Time to Break Down Closed Doors

Tesla is under pressure from investors, as former employees strain against arbitration ties. 

Multi-billionaire Elon Musk has never been one to shy away from the spotlight.   In recent weeks, he dominated headlines again as shareholders in his US-based automotive and clean energy company Tesla gathered for its annual general meeting (AGM) on 13 June to vote on the CEO’s proposed historic US$56…

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Gender Equality: A Compelling Case for Impact Investment

Undervaluation of and underinvestment in women is leaving money on the table, says Sandra Osborne Kartt, Deputy Chief Investment Officer, ImpactAssets Capital Partners.

Sound the alarm – we stand to miss out on US$290 billion a year in the US economy.

In an era focused on capturing every bit of economic growth, it’s almost inconceivable that such a vast sum – the equivalent of nearly US$800 million every day – could slip under the radar. And yet, that’s exactly what may happen with the care economy.

According to BCG, the care sector commands a valuation of up to US$6 trillion, nearly a quarter of the total US GDP. Roughly half of care work – which underpins much of the economy at large – is unpaid, and it is disproportionately performed by women. Addressing the issue requires solutions that reduce the unpaid care burden as well as boost the supply of paid care. For example, improved access to child and elder care would enable more women to enter and stay in the workforce. But the way our mainstream discourse often overlooks the sector represents a glaring blind spot about work and productivity.

And unfortunately, the care economy oversight is just the tip of the iceberg – one element of a broader social disregard to pervasive and systemic gender inequality. Persistent undervaluation of and underinvestment in women is leaving money on the table and holding back progress toward true equality.

For the world’s four billion women and girls, there is too much at stake to stall any longer.

Catalysing gender equality

While impact investing alone cannot be a panacea for gender inequality, it is an indispensable component of a larger solution. There are three essential areas of need where the patient and flexible capital of impact investors can be most effective at driving gender equality: advancing economic inclusion; delivering products and services that improve lives and outcomes; and increasing representation and voice.

Gender equality is, fundamentally, a moral imperative. It is an objective worth striving for, even in isolation. But it also supports a host of broader global goals – driving progress toward a healthier, less violent, increasingly productive, and more stable society.

And yet, at our current pace, the UN estimates it will take an unacceptable 286 years to achieve such equality. To make meaningful progress more quickly, impact investors must focus on the targeted areas of need where they

Pension Funds Slow on DEI

Asset owners are urged to better reflect their priorities when engaging with third-party providers and underlying investments. 

Diversity, equity and inclusion (DEI) themes have been increasingly featured in pension funds’ investment policies and assessment criteria for third-party providers, but research has highlighted their surprising absence in ongoing engagement efforts.  

Published by pension fund advisor Pensions for Purpose, the report drew on interviews with 21 organisations – including pension funds, trustees, asset managers and investment consultants – across the UK, Europe and the US, outlining how they consider DEI across their organisation and underlying investments, as well as their approach when interacting with third-party providers. 

All surveyed asset owners agreed that DEI correlates directly with business performance and have integrated such themes into their business models to varying degrees. Forty-two percent of asset owners have also implemented DEI voting and engagement polices, expecting diverse board representation. 

However, the level of development of pension funds’ DEI action plans and strategies still “varies significantly”, Pensions for Purpose said. For example, almost a third have not set specific targets, and only two were intentionally considering DEI topics in their underlying investments. There also remains a “marked lack” of engagement on DEI in pension funds’ underlying portfolio companies, the report noted. 

“There are pension funds doing great things on DEI, and they think about it holistically,” Karen Shackleton, Chair and Founder of Pensions for Purpose, told ESG Investor. “But those pension funds remain in the minority.” 

Ninety-two percent of surveyed pension funds said they had incorporated DEI factors into asset manager selection and oversight processes, with one asset owner commended for setting explicit representation targets for prospective asset managers and mandating a minimum participation of 50% of women or individuals from underrepresented backgrounds on the investment committees of their outsourced CIO.  

“However, most of these asset owners aren’t then challenging their managers [or investment consultants] to improve their DEI performance,” said Shackleton. “It’s fairly straightforward for an asset owner to bring DEI into their selection process, but beyond this DEI appears to be a consideration, not a deal breaker.” 

Until asset owners start regularly encouraging third-party providers to improve their DEI performance beyond the selection process, they won’t improve, Shackleton argued.