by Jennifer Gilhool - Gender Economics Lab —Barron's recently published a piece titled "Wonder Woman: Capitalizing on Gender Equality". The article opens recounting founder and CEO of Parnassus Investments Jermone Dodson's question to CEOs, "Have you thought about adding women to the board?" The most common answer to his question: What does that have to do with business?" Mr. Dodson was asking this question thirty years ago but he may have been asking it last week.
Women wonder why we are still asking this question and having this conversation?
The idea of "capitalizing on gender equality" is laughable. Women haven't been able to capitalize on gender equality because gender equality doesn't yet exist. But, that isn't the point of the Barron's article. The point is that shareholders can and should capitalize on gender equality by investing in firms that are capitalizing on their commitment to gender equality. Yes, these firms do exist.
In their new book, Gender Lens Investing: Uncovering Opportunities for Growth, Returns and Impact, Joseph Quinlan and Jackie VanderBrug provide a roadmap for integrating gender into investment analysis and decision-making and reaping the resulting rewards. Investing in companies that invest in women is a winning financial strategy. Could this strategy be the missing piece to achieving gender equality at work?
There has been a steady stream of research linking women's participation in leadership, specifically at the board level, to greater returns on equity, stronger dividend payouts and lower stock volatility as compared to less gender-diverse companies. Still, women lag men in leadership and board participation. Why might gender lens investing be the missing piece? Timing.
As the Barron's article notes, the lack of women in leadership or board positions can result in costly mistakes. Lululemon Athletica lost 36% of its value in just six months after founder Chip Wilson commented that his yoga pants weren't intended for larger women. Mr. Wilson eventually resigned. And, I never bought another pair of Lululemon yoga pants again. More recently, Uber Technologies founder Travis Kalanick resigned as CEO after allegations of sexual harassment and sexism were levied against the company. And, Dave McClure, the founder of the start-up incubator 500 Startups, stepped down after The New York Times reported that he had come on to a woman who was applying for a job at his firm.
Much of the talk about achieving gender equality at work has centered around achieving a "critical mass" of women on the board of directors and in the C-Suite. A critical mass being thirty-three percent. Is this really possible? Again, the answer appears to depend on timing. And, again, the timing seems to be pretty good.
In the United States, women are the most educated and the most skilled members of the labor force. Women closed the skills gap with men earlier in this decade. Women have been out-pacing men in college degrees at every level for more than a decade. This isn't just a U.S. trend either. Globally, girls out-perform boys academically and earn more college degrees than men. Women have never been better positioned competitively to take on the C-Suite.
Women's financial power is also growing. Globally, the female economy was $15 trillion in 2015 or 40% larger than the economy of China. Indeed, women are the second largest economy in the world, second only to the United States. Still, women lag men in earnings by a global average of 16%. Globally, women do more than double the amount of unpaid work as men, a global average of 4.5 hours per day. This is what Melinda Gates called "time-poverty" in 2016, labeling it a universal gender problem. It is also a universal economic problem, representing $10 trillion in lost output according to the OECD.
“I would say that [the] real drivers of the ‘Post-American World’ won’t be China… or India … or Brazil – or any other nation for that matter. The real drivers will be women. . . . The truth is that women already are the most dynamic and fastest-growing economic force in the world today.” -Muhtar Kent, The Coca-Cola Company
Additional opportunities for growth remain. Female labor participation rates lag men. Increasing female labor participation rates increases the opportunity for GDP growth. For example, if women participated in the paid economy at the same rate of men, $28 trillion would be added to the annual global GDP by 2025. Hardly small change.
So, to every woman wondering why are we still having this conversation, let me say this -- the end is near. Perhaps for the first time ever (we should check with an actual historian), women hold a competitive advantage when it comes to power, influence and opportunity to shape the future. And, there are signs that men agree.
Investment firms are increasingly considering environmental, social and governance (ESG) factors when making investment decisions and this includes women. Women drive or are a significant factor in an organization's commitment and follow through on environmental, social and governance related initiatives and priorities. The greater the number of women on the Board, for example, the stronger the commitment to green priorities and the more likely those priorities are sustained during economic downturns.
Perhaps I am overly optimistic about women and the future. Perhaps I simply want to see more leadership opportunities and better odds for sustaining women in those opportunities because my children are in and preparing for college. Or, perhaps, it is my personal bias that places rose colored glasses over my eyes. Whatever the reason, I continue to believe that this is the century of the woman and that the nation of women is the one true emerging nation on the world stage.
Women are a wonder.
Jennifer Gilhool is a self-described recovering anxiety-ridden workaholic. She is also the Founder of the Gender Economics Lab, an attorney, former Fortune 50 executive, author, and speaker.
Jennifer Gilhool is the founder of Gender Economics Lab, a professional, focused thought leading coaching and consulting practice that cuts through popular myths about gender in the workplace. GEL distinguishes its solutions by assuring both male and female workers that smart gender literacy rewards participants with career growth and rewards companies with higher margins. GEL goes far beyond compliance issues to deliver business value for all stakeholders. Learn more at www.gendereconomicslab.com