In recent years, a growing number of college and university endowments have started to shape their portfolios with a new focus—alignment with both their socially responsible goals and their institutional missions.
Still, endowments have been relatively slow to embrace one noteworthy area: gender-lens investing. This approach constructs portfolios not only with rigorous financial analysis, including risk and return objectives, but also with an eye toward advancing gender equality. An increasing body of research shows a correlation between gender diversity and financial performance.
Now, college and university endowments hoping to assess investments through a gender lens can turn to Gender Lens Investing: A Primer for College and University Endowments, published by the Intentional Endowments Network (IEN). IEN is a group of more than 150 higher education leaders and their stakeholders, financial industry practitioners, and academic experts, and this report draws on the organization’s pioneering framework for sustainable investing.
“This process can seem very nebulous. Pioneers and sustainability-minded board of trustees members need resources to meet their committees wherever they are,” says Julia Enyart. Enyart oversees impact-oriented investments in public markets at Glenmede, and she played a lead role in authoring the gender-lens guide in coordination with IEN and gender-lens consultancy Catalyst at Large.
Laying the Foundation
Before beginning to build a portfolio, Enyart argues that gender-lens advocates need to address a more basic issue: persuading boards to sign on. “You start with education and building consensus,” she says.
Because these are early days for the field, many board members may not be familiar with the idea of “applying a gender lens.” Organizations such as IEN and Catalyst at Large aim to educate investors about the topic—but there’s no single definition of gender-lens investing, as suggested by Project Sage 2.0, a 2019 study of private equity and venture capital gender-lens investing. Even among knowledgeable investors, there is a lack of consensus around what gender-lens investing really is.
There is also a need for a concerted effort to build consensus among investment committee members. These discussions can include stakeholders ranging from students to donors to faculty and often are part of a lengthy process. At the University of North Carolina at Greensboro, the sustainability office led a series of campus-wide conversations about socially responsible investing in 2017 that included trustees, asset managers, faculty, and students.
Building the Portfolio
Once those foundational issues have been addressed, endowments can turn their attention to the nitty-gritty of investment matters, such as revising the institution’s investment policy statement. “Some board members may not realize they can have a policy in which impact investing and financial goals sit side by side,” says Enyart. Efforts to educate boards can provide enlightening and crucial lessons about this area. Additionally, a statement laying out a commitment to gender-lens investing is more likely to influence the specific investments a manager selects.
At the same time, a dialogue with the board’s investment consultants is a prerequisite for reaching impact. Without a strong board directive, they are unlikely to take appropriate action, according to Enyart—in part because many consultants may not be aware of the gender-focused investment choices in both public and private markets. The number of gender-lens investments in the public markets has skyrocketed in recent years, according to a report from Veris Wealth Partners. At least 30 publicly traded products were introduced between 2013 and 2018, with a total value of $2.4 billion. For the best results with consultants, “You should come up with a short list of, say, 10 viable products,” says Enyart.
In fact, to benefit from the alternatives now available, boards must invest and engage across the full spectrum of products. In the public arena, that means selecting investments and participating in shareholder resolutions aimed at promoting gender equity. One example is investor Arjuna Capital which successfully lobbied for gender pay disclosures at multiple US companies. Additionally, the Glenmede Women in Leadership Fund voted to support diversity and pay equity–related proxies 100% of the time.
Communicating the Results
The final step is highlighting progress. Articulating the decision to invest with a gender lens doesn’t just help secure ongoing buy-in from the university community; it also helps fill the education gaps that may hold some investors back from embracing gender criteria.
This kind of follow-up can assume many forms, such as writing case studies or describing activities on the school’s website. The University of Toronto, for example, recently published a lengthy report outlining how it applies environmental, social, and governance (ESG) factors in its decision-making process. The report covered everything from an investment manager case study to a description of its proxy voting record.
Through efforts like these, says Enyart, “institutions will signal to alumni, students, and faculty that they fully embrace their missions.”