Investment in gender-diverse ownership and leadership drives development impact for women

This year, as we continue to celebrate the International Women’s Day’s theme of ‘Invest in Women: Accelerate Progress’, we are delighted to share new evidence on how investing in companies and funds with gender-diverse ownership and/or leadership can support development impact for women. For the past nine months, Kore Global has been collaborating with British International Investment (BII), the development finance institution of the UK government, to evaluate the extent to which its investments in companies and funds which meet the 2X Criteria for gender-diverse ownership ('Entrepreneurship' Criteria) and/or leadership ('Leadership' Criteria) have supported wider development impact for women.

The evaluation is timely. It builds on learnings from the first phase of 2X (2018-2021) and responds to the high demand to improve transparency, accountability, and credibility in the field of gender-lens investing. As BII publishes the report from this evaluation, we wanted to take this opportunity to share some of our evaluation team’s reflections and takeaways.

Women employees benefit when the leadership & ownership structures are gender-diverse

We found that BII’s investments in companies with gender-diverse ownership and/or leadership tended to adopt gender-smart business practices that promote inclusive work environments – in particular, gender-smart recruitment and retention strategies. For example, in traditionally male-dominated sectors, clear succession planning and tackling gender biases in recruitment coupled with targeted recruitment efforts can address gender imbalances in leadership, and enhanced parental leave and flexible or hybrid working arrangements were reported to facilitate more family-friendly workplace cultures. 

These practices are enabled by conducive organisational cultures, which promote women’s leadership and sustain diversity in the workplace. Of the companies assessed, those with the strongest evidence of supporting improved economic welfare, well-being and/or empowerment of women employees are those who demonstrate a genuine commitment to gender diversity at all levels, coupled with a deliberate focus on addressing gender-specific barriers to women’s employment and participation.

We could not assess whether gender-smart business practices were associated with higher remuneration for women due to the lack of such data collection by businesses. Along with greater support for women employees and gender-equitable policies, we encourage businesses and investors to invest in data-driven approaches that can enable gender pay gap analysis and other useful metrics of gender-equitable employment. Measurement not only supports the evaluation of outcomes but can also help ensure that commitments and policies are translated into practice. 

Funds with gender-diverse ownership and/or leadership have a more intentional approach to gender 

The evaluation included seven funds that met the 2X Entrepreneurship and/or Leadership Criteria, all of which showed commitment to integrating gender considerations within their investing strategies. Indeed, five of the seven funds (71%) were found to be on track to exceed 50% of their investments meeting at least one 2X criterion.

The funds demonstrating the strongest evidence of supporting impact for women were those with an explicit and intentional gender-lens investing strategy. Such investing strategies articulate the fund’s approach to identifying 2X-eligible investments as well as to creating gender-related impact by working with their portfolio companies post-investment to adopt gender-smart business practices and meet additional 2X Criteria. Particularly invaluable to amplifying impact was having personnel in-house with time and specialised knowledge to provide ongoing support to portfolio companies.

Financial institutions are leading the way in adopting gender-smart practices to address the needs of their women customer segment

The evaluation sample included four companies that met the 2X Entrepreneurship and/or Leadership Criteria that deliver products and services directly to end customers. All four had adopted gender-smart business solutions to address women’s needs, with the three financial institutions (FIs) in the sample demonstrating high standards in gender-smart business practices. These FIs went beyond simply collecting sex-disaggregated data on their customers and used gender-related data to inform the refinement of existing product or service offerings to better meet the needs of women customers.

Both gender-diverse ownership and leadership, coupled with other enabling factors, maximise the adoption of gender-smart business practices

To fully reap the benefits of women’s leadership, women’s broad representation across both senior management and governance structures, in conjunction with women’s ownership, was shown to be the most effective combination for the adoption of gender-smart business practices with the greatest potential to bring about development impact for women. 

In addition to women’s representation, company-level factors (see image below), such as strong senior-level buy-in, gender capacity, commitments, accountability mechanisms, and relationships with portfolio companies were more indicative of gender-smart practice adoption than geographic context. This means that while geographic context should be considered when contemplating gender-lens investments, other factors can be just as influential in determining the potential development impact of an investment. 

Factors most associated with the adoption of gender-smart practices

So what now? 

If you are interested in further details about the methodology behind this evaluation, including the Theory of Change we developed, or more information on our key findings and recommendations, you can access the report from this evaluation here.

Written by Becky Zelikson, Kari Walton, Jenny Holden, and Rebecca Calder, Kore Global.