Invest In Women: Accelerate Progress

This year’s theme for the UN-supported International Women’s Day, to be held on 8th March, is 'Invest in women: Accelerate progress’. Individual investors who care about gender equality can make a difference this International Women's Day by ensuring they invest with an ethical investment adviser who values investing in women.

There are strong ethical and financial reasons for investing in women. The UN highlights that in addition to being a fundamental human right, gender equality is also a driver of economic growth and enterprise development: progress towards gender equality is a core contributor to more economically prosperous and socially cohesive societies. Studies show that the loss in human capital wealth due to gender inequality is over $160 trillion. Women's participation in the economy contributes to economic growth and productivity. Conversely, restricting women's opportunities can result in lower and/or slower economic growth.

Research cited by the Sustainable Stock Exchange (SSE) initiative shows companies with higher levels of diversity at the executive level outperform their less diverse counterparts on both profitability and long-term value creation measures. Furthermore, companies with more diverse boards and senior management teams demonstrate better environmental, social and governance (ESG) performance, including having more ethical business practices, enhanced workplace policies, and stronger community relations.

Why Investing in Women Matters

Gender Equality is 300 years away

While there has been progress over the last decades, it is widely agreed that the world is not on track to achieve the UN Sustainable Development Goal (SDG) 5 – 'Gender Equality’ by the target date of 2030. It’s also true that while most people are familiar with SDG 5, many do not realise that gender equality underpins more than half of the SDGs: 9 out of the 17 SDGs make gender-specific references.

Women and girls represent half of the world's population and half its potential. However, on average, women in the labour market still earn 23 per cent less than men globally, and women spend about three times as many hours in unpaid domestic and care work as men.

According to the World Bank's Women, Business and the Law 2022 report, around 2.4 billion working-age women are not afforded equal economic opportunity, and 178 countries maintain legal barriers that prevent their full economic participation. In 86 countries, women face some form of job restriction, and 95 countries do not guarantee equal pay for equal work. Globally, women still have only three-quarters of the legal rights afforded to men.

Additionally, according to the UN, at the current rate, it will take an estimated 300 years to end child marriage, 286 years to close gaps in legal protection and remove discriminatory laws, 140 years for women to be represented equally in positions of power and leadership in the workplace, and 47 years to achieve equal representation in national parliaments.

Technology and innovation need more women

This year’s International Women’s Day theme stresses the need for technology and innovation to advance gender equality. Technology can expand pathways to education and opportunities for women and girls. But it can also be used to amplify abuse and hatred. Today, women comprise under a third of the workforce in science, technology, engineering, and maths.

Discrimination is built in from the start when women are underrepresented in developing new technologies. It is estimated that women's exclusion from the digital world has shaved $1 trillion from the GDP of low—and middle-income countries in the last decade—a loss that could grow to $1.5 trillion by 2025 without action. It is essential to close the digital divide and increase the representation of women and girls in science and technology.

Insufficient women in leadership

According to the SSE database, women hold only 22% of board seats in listed companies in the G20 group of the world's major economies. The database shows that for companies listed on the New Zealand Stock Exchange (NZX), 29% of board seats are held by women (making the NZX 11th ranking on this measure), 18% of companies are chaired by a woman (making the NZX 1st ranking on this measure), and 6% have a women CEO (making the NZX 11th ranking on this measure).

How Investors Can Accelerate Progress

Encourage the use of the Women’s Empowerment Principles

Investors working with an ethical investment adviser can encourage fund managers and companies to use the Women’s Empowerment Principles (WEPs), a holistic framework for companies to promote gender equality and women's empowerment in the workplace, marketplace, and community and drive positive outcomes for society and business. The WEPs propose over 70 indicators that can be used as impact indicators for investments.

Launched in 2010 by UN Women and the UN Global Compact, the WEPs are informed by international labour and human rights standards and premised on the idea that businesses have a stake in and responsibility for gender equality and women's empowerment. The WEPs are integrally connected to many of the gender targets within the SDGs.

The WEPs Gender Gap Analysis Tool is a self-assessment tool that helps companies assess current policies and programmes, highlight areas for improvement and identify opportunities to set future corporate goals and targets. Results are provided in a concise and clear format so companies can easily identify areas for improvement. These are further explored under the headings of "commitment", "implementation", "measurement" and "transparency."

