon announced that companies must host at least one ‘diverse’ board member, such as a woman, if they are to take them public.

Some companies have progressed further with such initiatives. For example, and as detailed in their 2019 ESG Report, 17% of Rockefeller Investment Management’s holdings already have over 25% female executives, and the company actively considers the proportion of women executives when evaluating future investments.

Such businesses are not alone in their engagement with GLI. An analysis of a company’s gender-based social policies is becoming increasingly integrated into investment strategy and decision making. For this reason, it is important that companies’ ESG reports can genuinely celebrate the ways in which they support gender equality both internally and externally. “There’s a lot of interest in gender-lens investing, and it’s more than just a trend… Lots of capital is going in this direction, billions and billions of dollars.” says Seema Hingorani, managing director at Morgan Stanley Investment Management in New York.

They theorise that having fair and sustainable gender equality policies will help a company to attract and retain customers, recruit the best staff, and accrue maximum investment.

Please visit The ESG Foundation’s report showcase to learn more about comprehensive ESG reporting or get in touch to find out how we can support you in this process.

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