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  • Writer's pictureAlpcan E. Gencer

Celebrating International Women’s Day - Reflections on Gender Diversity, Parity and Equality


Martina Macpherson, President, NSFM, and Visiting Fellow, Henley Business School

1.      Why is the topic of green and sustainable finance very often brought up in relation to women’s integration, leadership and equality in the work force?

Gender equality, female empowerment and development are at the core of the sustainable investment and social finance debate, and form part of the UN Sustainable Development Goals and Agenda 2030. Hence, the impact of gender diversity, parity and equality have been well researched and used for (sustainable) investment decision making over the last years. 

However, gender inequality, human rights abuses and economic inequality remain key issues around the world. And the worldwide gap between women and men remains particularly stubborn on issues of work. According to a United Nation's (2015-16) report, women do more unpaid household work than men, and get paid less when they do work in the formal economy alongside men. Moreover, women are predicted to face another 118-year wait for the gender pay gap to close, with only 55 of the 500 richest people in the world being women.[1]

Another key issue is equal pay. According to the OECD, full-time working women globally are paid on average 14.1% less than men.[2] Meanwhile, the World Economic Forum ranks 145 countries on women's equality assessing how many women participate in the workforce and how well they're paid compared to men; health and educational outcomes; and political empowerment and representation in government. Their reports provide some interesting findings: For instance, Great Britain just ranks at #18 and the United States at #28, and while they do not struggle with the same maternal mortality rates, human rights abuses, and other challenges that impoverished developing countries face, poverty and economic inequality still remain key equality issues around the globe.[3]

Moreover, there are serious constraints in the talent pipeline for women. Many are not enabled to make it from middle management to the vice presidential level. Here, corporations could vastly improve the odds for building diversity in top management as these aspiring women, having advanced and built managerial skills, are even more focused on leading.

No surprise then that nearly 100 years since women gained the right to vote and 46 years since the passage of Title IX, just 5.8 percent of American companies in the S&P 500 are led by a woman CEO.[4] Moreover, the worldwide picture of best chances of equal treatment at work remains very mixed. The Economist's “glass-ceiling index”[5] reveals that Nordic countries usually come out top overall. In these countries, women are present in the labour force at similar rates to men. Meanwhile countries such as the U.S. and Britain feature below the OECD average.

Interestingly, board composition, workforce diversity and inclusion appear in the Top 15 most regulated topics in Norway vs South Korea (the country also features at the bottom of the “glass-ceiling index”). Meanwhile, 64% of US companies are not even mentioning workforce diversity and inclusion in their public reports[6]. Norway (39.4%) and Sweden (35.6%) also have the highest percentage of board seats filled by women, according to research by MSCI (2016, MSCI ACWI Index)[7]

2.      What’s the investment case for gender diversity, female leadership and positive performance?Over the years, research by MSCI[8], SSGA[9], Credit Suisse[10] and other investors has found that gender diverse boards may also have a positive impact on a company’s financial performance[11], with a growing amount of research suggesting that having a minimum of three women on a corporate board represents a “tipping point”[12] in terms of influence.

Many of these reports have highlighted that diverse boards make business sense because they better reflect the employee and customer base, and because they tap into the skills of a wider talent pool.[13] Some reports have shown that boards and teams with more women are better at logical thinking, coordination, planning, risk management[14] and problem solving – and have a higher collective intelligence overall[15]. And the benefits don’t stop there. An analysis of the S&P Composite 1500, for instance, has shown that companies with women in top leadership positions have an “increase in innovation intensity”[16].

E&Y and the Peterson Institute for International Economics (2016) undertook a comprehensive study of gender inequality in corporate leadership, surveying nearly 22,000 organizations across a wide variety of industries in 91 countries. Among all these different organizations, the results came through clearly and consistently: a firm with female leaders will outperform a firm with none. In fact, if 30% of a company’s leaders are women, its net margin will be six percentage points higher than a firm with no women in their executive ranks[17].

And in 2014, Robeco’s Governance and Active Ownership team and Tilburg University researched the link between gender diversity of company boards and stock returns. In their analysis, they have found a positive relationship between gender diversity of company boards and stock returns. The results are promising: the conclusion holds using different methodologies and after correction for other performance-related exposures and effects. The link is especially visible from 2009 onwards.

