“Where shall I begin,” asked the White Rabbit. “Begin at the beginning,” the King said, very gravely, “and go on till you come to the end: then stop.”—from Lewis Carroll’s Alice’s Adventures in Wonderland

We often hear the same question when it comes to gender-lens or gender-smart investing. Businesses and investors have varying levels of knowledge, interest, and commitment to making the private sector more equitable for women. In the United States, a 2018 report on impact investing trends identified $868 billion in institutional investor assets under management that take gender-lens issues into consideration, more than double the $397 billion identified in 2016. Others find the phrase gender-lens investing confusing or intimidating and, like the White Rabbit, wonder where to begin. Our answer is less prescriptive than the King’s: We believe that there are many ways businesses and investors can begin to enhance gender equity, according to what works for them.

We recently attended a workshop called “Getting Gender Smart,” hosted by the Center for the Advancement of Social Entrepreneurship (CASE), a research and education center at Duke University focused on developing the business skills needed to create social change, and Catalyst at Large, a company that provides consulting and facilitation for gender-lens investing. The training emphasized that there are several issues to consider in mapping out a gender-informed investment strategy, including what you invest in, what impact you’re trying to achieve, and what commitments you need to balance. This approach is a useful way to explore this topic, decide where to begin, and ultimately carve your path—without falling down the rabbit hole.

Workshop attendees include, from left, Autumn Gorman of USAID, Christine Roddy of AlphaMundi Foundation, Johara Hall of DAI INVEST, Nora Brown of DAI INVEST, Claire Daley of Moonshot Global, and Alice Lin Fabio of Johnson & Johnson.

If you are an investor considering a particular opportunity through a gender lens, it may be helpful to consider the following five questions:

1. Will your investment support businesses with women in senior leadership and decision-making positions? In a 2017 Deloitte analysis of nearly 7,000 companies in 60 countries, women held just 15 percent of all board seats. Yet, in a study of 3,000 companies around the world, sales growth and return on assets were higher in companies where women occupied 50 percent or more of leadership positions. According to other research, “Companies with the highest percentages of women board directors outperformed those with the least number of women, on average, by 53 percent on return on equity, 42 percent for return on sales, and 66 percent for return on invested capital.”

Having women in leadership and decision-making positions provides businesses with access to more talent and more ideas to spur innovation and growth. It also creates better insights into women customers, including their needs and preferences, which helps to expand the customer base, tailor services to its needs, and create new opportunities for the business. Touting these benefits as well as the moral case for greater gender equity in the private sector, the Thirty Percent Coalition advocates for women to hold at least 30 percent of board seats in all U.S. public companies.

2. Will your investment support increased or equal access to investment, loans, and equity for women-owned businesses? Between 63 and 69 percent of small and medium women-owned businesses in developing economies have less access to capital than those owned by men, according to the International Finance Corporation. That means that an alarming number of businesses with great ideas, talented leadership, and the potential to generate much-needed employment in such economies face a greater risk of failure; thus, opportunity is lost for everyone, solely because women have fewer chances to access the financing any business needs to survive.

3. Will your investment support businesses with an equitable workplace environment for women or enable the workplace to become more equitable? Widespread inequality in compensation for men and women, inadequate family leave or restrictions on flexible working hours, and workplace cultures that tolerate and/or normalize sexual harassment create barriers for women’s success—and, by extension, that of the business. A growing body of literature shows that when businesses eliminate pay gaps and provide equal opportunities for women and men, they outperform their competitors. Businesses that condone harassment, on the other hand, suffer higher turnover. According to one study, 80 percent of women who have been harassed leave their jobs within two years. In the United States, harassment costs the economy an estimated $400 million in lost wages and 973,000 hours of unpaid leave each year.

4. Will your investment support a business or businesses that create and/or market products and services tailored to women? U.S. Trust research found that women’s total income globally surpassed $15 trillion, a value far larger than China’s economy and second only to the U.S. economy. It is a wonder that investors have not better capitalized on the promise of the global women’s economy.

5. Will your investment support supply chains that include women-owned businesses and provide employment for women? Diversifying global supply chains by incorporating more women as wholesalers, intermediaries, and frontline service providers supports gender equity outside of a business’s own employees and leads to increased resilience, access to a broader talent base, and employment for women across a range of jobs.

As these questions demonstrate, there are multiple interpretations of, and possibilities for, gender-lens investing, from investing in women-led companies to better catering to women employees and customers. Of course, having more women enter careers in investing and financial services could help too. More women in leadership positions in fund management, for example, and equal access to capital for investment funds that employ women could have a multiplier effect on any of the other actions described above. In sum, there is no fixed path for improving gender equity in the private sector, but, equally, there is no shortage of opportunity; investors can decide what to prioritize given their own unique skills and resources, as well as their financial and social objectives.

Nora Brown is a Strategic Investment Advisor and Johara Hall is an Activity Manager on the U.S. Agency for International Development (USAID)’s INVEST initiative, implemented by DAI. INVEST unlocks the power of private capital in countries where USAID works, facilitating work between USAID and the investment community.