A new tool has emerged—impact investing—that offers everyday investors, not just global philanthropists, a way to make change.
By Jess Houssian and Jess Tomlin
Hundreds of the world’s most influential philanthropists and social investors recently met in Toronto for a global summit to discuss the world’s most pressing challenges.
The gathering demonstrated how communities can work together to accelerate progress on issues that matter to people in Canada, and around the world—the pandemic, climate crisis, inequality, rising authoritarianism and threats to democracy.
Charitable foundations have a significant role to play in helping communities make meaningful change possible. But now they are calling on traditional investors to help make it happen too.
In the past, many foundations relied almost exclusively on grants or charitable gifts to fuel organizations addressing these challenges. But a new tool has emerged—impact investing—that offers everyday investors, not just global philanthropists, a way to make change.
Impact investing means finding ways to invest your money that will generate positive social and/or environmental returns along with financial returns. It is a chance to create profit and progress simultaneously.
One of the most powerful examples is Gender-Lens Investing. Growing research shows that women’s leadership and gender diversity at companies are related to higher returns. A study from S&P Global, for example, found that firms with women CEOs and CFOs produced superior stock price performance. It also found that firms with high gender diversity on their board of directors were more profitable than firms with low gender diversity.
By channelling capital to companies, organizations and firms like these, gender-lens investing fuels financial opportunity and women’s power together.
At the Equality Fund, we are testing the promise of this idea on a scale that is unprecedented globally. Utilizing a historic contribution of $300 million from the Canadian federal government, we are on a mission to make money work for women, girls and trans people twice: first by investing in ways that advance gender equality, and then by using the returns of those investments to make grants to women’s rights organizations and feminist movements.
The results will have a ripple effect around the world. Last year alone, we funded 128 organizations across 60 countries who are confronting gender-based violence, fighting for women’s economic security in the wake of the pandemic, protecting the rights of Indigenous people and promoting peace and security for all.
Investors at every level have a chance to take part in gender-lens investing.
According to Veris Wealth Partners, the value of public equity and fixed income gender-lens investment funds accelerated to over $12 billion USD as of June 2021, up from $2.4 billion USD in a 2018 report. And the growth of gender-lens strategies in the public markets is evidenced by more than 200 gender-lens investment offerings raising a combined $6 billion USD in 2021. That’s a market opportunity of over $18 billion USD.
For too long, some of our most pressing challenges have been ignored by investors. No longer. With principled innovation, and a commitment to use every tool we have to advance change, solutions are closer than we think.