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PEAK Grantmaking

Gender Lens Investing and Moving the Needle on the Sustainable Development Goals

“A goal without a plan is just a wish,” said the much-loved author and pilot Antoine de Saint-Exupéry, killed nearly eighty years ago at the start of the Second World War. It’s a good and concise way to explain some of what funders do: we create plans to turn goals into achievable change, and sometimes we succeed and, if we are honest, often we fail. Change is a hard master.

In the UN’s Sustainable Development Goals (SDGs), the world is reaching towards the most ambitious set of goals ever seen. The 17 goals set out a series of targets covering social justice and economic development in all countries including health, education, environmental standards, poverty, hunger and gender equality. Governments, companies, individuals, and funders of all kinds have been urged to join this common purpose and do what we can to achieve the SDGs by 2030.

But where to start? This is a question of special relevance to philanthropy when its slim resources are compared to the seemingly intractable issues the SDGs were developed to address. To be effective in supporting change, grantmakers need to identify their leverage point: that sweet spot where, in global terms, small sums make a big difference.

Most of us assume the best way to do this is to focus on our areas of expertise, such as climate change, rural poverty or supporting children’s health, or on a geographical region that we have ties to. A quick scan of the goals will likely produce one we can legitimately focus on: job done!

But another way of thinking and practice is emerging, offering an integrated approach that engages both the grantmaking/programmatic side of a foundation and its endowment. As its point of leverage, it seeks to use philanthropy’s relatively limited resources to harness the immense power of global capital flows for progressive change.

When Diana van Maasdijk and I set up Equileap two years ago, we asked ourselves whether, instead of focusing on any single SDG such as “Zero Hunger” or “Quality Education,” we might be more effective if we sought to improve outcomes for an entire marginalized population and thereby have an impact on all the SDGs rather than just one.

Diana and I have a long background in grant-making and philanthropy. She is the author of Beter Geven—a handbook for Dutch funders, and was Head of Philanthropy Advice at The Netherlands bank, ABM-Amro. I was the founding Director of the UK-based grantmaker, Sigrid Rausing Trust, and later set up and directed Ariadne – the European Network for Social Change and Human Rights Grantmakers.

Women and girls comprise the world’s largest marginalized population, and existing research tells us that improving their economic status would have an impact on nearly all of the SDGs, including Goal 13, which combats climate change. Drawdown – The Most Comprehensive Plan Ever Proposed to Reverse Global Warming, edited by Paul Hawken, confirms that educating girls, along with attaining universal access to family planning for all women in all countries, together constitute the most effective solution to reduce CO2 emissions, outweighing any single technological innovation.

We focused on economic justice for women, reasoning that this is a neglected but important lever to reduce global poverty and inequality, and that improving workplace gender equality in a global economy made sense, where millions of women are expected to transition from the informal to the formal workforce over the next 20 years. We also know that workplace inequality affects every country. This has been shown in stark relief this year with the #TimesUp and #MeToo campaigns, prompting understanding that gender violence at work is endemic in rich and poor countries alike, and the gender pay gap exists at all levels, confining women to lower earning jobs and lower pay.

To address this, we set out to rank public companies on their gender equality, not just on the relatively simple criterion of, “Does your company have a woman on the board?” We looked at everything that matters to workers and that would help bring about gender parity in the workplace.

We sat at Diana’s kitchen table in Amsterdam and listed what we believed to be important. The best framework we identified, the UN’s Women’s Empowerment Principles, inspired the first Equileap Scorecard, a direct measuring system to enable us to collect data and create rankings of public companies.

This is where the first role for grantmakers began. The market, focused on profit, has succeeded in creating simple gender measuring systems. It can look, for instance, at the number of women board members or CEOs. But in order to rank a large number of global companies on gender equality, and design and implement a quality model, Equileap needed philanthropic capital in the form of grants and loans. We have been lucky to find funders in the US, Germany, the Netherlands, and the UK that are able to see the point of this. Other grantmakers have considered this well outside of their comfort zones.

With this funding we ranked over 3,000 companies in 23 countries last year on their progress towards gender equality, and we are about to publish our second ranking and report this year. For the first time, a mining company in Australia is able to compare its gender equality performance with a French cosmetics company or an American bank. Companies can benchmark their performance and see what they need to do to improve, governments can understand what policy interventions make a difference to women and men in the workplace, and, above all, investors know which companies to invest in to reward those firms that lead the way in gender equality.

This gives us a second point of intervention for funders. We have used our methodology and data to form the basis of new investment products that enable foundations (and other institutional and private investors) to invest capital to bring about change. Equileap licenses its data to a number of financial providers, such as UBS, Lyxor, and the Australian insurance company QBE. With the data, these companies create tracker funds, exchange traded funds, screens for investors to exclude companies that perform poorly on gender equality, and hybrid bonds. The data is integrated into new environmental, social, and governance (ESG) funds, which include, for the first time, a detailed gender component. All of these instruments harness capital flows to help bring about change.

We are not the only ones thinking this way. A number of other specialists targeting marginalized or discriminated groups are beginning to leverage capital flows in the same way. Examples include Impact Shares, with its NAACP Minority Empowerment Exchange Traded Fund, Trillium Asset Management, which integrates LGBT issues into asset management, and The Return on Disability Group, which produces various fixed income and equity indices with the best performers on disability rights for stock and bond investors.

The first product built with Equileap data was launched last autumn, and now over $500 million is under investment using our data. We are beginning to move the needle on gender lens investing, something Deutsche Bank and others predict will grow substantially in the coming years. In time, we need to see if this new approach also moves the needle on gender balance and equality in the formal workplace and contributes effectively to much larger change globally.