Can gender lens investing move the needle on SDG 5?

UNDP's SDG Impact head Fabienne Michaux discusses the challenges and opportunities of mobilising private sector investors to address gender inequality.

This article is part of a week of coverage by Responsible Investor to mark International Women’s Day 2023. 

international womens day 2023“The world is not on track to achieve gender equality by 2030, and the social and economic fallout from the pandemic has made the situation even bleaker.”

This is the verdict of the United Nations on the progress towards reaching the fifth sustainable development goal – gender equality.

Some of the statistics presented in the latest SDG progress report under each of the nine targets and indicators tied to SDG 5 make for sobering reading. Violence against women and girls remains commonplace, as do child marriages and FGM. Women are underrepresented in legislatures and management positions across the globe, and in many countries women still lack legal bodily autonomy.

While other SDGs such as clean energy and climate action may seem more obviously relevant for investors, gender equality “is one of those goals that we really consider to be cross-cutting”, said Fabienne Michaux, director of the UN Development Programme’s SDG Impact initiative, which aims to mobilise private capital in support of achieving the SDGs.

“There’s a concept on the investor side of gender lens investing, and applying a gender lens to everything is a real opportunity to actually drive better outcomes for gender equality,” she added.

Investor map

The initiative produces an SDG Investor Map, which identifies SDG-aligned investment themes in selected emerging markets. Michaux said this has helped to highlight areas such as agriculture and health where applying a gender focus can allow for a more significant impact on women.

She also stressed the importance of disaggregating data to allow for consideration of women specifically, pointing to different nutrition needs for adolescent girls, or the fact that standardised designs mostly cater to men. “You can drive better outcomes for women by looking at the data in a more disaggregated way,” she said.

On the investor side, Michaux said the thinking around gender lens investing is evolving rapidly. “I think it has more awareness now than it had even a few years ago. We’ve also moved on from thinking about it from an investment perspective, where we’re doing well if we’ve got two women on the board. We’re realising it’s a lot more than that in terms of driving those outcomes.”

Yet while pledges and commitments on gender are being made, what is really needed is more rapid action, said Michaux. “It comes down to setting ambitious targets and holding ourselves accountable for the achievement of them.”

Investors should also look at how gender can be integrated across decision-making and activities, she added. “To achieve gender equality, we need to be really embedding this across all of our activities and investment opportunities, not just looking at it as something that we do over on one side for a small, fractional amount of the capital that’s put to work.”

Michaux noted that, while investors may not have as much direct impact as companies, they can also play an important signalling role “in terms of what’s important and what they want the organisations themselves focusing on”.

Washing debates

The sustainable investment space is used to accusations of various types of “washing”, ranging from greenwashing to impact-washing to rainbow-washing (which can refer to either the multi-coloured SDGs or the LGTBQ+ community).

Asked whether gender-washing is an issue, Michaux said: “To the extent that it happens anywhere else, it’s going to be happening for SDG 5 and gender equality as well.”

At the same time, she added, this may not always be done with the intention to mislead. Unintentional “pink-washing” can arise when investors see gender as a bolt-on issue rather than taking a more holistic view – for example, by investing in a gender bond when the underlying organisations have not embedded strong DE&I practices.

“The intentionality can be good but the execution is poor,” said Michaux.

From a market trust and credibility perspective, Michaux said there is a need for more assurance and verification of claims, as well as being able to link intentionality with actions and results. There is also a need to adapt approaches if progress is too slow or there are unintended consequences, she added.

Chance of success?

With the UN delivering such a bleak warning on the progress towards gender equality, does Michaux still think SDG 5 is a realistic target?

“I really believe that if we make these things a priority we can achieve them,” she said. “We’re operating in a system that we created for ourselves over a long period of time that isn’t serving us well in the challenges we face. But the good news is we did create this system for ourselves and it is completely within our power to change it if we so choose to do so.”

As she noted, however, this will require action by policymakers as well as the private sector.

“There is a need to take a real systems change view and look at all of the levels,” she said. “With a lot of issues across both environmental and social outcomes there are really strong business and investment cases to why action should be taken.

“But it will be made a lot easier if from a policy perspective we’re creating a level playing field and an enabling environment to help organisations get there faster.”