According to the National Women’s Law Center, the overall wage gap for women over the past decade has remained steady at about 80 cents for every dollar earned by men. That translates to about 64 extra work days per year for women to reach pay parity. This gap is even bigger for Latinas, black women and women of Native American and Hawaiian descent, requiring the impossibility of working for more days than exist on the calendar just to break even.
March is Women’s History Month, and International Women’s Day is March 8 every year. However, this year, National Equal Pay Day – the date which symbolizes how far into the new year women must work to catch up with what their male counterparts earned in the previous year – fell on April 2. We need to improve that order. What will it take for the National Committee on Pay Equity to be able to move Equal Pay Day to coincide with International Women’s Day, or better yet, January 1?
Data Doubts
As issues of economic inequality have finally made it into the investment mainstream, more data has become available. This makes it possible to examine corporate and community performance in gender terms. Along with that, we have also seen the rise of Gender Lens Investing (GLI) as either a standalone strategy or a facet of broader ESG mandates.
Unfortunately, in strictly quantitative terms, the data has proved insufficient in the equity space to capture performance beyond basic metrics of gender inclusion in the workforce and in leadership. While assessing representation in the C-suite and on the board of a company is a significant indicator of the balance of power, it does not capture the whole story of how the firm arrived at that point, the internal culture and policies that make it possible for women to participate and perform equitably, or the impact – either positive or negative – that the business has on women, from suppliers to end consumers.
This lack of a more expansive view of companies and markets through the gender lens has left indices and those strategies that focus solely on gender somewhat lacking when it comes to addressing the systems-level problems that have enabled pay inequity to persist. Strategies that take a more integrated approach and look at the interconnectedness of a comprehensive list of ESG factors beyond just diverse leadership are more likely to represent and result in the change that investors want to see.
The UN’s Sustainable Development Goal number five (see chart opposite) does an excellent job of articulating how the system needs to change to reach gender parity globally. Companies that reach beyond just hiring female executives to make broader changes to how they staff, how they compensate, how they operate and how they create and provide access to capital are the ones that will help to make it possible for women to lift themselves up to equal standing in local and global economies.
Money Where it Matters
Lending can be an even more powerful tool for lifting up individuals and communities and giving them the means for economic self-empowerment.Of course, it can become an economic prison if it is provided in inconsiderate or even predatory ways. In portfolio terms, responsible opportunities can be found through microcredit, small business financing, community investments and even municipal bonds that focus on everything from housing to healthcare and education.
As a case study, the Cordes Foundation was able to direct their asset manager Community Capital Management to focus on impact and GU, resulting in an investment in a taxable municipal bond financing the construction and outfitting of a STEM facility at Texas Woman’s University, the US’ largest university primarily for women. This is an investment that is changing the nature of the system itself, increasing the pool of qualified young women for highly compensated skilled jobs.
Indeed, the solutions will come from more than a few metrics influencing the weighting of a diversified list of equities. Investors can and should be performing deeply fundamental work to identify the investments that will break the old paradigm and drive systemic change in favor of fair opportunities and compensation for all.
Unlike many areas of ESG where the measures of success are harder to quantify, this one is simple and goes right to the economy’s bottom line. After all, one key measure of the impact of deeply integrated Gender Lens Investing will be where in the calendar National Equal Pay Day falls in years to come.