The performance benefits coupled with studies suggesting (gender) diversity can improve decision-making have been cited by both asset owners and advocacy groups in support of efforts to promote a 30% global female director goal (e.g. “The 30 Percent Club”[18]). However, MSCI ESG Research (2015) estimates that, based on current "business as usual" trends, women are still unlikely to comprise 30% of directorships in publicly held companies until 2027.[19]

3.  What is the difference in withstanding a (financial) crisis with male vs female leadership?

We live in a world of economic and (geo)-political uncertainty where both political and corporate leaders are facing testing times.

In the turmoil and confusion following the financial crises, EU and UK referendums, several female politicians have come to prominence in their leadership roles. What’s happening in politics with the appointment of Theresa May as the U.K. Prime Minister could be described as the "glass cliff"[20] phenomenon. The glass cliff refers to the tendency for women to be more likely than men to be appointed to leadership positions that are risky and precarious.

There is certain evidence for the glass cliff phenomenon: A 2008 academic study investigated changes in monthly share prices of FTSE100 companies on the London Stock exchange, both directly before and directly after the appointment of male or female board members. The study examined fluctuations in share prices leading up to board appointments. On the one hand, prior to the appointment of men, companies typically experienced reasonably stable performance and in sharp contrast, in the five months prior to the appointment of a woman, companies tended to experience consistently poor share price performance.[21]

On the one hand, this phenomenon could be interpreted as a female "leadership advantage”[22], on the other hand, there is a real danger of gender stereotyping: Women are often perceived as team-orientated, collaborative and “care taking” - while men are seen as being better at "taking charge" behaviours.

Research by Catalyst (2005) shows that gender is not generally a reliable predictor of how a person will lead as there is as much diversity within genders as across genders.[23] Hence, the focus of the “glass cliff” debate must shift towards better assessing and measuring leadership capabilities, skills and context – across genders - to ensure that all individuals are being fairly evaluated on their accomplishments.

4.      How do you see investment scene in five and ten years given the fact that women and millennials of both genders are interested in impact and sustainable investments? 

Gender diversity and equality issues will remain high on the public policy, corporate and investor agenda. The EU Commission has made it its mission to “promote equal economic independence for women and men, closing the gender pay gap, advancing gender balance in decision making, ending gender based violence and promoting gender equality beyond the EU”[24].

As outlined earlier, studies show that empowering and enabling women is not only an ethical debate, but also the smart thing to do, leading to increases in GDP, higher performance, return on investments and more effective and innovative organisations.

Hence, global investors, NGOs and coalitions are leading the way in raising awareness about gender diversity, parity and equality issues and explored the interconnectedness with other social risks such as human rights, labour standard, supply chain management, living wages etc.

Millennial and female investors are generally more concerned with social and environmental outcomes and with impacts beyond financial results, and they hence aim to reflect their values and beliefs in their investment decision making. Various recent studies by Morgan Stanley have emphasized the demographic shift in asset ownership towards women and Millennials and have identified gender diversity themes as a strategic marketing opportunity for investment management.[25]

US investment funds incorporating diversity and equal employment opportunity (“EEO”) policies and practices nearly tripled between 2005 and 2014, in both numbers and assets, according to USSIF. And as of 2016, social criteria in investing, which include equal employment opportunity and diversity, and labour and human rights, applied to USD 7.78 trillion in AUM.[26]

Over the last few years, other service and product providers and the Sustainable Stock Exchanges initiative (SSE)[27] have also started to focus on identifying, measuring and benchmarking best-in-class gender diversity policies and practices.

MSCI, Pax World, SSGA and UBS have created a range of female leadership indices and passive products integrating gender empowerment and leadership criteria, e.g. the number of women on boards and in senior management, the existence of substantive diversity and inclusion policies, the breadth and quality of work life balance and maternity programs, the progress and disclosure on gender parity, the records of workplace safety and supply chain management oversight, and other factors such as compliance with the UN Sustainable Development Goals (= #5), or the Women’s Empowerment Principles (WEPs), a joint initiative of the UN Global Compact and UN Women.

Regulation remains a key driver for implementing gender diversity and equality at a corporate level, and the U.S. and EU countries are leading the way: In December 2009, the SEC in the U.S. published a rule that requires companies to disclose certain information on board diversity in proxy statements filed with the Commission.[28] Also, if boards have a policy for considering diversity when identifying director nominees, they must disclose how this policy is implemented and how the board assesses the effectiveness of its policy.

