Investors in Public Market/Pension Funds
Public equities are one of the fastest-growing asset classes for impact investments, yet much work remains to be done in creating effective ways for asset owners and managers to engage in public capital markets in ways that respond to social and environmental risks and opportunities. In the case of GBV, there are structural limitations for investors. Companies are not required to disclose most information that relates to policies and practices that impact GBV. Nor do simple positive or negative screens exist to categorize companies on this issue.
That said, there are critical reasons for why public markets investors should want better options for assessing GBV, as well as strong imperatives to develop approaches for these asset classes. Below we share some of the ways in which this issue is relevant to the three investment lenses.
How can investors in public markets assess the possible risks of GBV to enterprises and portfolios?
As laid out in the first module, GBV both within and outside companies represents operational, reputational, regulatory, and political risks. From the point of view of investors in public markets, the challenge is to understand when and how those risks become material to a company or portfolio’s valuation and how to mitigate these risks. Investors should consider the following points:
- The prevalence and incidence of gender-based violence is impacted by a host of socioeconomic and cultural factors beyond company policies and practices. As those factors change, so does incidence and tolerance of gender-based violence. And violence outside of companies has impacts on companies as much as violence inside, meaning even enterprise-level risk is not limited to enterprise-level policies, practices, and behaviors.
- These risks translating into a shift in stock price is less about the behaviors happening at the company and more about the cultural tolerance of the behavior. Gender-based violence has been happening inside and outside of companies for as long as companies have existed. What makes it at investment risk—what invites the legal and/or public scrutiny that affects investor confidence—is changes in whether certain types of violence are tolerated.
Thus, while factoring in data about violence in geographies and sectors can help investors see a fuller picture of possible risks in any given market, understanding how to track changes in cultural tolerance of violence is critical to longer-term assessments.
How can those investing in public equities incorporate a GBV lens into their assessment of investing opportunities?
While the lack of consistency in what information companies disclose is a limitation to assessing GBV patterns that may inform valuation, it is important to remember that GBV is grounded in gendered imbalances of power. Research shows that sectors and companies that have significant disparities in gender representation are at higher risk of violence. Thus, attention to demographic data, including things such as leadership, board demographics, and gendered pay disparities, can help investors potentially identify companies with better environments for equity and safety.
How can those investing in public equities impact GBV with their capital?
While the lack of company-level information regarding intent or categorizations that relate to GBV means it is difficult to proactively screen for companies that impact GBV, investors still have ways to engage in certain actions. Shareholder advocacy is a powerful tool for encouraging good practices at companies. Advocating for fund managers to identify ways to incorporate this lens can also have powerful ripple effects, particularly among managers actively seeking to be forward-looking on ESG and impact. Institutional investors such as pension funds have a particular opportunity to advocate for more products and approaches aligned with this issue.
Glossary
This refers to anything that has economic value.
Groupings of investments that exhibit some similar characteristics and are generally subject to the same regulations. Examples include equity (i.e., owning a portion of a company), commodities (basic goods, such as agricultural products, that can be transformed into other goods or services), and real estate.
A socially constructed category related to norms and expectations of people with different sex characteristics.
A person's internal understanding and experience of their own gender.
Incorporating a gender analysis into financial analysis in order to get to better outcomes.
The gender binary (male-female) influences what societies and cultures consider “normal” or acceptable. These relate to expectations regarding the behaviors, dress, appearance, and roles of women and men. Gender norms continue to dictate that anyone variant from what is deemed acceptable will experience discrimination and oppression at an individual and systemic level. Gender norms can contribute to power imbalances and gender inequality in the home, workplace, markets, and in society as a whole.
Any act of violence, that causes physical, sexual, or psychological harm or suffering to someone based on their gender. This definition encompasses all forms of violence that women and gender-diverse people experience (including physical, sexual, financial, emotional, and cultural violence). Gender-based violence is a violation of human rights and a life-threatening health and protection issue. It includes acts of violence, sexual harassment, and threats of harm or coercion in public or in private life, including in homes, workplaces, social contexts, on the street, in schools, or online by perpetrators either known or unknown to the victim-survivor.
Investments made with the intention of generating positive social and/or environmental return alongside financial returns.
Coined by the American law professor Kimberlé Crenshaw in 1989, this term signifies a lens through which to analyze how oppressions along multiple vectors – race, gender, class, sexuality, and more – interact to affect an individual's experience. This approach calls for analyzing oppression through a multitude of social, cultural, biological, and geopolitical factors.
This acronym stands for lesbian, gay, bisexual, trans, intersex, and queer, and the ‘+' signals inclusion of further identities and experiences not named in the acronym. Certain Global South scholars have argued that the acronym potentially imposes limits on identification not reflective of dynamic identities and experiences.
This term refers to any factor that is deemed relevant in terms of affecting a company’s performance.
People whose gender identity does not conform to a male-female binary.
An investment opportunity refers to a situation in which one can place money into an asset that has a chance to gain value in the future.
The collection of assets owned by an investor or fund, often comprising of multiple asset classes.
In the context of sociology and political science, this is defined as the capacity of an individual to lead, dominate, or otherwise influence the actions, beliefs, or behavior of others.
The chance that an investment's gains will differ from an expected outcome or return. In general, investment risks fall into two broad categories:
- Market risk: Risks that affect part or all of an economic market in which an investment is made. Examples include political risk, inflation risk, and currency risk.
- Unsystematic risk: Risk that affects a specific company or sector, such as changes in management, policies, or practices that affect employee performance, or new competition for a product or service.
This acronym stands for sexual orientation, gender identity and expression, and sex characteristics (the shorter SOGIE is also used). While not as widely popularized as the LGBTIQ+ acronym, some scholars argue that it is more representative of how gender and sexual identities are formed in different global contexts.
The physical characteristics with which a person is born, such as anatomy and chromosomes.
How people experience sexual and romantic attraction, including sexual orientation.
The process of predicting a company or other asset’s future value based on analyzing its current assets, potential for growth, and possible risks.