The tool is framed in the context of the Women's Empowerment Principles and is based on company practice, international standards, and indicators. Topics covered by the assessment include commitment to a gender equality strategy, equal pay, recruitment, supporting parents and caregivers, women's health, inclusive sourcing and advocacy for gender equality in communities of operation. Each question is organised according to widely accepted and understood management practices, including the UN Global Compact Management Model, which guides companies of all sizes through the process of formally committing, implementing, measuring, communicating progress, and taking action.

In addition to providing insight into the company's performance and opportunities for improvement, the tool also leverages gender equality resources for continuous improvement across topics covered in the tool.

Invest with fund managers who are ethical leaders

Investors can work with an ethical investment adviser and aim to invest with fund managers who are ethical leaders in taking account of a gender lens in their investment process and engaging with companies through active ownership and proxy voting to influence gender-responsive practices.

Current practice can include setting targets and reporting on the process of improving board gender diversity within the portfolio. Fund managers may use their voting rights against the reappointment of directors when gender diversity is less than a specific threshold.

It is recommended that fund managers go beyond assessing investment prospects based on their board diversity to take account of SDG 5 and embrace the entire WEPs framework, which covers all aspects of gender equality in the workplace, marketplace and community. Fund managers can undertake engagement on specific gender equality, including pursuing pay equity, implementing paid parental leave policies, and using gender-responsive procurement practices. Supplier diversity programmes prioritising sourcing from women-owned businesses can contribute to economic empowerment and create a ripple effect in the broader business ecosystem. Companies can be encouraged to convene or participate in sector-wide reforms that tackle gender equality issues, for example, gender-based violence in agricultural value chains.

By prioritising transformative outcomes, investments can contribute to the realisation of gender equality. Moving forward, investors and fund managers must continue exploring innovative approaches and collaborations that further strengthen the depth of gender lens investing. This includes committing to generating positive impacts on gender equality, with accountability structures in place to measure, monitor and report on the impacts achieved.

Tell the NZX you support their gender equality actions, including "Ring the Bell" on 8th March

Every year, in celebration of International Women's Day, the SSE initiative supports "Ring the Bell" events to raise awareness of the pivotal role the private sector can play in advancing gender equality to achieve the UN's SDG5 and to raise awareness about the WEPs. On 8th March, many stock exchanges worldwide, including the NZX, will host a bell-ringing ceremony.

30 exchanges, up from 10 in 2019, are now signatories to the WEPs as part of their commitment to promoting gender equality. SSE members are also expected to scale up their actions on gender equality by promoting transparency of relevant metrics, organising training on board diversity, and encouraging their listed companies to sign the WEPs.

Stock exchanges are uniquely positioned to influence their market in a way few other actors can. Exchanges play a central role in the economies in which they operate. Globally, exchanges list over 50,000 companies with a market capitalisation of over $90 trillion. In many jurisdictions, the exchange directly and indirectly defines what is expected from the companies listed on its markets and the entities transacting through its markets. Policymakers, regulators, investors, and civil society increasingly demand greater action on gender equality. Exchanges are well-placed to meet this demand with an influence and a voice across the capital markets ecosystem. By writing to the NZX telling them you support their gender equality actions, you can encourage them to accelerate progress.

Are your investments part of the problem or the solution? Voting for gender equality

The UN maintains that the world is at a crossroads for gender equality and that standing up for women’s rights is more important than ever. They offer the following challenge:

This International Women’s Day, let’s unite to transform challenges into opportunities and shape a better future for all! Join us on March 8th, 2024, for International Women's Day under the theme 'Invest in women: Accelerate progress’, and take a stand with us using the hashtag #InvestInWomen.

The UN website includes a reference to NZ when it explains that:

International Women's Day is celebrated in many countries around the world. It is a day when women are recognised for their achievements without regard to divisions, whether national, ethnic, linguistic, cultural, economic or political.

Since those early years, International Women's Day has assumed a new global dimension for women in developed and developing countries alike. The growing international women's movement, which has been strengthened by four global United Nations women's conferences, has helped make the commemoration a rallying point to build support for women's rights and participation in the political and economic arenas.

We invite you to learn about the history of women's rights and the UN's contribution to the cause:

In keeping with the spirit of NZ’s women's suffrage movement, NZ investors, investment advisers, and fund managers can be ethical leaders by investing more in women to accelerate progress towards gender equality. You can use your money as a force for good by voting for gender equality with your investments.