Gender Lens Investing

Uncovering Opportunities for Growth, Returns, and Impact

Joseph Quinlan, Jackie VanderBrug

• Publisher: Wiley
• Year: 2016
• Print ISBN: 9781119182900
• eBook ISBN: 9781119182887
• Edition: 1
• Topic: Business
• Subtopic: Investments & Securities
• Index: Business

Delve into gender lens investing and the reality of the female economy

Women today are an unparalleled force in the global economy—as successful entrepreneurs, corporate executives and family breadwinners. Yet gender-based violence, the absence of women's legal rights and the persistent wage gap stubbornly remain. This paradox creates an unprecedented and underexplored opportunity for investors.

Gender Lens Investing, co-authored by Jackie VanderBrug, Managing Director and Joseph Quinlan, Managing Director and Chief Market Strategist, of U.S. Trust, Bank of America Private Wealth Management, is the first book of its kind to examine, in-depth the advantages of integrating gender into investment analysis. While other books speak to growing numbers and influence of women, Gender Lens Investing moves from economic trends to financial strategy.

• Learn why gender is material to economic prosperity and investment performance
• Explore ways to use a gender lens to assess products, companies and sectors.
• Delve into the forces of positive social change supported by a gender perspective on investment choices
• Examine profitable and gratifying gender lens investment strategies

Women are one of the world's greatest underutilized assets, and applying a gender lens allows you to identify companies that recognize this, or uncover the risks of companies that neglect it. A gender lens adds value across the investment community, but the impact reaches far beyond the bounds of portfolios to the economy and society as a whole. Gender Lens Investing provides expert perspective and real-world practical insight for investors looking to drive returns and impact.

Chapter 1
Womenomics and the Measures That Matter

“All economies have savings and productivity gains if women have access to the job market. It's not just a moral, philosophical or equal-opportunity matter. It's also an economic cause. It just makes economic sense.”¹

—Christine Lagarde, Managing Director, The International Monetary Fund

Say the word womenomics to a crowded room of investors and the typical reactions include snarky bemusement to utter bewilderment. Rolling of eyes and tilting of heads toward the ceiling—you bet. There are invariably some mumblings of “women-what?” since a majority of investors (men and women) have neither heard of the term nor ever contemplated women as an economic cohort with significant financial or commercial relevance.

They're not alone. Although the debate over gender equality has raged for decades in the United States, women and their potential contribution to economic growth remains a novel concept. Even the practitioners of the Dismal Science have yet to fully grasp the economic importance of women. Open up any standard economic textbook and you will see a chapter on fiscal and monetary policies, trade, foreign exchange, investment, and other traditional metrics of economic growth. Good luck, however, finding that chapter on gender—it's not there because sex-disaggregated data and gender-driven growth remain outside the economic mainstream, notwithstanding the accumulating evidence that the greater the participation of women in the formal economy, the greater the upside potential for real growth.

Quantifying womenomics is no easy task since statistics on all aspects of the subject remain relatively sparse and incomplete. Analyzing significant gender dynamics is not just about economics: Various political, social, and cultural dimensions come into play as well. The quest for more and better data is a crucial one. Evidence from research and experience from practice are both necessary tools to build this field. To that end, within this chapter we provide a brief overview on ten measurable developments that explain and portray the rising economic influence of women. These measures—while not all encompassing—offer a starting place, and will be referred to and analyzed in greater detail throughout the book. As a footnote, when we refer to the “formal” economy, we are talking about participation in the “paid” economy, an important distinction for women since a great deal of female economic participation is unpaid work versus paid.

Starting with the basics and the first of the metrics, the female labor force participation rate is one of the most fundamental metrics of womenomics, but perhaps one of the most important as well. The greater the number of women participating in the formal economy with paid jobs, the greater the opportunity and upside for economic growth. When more women enter the workforce, the nation's productive capacity increases, boosting the potential for more output, income and spending, as well as investment and trade. To this point, and discussed further in Chapter 2, America's expanding middle class and economic prosperity over most of the postwar era was due in large part to the steady increase in working women in the United States economy. And around the world, notably in China for instance, one of the most important macroeconomic trends is the inclusion of women into the formal economy and the attendant boost in growth. But much work needs to be done since the playing field in both developed and developing nations remains tilted against women at a significant cost to both women and their economies. As the McKinsey Global Institute notes, if women's participation rates were the same as men around the world, it would add up to $28 trillion, or 26 percent, to annual global GDP by 2025.²

The rising educational levels of women is another major change of the past few decades, and a trend just as prevalent in the developed nations as developing countries. Data and studies show that in many parts of the world girls now outperform boys academically, and more women are getting college degrees than men. Women are more actively involved in the formal economy today because they are better educated, skilled, and qualified for virtually any job in any sector. Among women ages 25 and over in the United States, the percentage of women with a college degree nearly tripled from 1970 to 2015. In 2014, the number of female graduates with bachelor's degrees was nearly 10 percent higher than males.³ Meanwhile, the same trends are unfolding around the world—in Europe, the Middle East, and Asia in particular, where women at all levels of higher education are excelling and participating in education at a higher level than men.

