Return on Inclusion | February 23, 2022

Investors find untapped opportunities at the intersection of gender and justice

Dennis Price
ImpactAlpha Editor

Dennis Price

ImpactAlpha, Feb. 23 – Some of the funds are run by women of color seizing overlooked market opportunities with lived experience and cultural insight. Others are run by white managers who understand the power of diversity.

The most recent Project Sage survey of more than 200 gender lens funds found nearly half also had a racial lens, from less than one-quarter in 2018.

The rise of such “intersectional venture funds,” says Suzanne Biegel of GenderSmart Investing, reflects “an increasingly sophisticated understanding of equity, diversity, inclusion, and justice.”

In a new toolkit, GenderSmart rounds up the emerging principles and practices of investing for justice, equity, diversity and inclusion, or JEDI. “Together, these fund managers are bringing a diversity and experience to their investments that is missing from the investment ecosystem as a whole,” says Biegel.

Intersection and intention

Canadian pension fund manager CDPQ’s C$250 million (US$200 million) Equity 25³ fund backs tech companies committed to women, visible minorities and Indigenous peoples as board directors, executives and shareholders.

In New Zealand, Brightlight Impact’s Te Puna Hapori infrastructure debt fund leaves ownership of housing, water and healthcare infrastructure with Maori communities.

The impact-first investment strategy of Seattle-based Global Partnerships considers gender, geography, race and ethnicity, as well as poverty, as drivers of exclusion in Latin America, the Caribbean and sub-Saharan Africa.

Power dynamics

Impact targets of the intersectional funds range from reaching diverse and first-time fund managers to closing wealth gaps to building more inclusive value chains. “The way it shows up will depend on how you come in,” GenderSmart’s Sana Kapadia told ImpactAlpha.

Investors in the Global North may focus on racial diversity; those in the Global South may prioritize local founders or historically excluded groups. The best strategies examine gender across dimensions of race, class and ethnicity, according to the toolkit, and address power dynamics across gender, racial, and socioeconomic divides.

22 in ‘22

Biegel last month put a gender lens on ImpactAlpha’s annual lookahead, annotating our five broad themes of The Reconstruction, Emerging Markets, Climate Finance, Catalytic Capital, and Capitalism Reimagined.

She encouraged investors to ask themselves “Where the opportunities are to bring a gender lens to investments that don’t already have them. And what new investments you could make to bring a gender lens to your portfolio.”