Swiss sustainable finance sector wisens up to gender lens investing
Behind the glass facades of the Hotel d'Angleterre, a group of actors from the sustainable development and finance sector met last month to share their priorities for next year. One fund manager’s suggestion stood out: is now the time to review if the Swiss finance sector is doing enough when it comes to improving the rights and lives of women and girls?
Although still a fledgling trend, “gender lens” or “gender-smart” investing is growing rapidly in popularity, having expanded well beyond its origins in microfinance to include private equity, venture capital, public vehicles, bonds and other forms of investment.
This form of investing seeks to generate financial return while also factoring in the benefits to women, for example, helping women entrepreneurs gain access to capital, advancing products and services that positively affect women and girls, or promoting equality in the workplace.
In 2019, there were around 200 funds deploying around $10bn of capital with a gender lens, according to two reports. Analysis by Veris Wealth Partners counted $3.4bn invested across 50 public gender lens products.
A separate report from the Wharton Social Impact Initiative and consultancy Catalyst at Large, found that 138 private equity, debt, and venture capital firms raised a cumulative $4.8bn through 2019 - up 58.6 per cent from the 87 funds in 2019.
But despite this encouraging trend, the amount of capital attributed to gender lens investing still remains a fraction of the market. Suzanne Beigel, a leading expert in the field and founder of Catalyst-at-Large and GenderSmart, which organizes an annual industry summit, said many investors are still too cautious about taking the leap.
“We all know that if everybody takes a wait and see attitude, nothing will ever happen,” she told Geneva Solutions. “We need the wealth management industry and the financial management industry to get these products onto these platforms.”
Calls for an industry-wide survey. Biegel was one of the experts invited to the roundtable to share her research and views on how Switzerland’s finance sector could take a more active role. “There's so much of the world's capital that's being managed and moved by Swiss fund managers and asset managers,” she said.
“There has not been an explicit commitment on behalf of the Swiss social finance community to really make a bigger commitment about gender lens investing. And so we asked ourselves at the meeting, is now the time also for the Swiss investment industry to look at its own houses?”
Tim Radjy, managing partner of impact investment firm Alpha Mundi was the host of the roundtable event. He said: “Most of the organisations in the (Swiss) financial industry have not really taken a formal survey on where they stand today on gender and diversity issues.”
Using his sway as a board member for Sustainable Finance Geneva, he is hoping to muster up support for an industry-wide survey over the course of the next year, similar to one conducted in the UK, that will help set a benchmark for the industry on gender issues and pave the way for some common standards.
Winning over institutions to the idea may be difficult at first, he admitted. No-one likes fingers being pointed at them when results come back poor. But the results would then help to identify a baseline from which to move forward.
Growth aided by collaboration. While industry-wide data may be lacking, that is not to say that there isn’t a lot of activity underway. Although studies show it is still largely a North American phenomenon, gender lens investing has been gaining momentum in Europe and in Switzerland, thanks to its position as one of the world’s biggest hubs of wealth management.
New funds have been emerging. In 2018 for example, UBS partnered with consultancy Equileap to launch its Global Gender Equality exchange traded fund (ETF), which now has just over $300m assets under management. Using data from Equileap’s gender equality index, the fund chooses companies based on 19 different criteria including gender balance in leadership and equal compensation and work-life balance.
This trend has also been further aided by collaborations between the country’s financial sector and its many non-governmental organisations (NGOs), UN agencies and other international organisations working to promote gender equality and help stimulate the market around gender lens investing.
Among some recent examples of collaboration, the International Trade Centre (ITC) joined forces last year with the NGO CARE to establish the CARE-SheTrades fund. This blended finance vehicle invests in businesses in South and Southeast Asia promoting gender equality through actions in the workplace. It is one six funds in the SDG500 Partnership, which is managed by Geneva-based Bamboo Capital.
In an example of public sector involvement, the Swiss Agency for Development & Cooperation (SDC) last year partnered with finance advisory firm Roots of Impact to create a new funding instrument, called Social Impact Incentives (SIINC). This mechanism allows public donor funding, which cannot otherwise invest directly, to reward high-impact enterprises.
Now its team is looking at how this model can be used to reach more women. One route would be the creation of a Gender-Inclusive FinTech Fund (GIFF) - a proposal made following a feasibility study commissioned by the SDC and published by Roots of Impact last month.
When investing in companies that are benefitting women or women entrepreneurs, understanding whether those investments are ultimately having the impact intended is also crucial. The AlphaMundi Foundation, AlphaMundi’s sister non-profit organisation, launched a consortium last year with five other international impact investors with the goal of collating and analysing data to support the business case for gender-smart investing. The project, called G-Search, is backed by Canada's International Development Research Centre (IDRC) and USAID's Powering Agriculture Investment Alliance.
With many examples of international organisations, the private and public sector already collaborating together to create more opportunities for women, the next priority is to encourage wider participation in the market and bring it further the mainstream, said Radjy:
“One of the first things that we want to do is to make sure that for all the strategic market building initiatives of 2021 there is a momentum of collaboration across the private sector and public sector and across different types of actors in the same value chain,” he said. “And second, that the gender and diversity agenda is well represented in all these market building efforts for next year.”