Next, due in part to the rising educational levels of women, the incomes, purchasing power, and investable wealth of women have climbed steadily over the past few decades, giving women more independence and decision-making power. In our opinion, the power of the purchase represents one of the most powerful and promising metrics of womenomics. Expanding on the groundbreaking data and analysis of Michael Silverstein and Kate Sayre, we estimate the global purchasing power of women totaled roughly $15 trillion in 2015. That is a figure some 40 percent larger than the Chinese economy, and larger than every other economy in the world except the United States (see Figure 1.1).⁴ Think about that—in a world struggling to grow, women could be a potential new growth engine. Meanwhile, globally, women control upward of $20 trillion in wealth—a staggering sum of capital that speaks to the financial influence of women. In the United States alone, women control just over half of the nation's personal wealth or investable assets, or $14 trillion. By 2020, this nest-egg is expected to total $22 trillion as women earn and save more, and become recipients of a massive transfer of wealth from their spouses.⁵

Despite the rise in the educational attainment of women, the gender earnings gap—another key metric—between male and female workers remains a key sticking point and barrier to gender-led growth. Women working full time in the United States, for instance, earned 79 percent of what men did in 2014, according to the 2014 Census Bureau comparison of the median earnings of full-time, year-round workers. African-American women in the United States earn just 63 cents and Hispanic women 56 cents to males.⁶ And what is true in the United States is true around the world—where, on average, women earn 16 percent less than men.

Figure 1.1 Women vs. the world's largest economies: Global female earned income, 2015.

Sources: BCG; IMF. Data as of July 2016.

Women are not only paid less than men, they do much more unpaid work than men. This metric certainly matters because the OECD defines unpaid work as both “an important aspect of economic activity and an indispensable factor contributing to the well-being of individuals, their families and societies.” This includes cooking, fetching water, house cleaning, getting kids to and from school, grocery shopping, and caring for children, elderly relatives, and family members who are sick.

In 2016, Melinda Gates ignited a frenzy of news and social media by declaring “time-poverty” to be a universal gender problem. In her half of the annual Gates Foundation letter, she said, “I'm sorry to say…Unless things change, girls today will spend hundreds of thousands more hours than boys doing unpaid work simply because society assumes it's their responsibility.”⁷ Thanks to the uneven and unequal distribution of responsibilities at home, women and girls spend two to ten times more time and effort on unpaid care work than men. On a global basis, women spend an average of 4.5 hours per day doing unpaid work; men spend less than half as much time. Quantifying this dynamic, the OECD estimates that unpaid “care” work equates to a staggering $10 trillion annually in lost output.⁸ That is another equivalent to the size of China's economy.

Non-traditional Measures of Womenomics

All the womenomics data just cited are traditional—and essential—for measuring economic growth. But there are other, emerging metrics that underscore the underlying economic potential of women. Widening the lens, women are more than just workers, consumers, and caretakers—they are also entrepreneurs, engineers, senior executives, scientists and public servants. And their numbers are growing. Even if the playing field is not level yet, women are a force in determining the fate of countries in the global economy.

The number of women entrepreneurs is a key metric since women are just as much creators of businesses as men. Even with the challenges of access to capital, the 2014 Global Entrepreneurship Monitor (GEM) found 200 million women starting or running businesses all over the world, and 128 million operating established (in place over three and a half years) businesses.⁹ That is 328 million women impacting the global economy—and this survey counts only 83 of the 189 countries recognized by the World Bank. These entrepreneurs span the spectrum of industry, and include hair sa...

Table of contents

• Cover
• Advance Praise
• Title Page
• Copyright
• Table of Contents
• Dedication
• Prologue
• Acknowledgments
• About the Authors
• Chapter 1: Womenomics and the Measures That Matter
• Chapter 2: It's the Women, Stupid
• Chapter 3: Womenomics Goes Global
• Chapter 4: From Womenomics to Gender Lens Investing
• Chapter 5: New Paths to Capital
• Chapter 6: Inside and Outside the Workplace
• Chapter 7: Getting Beyond Pink
• Chapter 8: A New Field in Motion
• Chapter 9: A Start That's Here to Stay
• Index
• End User License Agreement