Gender Lens Investment (GLI) is a thematic environmental, social and governance (ESG) strategy inspired by women in leadership (WIL) and related gender equality criteria.
The primarily traded GLI equity funds available to individual investors include 12 global and 16 regional funds that closed under 2020 with 67 2.67 billion under assets (AUM). Overall, they coped well with the economic storm of the year, with only one fund off and three new ones launched.
Indeed, GLI equity funds are compatible with the larger market. Although there is no clear sector winner on gender equality, according to their AU-weighted allocation analysis, information technology and financial services are the top two, despite their own registered gender equality gap. According to several country and European allocations, 58% of the country’s weight is influenced by the United States,
Despite ongoing protests for WIL benefits, progress has been painfully slow, especially for women of color. Gender equality must include racial, ethnic and socio-economic diversity.
Stakeholders are beginning to tackle the depressing pace of change. In the UK, one-third of government-backed women board members for all FTSE 350 companies by the end of 2020 have met the target index elements. In the United States, the Nasdaq Stock Exchange filed a groundbreaking SEC proposal in December that required board diversification for newly listed companies.
How do GLI equity funds reflect the ESG approach and how well do they do it?
WIL Investment Philosophy Corporate leadership and related initiatives that promote inherent gender diversity. It contains GS-ESG in relation to internal stakeholders. Some GLI funds also focus on supplier diversity and product security, implementing an element of social, or ESG, with external stakeholders.
But what about e? How are GLI equity funds working on the environmental front? This is a critical question given the extent to which environmental crises affect women.
Unequal tolls received from women, especially in developing countries, have been well studied for weather disasters, rising sea levels and other factors related to climate change. Due to the climate crisis, women are more likely to live in poverty, less likely to own land, and more likely to lose education and livelihoods. Discriminatory laws, lack of access to financial services, and the burden of unpaid care only add to the gender-unequal burden of climate change.
One of its growth is the greater role of women as agents in climate change. In developing economies, women are leading many community-based efforts to address local climate impacts. The empowerment of women and girls ranks second among dozens of solutions to global warming. In developed markets, research has shown that women are relatively more focused on climate change and many eco-friendly products are marketed to women.
At least four of the 28 GLI equity funds are fossil fuel free, indicating their integration with the climatic elements of the ESG. These include the PAX Ellevate Global Women Leadership Fund, the Desjardins SocieTerra Diversity Fund, and the Adasina Social Justice All-Cap Global Exchange Traded Fund (ETF).
In addition, RobecoSAM Global Gender Equality Impact Equities Fund Manager, Robeco has announced that by the end of 2020 all of its funds will be free of fossil fuels. Five GLI equity fund managers recently pledged to align with the exit targets of the Paris Agreement.
Where is the opportunity for this fund to invest in women in climate leadership? Women work approximately 32% of renewable energy, compared to 22% of the total energy role. But most of these positions are low-paid administrative roles rather than high-paying STEM-related jobs. But strong growth is projected for jobs in the renewable energy sector in the coming decades, so clean energy industries will have the opportunity to promote inclusive gender equality and reap the rewards of leadership.
28 GLI Equity Fund holds 155 unique top 10 holdings at the end of the fourth quarter. The chart below shows the clean energy companies and their WIL data within those ranks.
Clean and Renewable Energy Companies are listed alphabetically in the top 10 holdings of GLI Equity Fund
|Institution||Country||Description||Women in leadership positions?||Representation of women on the board|
|Enbridge||Canada||Energy transport providers and natural gas utilities. Portfolio of Renewable Energy Projects.||COO||36%|
|Enfage Energy||Us||Energy technology provider. Global leader in solar micro-converters.||None||14%|
|The first solar||Us||The world’s leading supplier of solar power systems.||None||20%|
|Meridian Energy||New Zealand||New Zealand’s largest generator of renewable energy from wind farms, hydro stations and solar arrays.||None||50%|
|Orstad AS||Denmark||State-owned energy producers. 100% renewable with wind, solar and renewable hydrogen.||CFO Deputy chair||22%|
|Solar Edge technology||Israel||Develops energy technology solutions for the residential, commercial, energy saving and grid services markets.||None||14%|
|Vestas air system||Denmark||Design, manufacture, install and service of wind turbines worldwide.||CFO||33%|
Source: Parallel Finance, until 31 December 2020
Of course, there is another aspect of the equation: how do ESG investments incorporate gender lens philosophy? After all, the standards of various ESG reports are pushing for leadership in space.
Any structure should ultimately be the winner on a comprehensive measure on inclusive gender equality. Indeed, all ESG reporting standards and requirements should be filtered through a gender lens. Leading values have focused on the specificity of ESG metrics by companies and industries.
That said, ongoing research on the benefits of gender-diversified leadership এবং and the costs of retreat নয় is not sector-specific.
ESG values should measure all corporations of internal inclusive gender equality G, external relationship diversity and equality S, and E to address gender-unequal effects of climate change and environmental crises.
ESG funds should weigh their investment towards leaders in these metrics.
For more analysis from Meripat Smoker, CFA, visit Parallel meaning.
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All posts are the author’s opinion. As such, they should not be construed as investment advice, or the opinions expressed do not necessarily reflect the views of the CFA Institute or the author’s employer.
Photo Credit: ©GettyImage / Wachara Kokram / IEM
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