By Patricia Farrar-Rivas, CEO, and Anders Ferguson, Partner, Veris Wealth Partners
The Google diversity story needs a reframe. Others have debunked the poor science and just plain ignorance in Google engineer James Damore’s argument that males are better suited than females for work in the tech and engineering fields.
So let’s talk instead about building great businesses and investing to make companies stronger, more innovative and ultimately more profitable.
The now infamous internal memo offended women and men across the nation and ultimately cost Damore his job. What he failed to realize is that business and investing are moving beyond these harmful notions towards diversity and inclusion. Harmful prejudices limit the potential success and impact that companies and investors can achieve. These views put companies at a competitive disadvantage. By limiting the talent pool, they reduce innovation, profitability and stifle this dynamic diversity that benefits everyone.
Conversely, investors actively considering gender and seeking out investments in women founders, gender-diverse teams and companies delivering solutions for women — gender lens investors — are finding more radical innovation, stronger companies, and better profits.
Historical imbalances in capital flows mean that investors using a gender lens can identify overlooked, outsized opportunities. The data bears out that companies perform better and communities are stronger when women fully participate.
For example, gender diversity on research teams generates dynamics that foster novel solutions, according to a 2013 Innovation: Management, Policy & Practice study. It concluded, “The results indicate that gender diversity is positively related to radical innovation.” A separate Morgan Stanley report from last year concluded, “that higher gender diversity companies meaningfully outperformed lower gender diversity companies on a risk adjusted basis over the past five years.”
Economics research affirms that ‘different’ is not a liability and that women are an asset not only in the technology industry, but in every field of business.
Economic Driver
Veris has been working for over seven years researching, raising awareness and investing in the intersection of women and investing. Today, we are joined by many other investment firms in the U.S. and abroad. For companies, their employees, and for the people and institutions investing in them, the solutions being developed are making the world a better and more productive place for everyone.
Gender lens Investing is an opportunity for everyone in business. That’s because gender lens Investing focuses on diversity, innovation and inclusion in workplaces and communities. 2015 McKinsey Global Institute research found that closing the global gender gap at work could add $28 trillion, or 26%, to global annual GDP in 2025.
A gender lens is good for the economy. It’s also smarter way to invest. While traditional financial analysis has mostly ignored gender considerations when allocating capital, gender lens investors believe that rigorous data analysis leads to better outcomes — both financial and societal. As an analytical tool, a gender lens helps investors see the world with greater nuance and clarity. As a result, investors can identify investment risks and opportunities with greater effectiveness.
Multiple studies confirm the importance of gender inclusiveness in business, including an analysis of small business owners in emerging economies (who repay loans at extraordinarily high rates) to research on female Silicon Valley entrepreneurs (who despite being capital constrained are more likely to survive the transition from raw start-up to established company).
“We believe that gender diversity supports corporate outperformance through access to a bigger talent pool, a reputation as a more attractive employer for skilled people, higher retention of top talent and more motivated employees,” wrote RobecoSAM in a 2015 brief.
Benefits For All
Gender lens Investing is decidedly not anti-men. Rather, it embraces the proven research of success. It is not claiming women coders in Silicon Valley are better than their male counterparts. It is not a divisive strategy, but rather an inclusive one that benefits men in business and in their personal lives. Research consistently shows that investors want alternatives to the investment industry’s traditional biases. They are seeking new, creative ways to achieve a sustainable and equitable prosperity.
With so much flawed thinking in circulation, we thought it an opportune moment to focus on the inclusive and the positive: how gender lens investing can be the antidote to those who wish to exclude not include, who want to innovate not stagnate.
In his memo, Damore also missed early female programmers Ada Lovelace, considered by many to be the first computer programmer and Grace Hopper, “the mother of COBOL.” He also missed how a gender lens can help companies leverage the talents of women at every level of an organization.
Special thanks to Pax World for their research insights on gender lens investing.