As of April 2017, the UK has introduced new legislation which requires organisations with 250+ employees to report the overall gender pay gap between all men and women.[29] This information needs to be reported annually, not just on the organisation’s website, but also a dedicated Government website, which means that the information is accessible to all.

In addition, all EU member states are implementing the EU Directive 2014/95[30] which requires companies with more than 500 employees to disclose information on environmental, social and governance (ESG) and diversity, on information relating to the 2017 financial year.

However, while the investment, business and compliance case for gender diversity, parity and equality is loud and clear, inequality issues, especially in the human capital management context remain. Most recently, Hermes Investment Management, a sustainable and long term investor in the UK, reported a 30% gender pay gap amongst its male vs female workforce, with a difference for bonus payments of over 60 per cent.[31] This is just one of many cases now coming to light, and astonishing given that it is illegal for an employer to pay a woman less than a man for doing equivalent work according to the Equal Pay Act 1970[32] and the Equality Act 2010[33].

It is hoped that over the next decade more defined legislation, disclosure on prevailing diversity issues and access to consistent assessment metrics, frameworks and investment solutions addressing gender inequalities will make it easier for employees, investors and beneficiaries to recognize gender diversity risks and opportunities, and will encourage organisations to mitigate their impact.

Looking ahead, technology is giving women more information they need to gain insights into fair pay and negotiate equal salaries.[34] In addition, increasing reliance on automation and artificial intelligence will create more demand for social and analytic skills.[35]

5.      Is there a correlation between larger share of female leadership and workforce involvement and national economic indicators? 

An important determinant of a company’s and country’s competitiveness is and remains its human talent - the skills and productivity of its workforce.  

Female talent has a strong role to play, as gender diversity and having more women in the workforce contribute to stronger corporate performance and economic performance: According to the World Economic Forum, greater female participation in the U.S. workforce since 1970 accounts for one quarter of current GDP.[36]

Meanwhile advancing women’s equality could add USD 12 trillion to global growth in a business as usual scenario and as much as USD 28 trillion, or 26 percent, to global annual GDP in 2025 in a full-potential scenario - in which women play an identical role in labour markets to men’s - according to a 2015 report by the McKinsey Global Institute.

Gender equality has a strong economic dimension and the reduction in the male-female employment gap has been an important driver of European economic growth over the past decade. In the last decade, it has been estimated that fully closing the gender gap would have massive economic implications for developed economies, potentially boosting U.S. GDP by as much as 9% and Eurozone GDP by as much as 13%.[37]

Women on average… live longer, make up 50% of the world’s population, represent 60% of university graduates[38], control more than 60% of consumer spending globally[39], and in some countries drive over 70% of household spending decisions[40].

But many have still many unmet needs from financial education and advice to providing products they require at key inflexion points in their lives caused by divorce, death of a spouse, marriage, first home purchase, birth of a first child, college commencement, first job etc. 

On a positive note, over the last decade more women, especially in Emerging Markers, are finally joining paid work. For example in Latin America the proportion of households where women are the main earner has increased, rising from 28 per cent in 2002 to 32 per cent in 2014.[41]

Women's earning capacity, especially if their employment comes with social protection coverage, can enable their families to escape poverty and improve their standard of living and education – so overall, gender diversity, parity and equality can leverage multiple other social (and environmental) goals, as outlined by the UN Sustainable Development Goals.

See also my latest Gender Diversity blog on Picking Alpha:


Literature References:

[1] UN, Progress of the World’s Women 2015-16 Summary (2016), Link:

[3] World Economic Forum, Global Gender Pay Gap Index (2015), Link:

[4] Catalyst, Women CEOs of the S&P 500, (2015):

[5] The Economist, The Best—and Worst—Places to be a Working Woman (2016), Link:

[7] MSCI, The Tipping Point: Global Trends in Corporate Gender Diversity, Pay Parity and the Talent Pool, (2016), Link:

[8] See e.g. MSCI, Women on Boards: Global Trends in Gender Diversity on Corporate Boards (2015), Link:

[10] See e.g. Credit Suisse, The CS Gender 3000: Women in Senior Management, (2014), Link:

