Gender Lens Investing a treasure trove of economic momentum

April 10, 2021 | 12:14
The Gender Lens Investing Initiative under which women and girls are being cared for, can bring high growth for the economy.
gender lens investing a treasure trove of economic momentum
If women’s economic empowerment is improved, Vietnam's GDP gain $40 billion a year by 2025

At the event titled Gender Lens Investing in Practice – Driving Value for Investors in Vietnam, Australian Consul General Julianne Cowley explained that economies need to be "built back better" in ways which deliver greater equality. Investing in women is a smart business decision, she added, with ample data to back this up.

“We encourage more investors to unlock the potential of this largely under-served market of women’s SMEs and join the early leaders on gender lens investing,” she said and added that it cannot be hard to unlock the potential of women and engage them in all areas of the economy in 2021 and beyond.

At its core, gender lens investing is the practice of investing for financial returns while considering the benefits to women, both through improving economic opportunities and social well-being for girls and women.

A report by McKinsey & Company said that if women’s economic empowerment is improved in Vietnam, the country's GDP could gain $40 billion each year by 2025.

In fact, women empowerment results in gender balance in investing, generating critical benefits for the economy.

According to a survey by the International Finance Corporation, gender-balanced funds realised an excess net internal rate of returns (IRR) of 1.7 percentage points more than male- or female-dominated funds, controlling for vintage, geography, and strategy.

When normalised for the median net IRR of emerging market funds (-8 per cent), the performance of gender-balanced funds is approximately 20 per cent higher than funds of male or female-dominated teams.

This positive correlation holds across investment strategies and geographies, as well as when controlling fund size.

Portfolio companies with gender-balanced leadership teams had a 1.64-time increase in their step-up valuations.

When annualising the growth in valuations and benchmarking against peer portfolio companies based on investment year and geography, gender-balanced senior leadership teams outperformed male or female-dominated teams by 5.5 percentage points per year in valuation.

Gender balanced leadership teams are correlated with approximately 25 per cent greater increases in valuation than unbalanced teams.

“Investing in women-led businesses is not just a good thing to do, it’s good business. We are committed to diversity and inclusion both in our leadership and continually work with our member companies. The aim is to continue to enhance women in workplaces and the broader community in Vietnam,” said Mary Tarnowka, executive director of AmCham Vietnam.

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