Some weeks back, I was invited to speak at an impact investing breakfast in London. About twenty men and women, most of whom manage substantial funds, showed up for this event, appropriately entitled “Impact for Breakfast.” They wanted to talk about investing in women–how to do it, who was already doing it, what products were available, how to measure outcomes, and so forth.
Suzanne Biegel, Catalyst-at-Large and senior adviser at ClearlySo, was in charge of the program. Suzanne has been a leader in social investment for many years, as well as a tireless advocate for women and girls. She founded Clearly Social Angels, an angel investing firm with 50% women among its investors (which is likely some kind of world record). Suzanne had asked me to speak alongside Laurie Spengler, who is President and CEO of “Enclude,” an advisor in building more inclusive and sustainable local economies. Enclude works through both capacity and capital interventions. (Both Suzanne and Laurie are also Power Shift people.)
I started with the whole “why the women’s economy is important” thing. I alluded to the big world players now engaged in the intentional effort to empower women economically: OECD, World Bank, World Economic Forum, as well as ExxonMobil, Coca-Cola, Walmart–and McKinsey, Booz, Goldman Sachs. I closed by observing that the studies and numbers tell us that closing the gender gap will bring enormous social and economic benefits to everyone, adding “for those who are familiar with the data, this is simply no longer controversial.”
Laurie followed up with an even more emphatic statement:
The business case has been made, it’s been made, it’s been made over and over and over. So there’s no debate about the business case and I’m not finding that in our work. There is a distinction, though, between what I would call the “implicit” or the “working hypothesis” expectation that “there’ll be a good effect on women from my investment activity,” and an explicit agenda that “I’m investing in something that I am purposefully saying is intended to have this type of outcome on a target community of women and girls.”
In other words, there is a difference between just assuming your effort has a positive gender effect and purposefully creating one. This is the sensibility on which a true “gender lens investing” approach is built.
Laurie observed that, despite the implicit expectation that microfinance benefits and goes to females, the focus of microfinance funds has shifted as they moved away from small community loans toward larger individual loans. More and more, the money has been going to men, especially when third party capital was involved. Laurie alluded to Isis Fund, from Women’s World Banking, as one of very few that acts to ensure women remain in the picture. “But it’s stunning to me after, you know, a couple of decades that [Isis] is one of the few funds you can point to in microfinance as having an explicit women and girl’s agenda.” So here is a clear, but little recognized example of how an investment moves, from nothing but lack of focused attention to gender, out of the position of benefitting females.
People often seem to assume that reaching out to the poor necessarily benefits females–which simply is not true. “A lot of the development finance institutions have made funds available on the supply side for banks and for MFIs with the idea that you’re going to reach underserved communities, entrepreneurs, and households. The implicit understanding is that it will help women and girls because they’re part of that underserved community. But when you go to some of these DFIs and you even ask the gentle question, ‘What percentage of that capital’s really flowing ultimately to women and girls?’ – you get blank stares. I mean, forget outcome conversation, what’s the delta, what’s the result, what’s the change? Just ‘what’s the data?’ Because if [capital for women and girls] was your expectation as a funder, then wouldn’t you at least ask the question ‘what’s in your database of how much of that capital has been distributed to women, women owned, women-led businesses?’ And so that, I’d say, that’s been a disappointment.”
Nods of appreciation were given to Hillary Clinton, who, as Secretary of State, “was very active with finance ministers, saying at the G8 and other tables, ‘Look, this is smart business, it’s smart economics, the business case is obvious. At a minimum, you, as a finance minister, should be asking for this information.'”
Early on, guarantees had been used as a risk mitigant by funders inexperienced in lending to women, a kind of “training wheels” approach. In the end, few guarantees usually were tapped. So then the training wheels were no longer needed for those making the guarantees. A good many philanthropies–she mentioned Nike, MasterCard, and Gates–had grant programs that built financial literacy and other business skills among adolescent girls. Those girls then have different futures, make different choices, and the cascading effect for potential investors to build on those initial grants is very powerful.
So we’ve got the economic productive activity business case, we have the multiplier effect in cascading decision making a business case, and I think these instruments of equity, debt, grant, and guarantee are now being tapped more effectively. The shift that we’re trying to both encourage and to then share in conversations like this, is going from implicit expectations (and there you better track at least the data), to an explicit agenda and trying to really marshal those interventions in a more thoughtful and tailored way.
Laurie noted that in projects such as the Walmart Empowering Women Together effort or the Coca-Cola 5 by 20 program, you quickly see that access to capital is a problem for the women. Yet there is capacity building needed on the bank side, too. “It’s one thing to really help the female pursuing this capital, but who’s sitting behind that credit desk and making those underwriting decisions? They actually need to be aware of the needs of this borrower and have the tools to interact with that borrower in a more impactful way. So one of the great things with the EBRD [European Bank for Reconstruction and Development] recently, they’ve actually launched an internal capacity building initiative [for the banks].”
Suzanne then followed with some interesting observations of her own. “So we talk a lot about what’s going on in emerging markets, but we talk less somehow about what’s happening right here.”
There’s a group [in East London] called “Fair Finance,” with a very charismatic guy, Faisal Rahman, and they’re doing microfinance in East London. He worked with Grameen early in his career. He came back and said there’s seven million people un-banked in the UK, seven million. And they may be immigrants, they may be ex-offenders, they may be people who just don’t have access to finance for a variety of reasons. And he started a consumer banking initiative and now he’s launching a business banking initiative, and he is out to basically put the Wongas out of business and the pay day lenders and the other people in the informal economy. And his statistics, he doesn’t trumpet this but the reality is that sixty-five percent of his team, by the way, are women, but something like seventy percent of his beneficiaries, his customers are women. And so he is both explicitly and implicitly saying I want to solve a problem for a particular segment of society here and I think that will uplift communities and really change the equation.
Suzanne was wanting to remind us not only of the disadvantaged women among us, but also good work going on in the finance community to move the game ahead for gender lens investing. She described (re)Value Gender, part of the Women Effects Investment initiative under the Criterion Institute. (These folks will be at Power Shift! You can sign up for the (re)Value Gender experience!)
The purpose of the (re)Value Gender exercise is to question the way gender is being valued (or not) by major financial decisions, instruments, and metrics. The method is to put together a gender expert, an industry expert, and a financial expert, give them an assignment where a specific type of instrument must finance a particular industry with a gender lens and let them brainstorm a solution.
And the one that I love is – and it may be something that is really not obvious. So the one that I loved that’s really not obvious is take a municipal bond that’s focused on transportation and take a gender expert who understands the patterns of women needing to get to childcare, needing to get to work, needing to sort of go through their day. And what if you were to say that you were going to really craft the transit projects according to what would most benefit women in that city. Would that conceivably decrease risk on that bond, because you were paying so much more attention to the gender analysis that the transit would be much better used and really much better serve the population. And could you then tell that story to the public who would be investing in that bond and have a different outcome. So it’s projects like that where they’re saying like think of something in whatever realm you’re in and is there some opportunity for creativity. And I think that’s part of what’s really great about where we are right now.
When the meeting broke, the group looked back and noted that we had covered a wide range of asset classes, as well as many investor types and many industrial applications. But there is need for more product and, especially, better metrics to measure gender-specific outcomes. Above all, gender lens investing is something that needs to be undertaken with intention, carried through with focus, and evaluated with measures sensitive to the risks that affect women, as well as to the unique contributions they have to make.