[11] See e.g. N. Carter and H. Wagner, The Bottom Line: Corporate Performance and Women’s Representation on Boards (2004–2008), 2011, Link:; B. Choudhury, New Rationales for Women on Boards, Oxford Journal of Legal Studies (2014), 34 (3), p. 511-542; Credit Suisse Research Institute, Gender Diversity and Corporate Performance (2012), Link:

[12] MSCI, The Tipping Point: Global Trends in Corporate Gender Diversity, Pay Parity and the Talent Pool, (2016), Link:

[13] See e.g. McKinsey, Why Diversity Matters (2015), Link:

[14] See e.g. Chen, Shimin , Xu Ni, and Jamie Y. Tong, Gender Diversity in the Boardroom and Risk Management: A Case of R&D Investment, Journal of Business Ethics, (2016), 136 (3), p. 599-621

[15] See e.g. Scientific American Journal, How Diversity Makes Us Smarter (2014), Link:

[16] Columbia University, Does Female Representation in Top Management Improve Firm Performance? A Panel Data Investigation. In Strategic Management Journal 33, no: 09 (2012), p. 1072-1089, Link:; see also F. Galia and E. Zenou, Board composition and forms of innovation: does diversity make a difference? European Journal of International Management (2012) 6 (6), p. 630-650. 

[17] E&Y, Peterson Institute, Is Gender Diversity Profitable? Evidence from a Global Survey (2016), Link:

[18] The 30% Club, Link:

[19] MSCI, Women on Boards: Global Trends in Gender Diversity on Corporate Boards (2015), Link:

[20] See e.g. Forbes, Women More Likely Than Men To Lead In Times Of Crisis (2016), Link:

[21] See e.g. S.A. Haslam and M. K. Ryan, The Road to the Glass Cliff: Differences in the Perceived Suitability of Men and Women for Leadership Positions in Succeeding and Failing Organizations, in: The Leadership Quarterly 19 (2008), p. 530–546; M. Mulcahy and C. Linehan, Females and Precarious Board Positions: Further Evidence of the Glass Cliff, British Journal of Management, (2013), p. 2-14, Link:

[22] A. H. Eagly and L.L. Carli, The Female Leadership Advantage. An Evaluation of the Evidence, in: The Leadership Quarterly 14 (2003), p. 807–834, Link:

[23] Catalyst, Women 'Take Care,' Men 'Take Charge': Stereotyping of U.S Business Leaders (2005), Link:

[25] See e.g. Morgan Stanley, The Gender Advantage. Integrating Gender Diversity into Investment Decisions (2016), Link:; Morgan Stanley Research, What’s the ESG/SRI Opportunity Set? (2016); Morgan Stanley Institute for Sustainable Investing, Sustainable Signals: The Individual Investor Perspective (2015), Link:

[26] USSIF, Report on US Sustainable, Responsible and Impact Investment Trends (2016), Link:

[27] SSE, How Stock Exchanges Can Advance Gender Equality (2017), Link:

[29] UK Government, Gender Pay Gap - Who Needs to Report (2017), Link:

[30] EU Parliament, Directive 2014/95/EU of the European Parliament and of the Council (2014), Link:; see also the EU Commission’s reporting guidelines in alignment with EU Directive 2014/95, Link:

[32] UK Government, Equal Pay Act 1970, Link:

[33] UK Government, Equality Act 2010, Link:

[34] See e.g. and for further details

[35] The Pew Research Center, The State of American Jobs. How the Shifting Economic Landscape is Reshaping Work and Society and affecting the Way People think about the Skills and Training they need to get Ahead (2016), Link:

[36] McKinsey & Company, Unlocking the full potential of women in the U.S. Economy (2011), Link:

[37] Goldman Sachs, Gender Inequality, Growth and Global Ageing, Global Economics Paper No: 154, April 3, (2007), Link:

[38] See e.g. Harvard Business Review, Three Diversity “Best Practices” That Hurt Women (2012), Link:

[39] M.J. Silverstein and K. Sayre, Women Want More: How to Capture Your Share of the World's Largest, Fastest-Growing Market, (2009) New York: Harper Collins Publishers

[40] Accenture, Banking for Today's Women. Because They Are Worth It - Opportunities for UK Banks in Providing Retail Financial Services to Women (2006), Link:

[41] UN, Progress of Women in Latin America and the Caribbean 2017. Transforming Economies, Realizing Rights, 2017, Link:

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