If you’re a woman who invests, or has money to invest, you have an incredible opportunity to change the landscape of the business world, simply by investing in women-owned and women-led businesses.
And here’s the thing: Women do increasingly have money, and they do want to use their money to support women. It’s the “how” that gets confusing.
Earlier this year, a Bank of America Institute study showed that women’s share of global growth has reached $30 trillion, and is rising dramatically. More women have more money, and therefore more opportunity to advocate for the people, causes, and goals they care about.
“Affluent women are driving positive change through their economic influence and strategic philanthropy … [and] were also significantly more likely to select women’s and girls’ issues as one of their top three most important causes/issues,” the study found.
But there’s a gap in the way women manage and utilize their growing share of wealth. They often assume that the best way, or the only way, to line up their money with their values is through philanthropy.
Sounds to me like it’s time for an Aha Moment.
The how
No one is better positioned to talk about this topic than Angela Atherton, CFA, and Marypat Thenell Smucker, CFA, the heads of Parallelle Finance. Their goal is to build the bridge between women (and other sustainable) investors and women-led companies, and they are building the tools to make that happen.
A registered investment advisor, Parallelle Finance isn’t strictly an investment company. It started its life as a research firm, reporting data on women in the global economy and equality-focused investments. They also provide ratings, scoring both public and private investments with a gender equality lens.
But Atherton and Smucker go beyond the data. They work with institutions to establish gender lens investing strategies. They conduct outreach and education efforts with women and investing groups. And they have plans to put more investment dollars behind women-owned or women-led businesses.
Angela Atherton and Marypat Thenell Smucker, the heads of Parallelle Finance
Why are they doing this? For them, the calculus is simple. The single most effective way to improve gender equity is for women – and other sustainability-minded investors – to invest with companies that have a relatively high representation of women at senior levels of the company and those that have a track record of hiring, retaining, and promoting women.
“When companies score relatively well on female representation in leadership, that has been shown to boost gender equality across the entire organization. Our data shows that that is the way – likely the only way – that issues like the gender pay gap will be resolved,” Atherton said.
And the good news is, there is no expected investment penalty for doing so. Their data indicates that companies that score well on female representation in leadership tend to produce improved company performance, compared with those that don’t.
Taking action
For women investors, it’s not surprising that many companies don’t have female representation in leadership. But there is an Aha Moment in discovering that there are many accessible ways to focus your investments on the companies that do.
For example, there are multiple so-called thematic funds where the theme is gender equity or women’s leadership.
You can find several of those options on the Impact Funds by Theme resource from Equities.com.
There are also stock funds and ETFs that may not identify as thematic funds, but that include gender equity as a key component of their strategy. Parallelle maintains a broad list of gender lens options on their site, along with regularly updated performance data for those funds.
“We have gathered and republished a large body of research showing that companies that embrace female leadership have better results – including higher stock price performance. Likewise, the companies that don’t measure up on the kind of equality and women-in-leadership metrics we look at tend to underperform,” Smucker said.
The investment funds listed on the Parallelle site tend to evaluate a full range of gender equality metrics, from leadership, workforce, and promotion metrics to pay gap transparency to policies and employee benefits.
For women who aim to support the work of other women, Parallelle’s findings are a strong inducement to go beyond philanthropy and align your investment dollars with your values. It’s the kind of support that businesses pay attention to – that provides them with an Aha Moment of their own.
Read more Aha Moment: Is your advisor not really hearing you? There is a tool for that
