The complexity of interactions between the global economy, social trends, cultural aspects, human behavior economics, and their impact on capital markets demand a new approach to investing for future generations. Social innovation, social entrepreneurship, and next generation impact investment models will likely be the trifecta of our post-pandemic economic recovery journey and the foundation for the 5th Industrial Revolution era. Gender disparity represents a prime target for impact investments along climate crisis, economic inequality, racial injustice, and other crises that have been plaguing our society. The pandemic has only accelerated these, and we have noticed an upward impact investing trend that has reached new heights. Ensuring diversity and inclusion in investments is a powerful trend that will persist in the post-pandemic era, promote economic growth, and lead to empowerment of future generations of young women.
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The chapter aims to provide a state of the union of the impact investing landscape, emphasize the challenges and opportunities we are facing, and point to future directions of research, advocacy, and development that are required to facilitate women empowerment and attainment of UN SDG 5, with a broader impact on all UN SDGs. The crucial role of women leaders will be emphasized throughout this chapter and specific areas of the ongoing gender divide, as well as possible remediation of this divide, will be highlighted.
The overarching theme of this chapter is that impact investments and attainment of UN SDG 5 are key for our society and are grounded on powerful statistics. Women represent 49.5% of the world’s population, account for 47.7% of the global workforce, and earn more than $20 T every year globally. Therefore, increasing their engagement in the impact investing ecosystem can have a positive long-term effect. For example, women hold the majority of the jobs in early education, social work, and healthcare, therefore, they can play a key role and have a direct positive impact on SDGs 3,4,5, and an indirect positive effect on all other UN SDGs.
The objectives of this chapter are to provide an assessment and update of the current impact investing ecosystem, point out how understanding and harnessing the true power of women in reshaping impact investments can strengthen and further develop the ecosystem, as well as serve as a call to action for immediate collaborative engagements of stakeholders to remove residual barriers, address ongoing challenges and build a more inclusive and diverse future to generations of girls and women.
Impact investing incorporates an investor’s intention to positively influence social or environmental changes and a dual financial-impact ROI. The impact investment ecosystem addresses all SDGs and includes a broad portfolio of asset classes that range from grants, equity, loans, bonds, private-public partnerships, etc. The impact investment ecosystem includes a variety of key stakeholders such as entrepreneurs, investors, investment institutions, family offices, family foundations, NGOs, banks, pension funds, insurance companies, financial advisors, and wealth managers.
A recent report by the UN Global Compact as part of the finance initiative focused on private markets investing, shared 6 principles of responsible investing, and aimed to encourage a stronger industry uptake of the UN guiding principles on Business and Human Rights. One key driver of success identified was to support portfolio companies that set out to carry their ESG portfolios and mandates for companies to have women representation on boards. The last survey published by the Global Impact Investing network highlights the highest response rate ever recorded. Major financial management and consulting firms have reported that sustainable investing companies typically perform as well as traditional investments or sometimes even better, while some sustainable funds even outperform comparable funds. Women-founded companies belong to this category. As highlighted in a recent MSCI report, the main trends predicted for 2022 and beyond were climate change, biodiversity, focus on gender, and technology as a driver of inclusivity, and managing social inequalities. Ensuring diversity and inclusion in investments is a powerful trend that we hope will persists in the post-pandemic era and lead to the empowerment of future generations of young women. There is a need for a wider understanding that gender is one of the key drivers of economic recovery and a higher commitment to dedicate investment funds towards diverse population segments to accelerate and sustain global impact investing efforts.
Global investments trends have pointed to an increase in venture capital and private equity allocated to women founders, however, the total overall percent allocated remains low. Impact investment trends are also showing an upward slope with a higher than ever volume of capital dedicated to climate change, clean tech, smart urban developments, digital health, agriculture technology, etc. However, investment in SDG 5 remains low compared to other important causes. Women’s presence in board rooms, C-suites, and other key government leadership positions has increased steadily, however, women continue to be vastly underrepresented compared to men, and promotion opportunities are abysmal. Women continue to be the majority in several industries, continue to complete higher education in large numbers, and then achieve middle management roles. Unfortunately, many continue to experience bias and other barriers when aiming to advance to C suite or government leadership positions. Abhayawansa and Mooneeapen (2021).