In the global investment landscape, gender lens investing seeks to address a persistent global gender gap of unequal representation for women in corporate and political leadership, a widespread pay divide, and uneven progress for women and girls in education, healthcare, and economic opportunity. In 2015, McKinsey estimated that fully closing the gender gap would add $28 trillion to global GDP by 2025. Halfway there, work remains on all fronts. The World Economic Forum recently concluded that closing the global gender gap will require 257 years at the current pace.

Gender Lens Investing beyond WIL: The Benefits of Supplier Diversity

Within global equity and fixed-income markets, a suite of gender lens mutual funds, exchange-traded funds, and institutional portfolios have developed from evidence of superior financial and stock price performance by companies with higher levels of women in leadership (WIL). Emerging markets gender lens investing includes impact investments in small and medium women-owned enterprises (WOE), as well as development finance gender bonds. Growing attention is also being paid to gender balance in venture capital (VC), where funding for female founders, while inching forward, remains extremely low.

Against the ongoing challenges of global inequality, gender lens investing is growing and positioned to expand beyond WIL into additional areas where metrics around the benefits of gender equity are slowly emerging. This includes supplier diversity and inclusion, which describes an organization’s commitment to maintain a diverse pool of women and other underrepresented business owners in the procurement process.

Research shows that companies with diverse suppliers experience no loss of efficiency and often achieve access to new markets. According to a recent Harvard Business Review analysis, companies with diverse supply chains benefit from new product opportunities, increased competition, market knowledge and innovation from multiple corners, and enhanced brand recognition.


To learn more about gender lens investing, read Gender Lens 2.0: Uncovering Deeper Measures of Gender Equity.


Commitments to supplier diversity among large corporations are one end of the challenge and investment opportunity. The other end is small and medium enterprises (SMEs) in both developed and developing markets. Recent research by Boston Consulting Group estimates that global GDP could rise by 3% to 6% if women and men participated equally as entrepreneurs. In addition to funding gaps, women-led startups face sustainability and growth gaps. Narrowing this entrepreneurial gender gap requires investment in diverse suppliers of products and services and increased impact investment in early- and growth-stage WOEs. In seeking to support and capture the benefits of diversity, it is important for gender lens investing to incorporate a focus on women-owned SMEs and the companies that do business with them.

Building Supply-Chain Diversity Commitments

Working to bring the two ends of this diversity challenge together, WEConnect International is a member-led organization of buyers representing over $1 trillion in annual global buying power. It provides support to a growing network of women-owned suppliers in over 120 countries, who receive comprehensive assistance to connect with member buyers.

According to Elizabeth A. Vazquez, CEO and co-founder of WEConnect International, recent supply disruptions due to the COVID-19 pandemic have highlighted the risks of many corporations’ reliance on large, consolidated suppliers. “COVID helped shine a light on the challenges of supply chain consolidation, and also on the value of diversification,” says Vazquez. “Suppliers from different communities and backgrounds are in touch with a broad range of evolving local needs, products, and markets.”

According to Vazquez, corporate commitments to inclusion are in an early stage globally and require a deeper recognition of the market benefits of supplier diversity. “It is important for these historically extreme parts of the value chain to connect and leverage their knowledge and innovation. Diversity in offerings from underutilized suppliers must be recognized as a strategic decision for large companies, beyond something nice to do.” Vazquez notes that diversifying the value chain also requires goal-setting and systemic changes, including adjusting how procurement spend is tracked.

Notable leaders in supply chain diversity include IBM, which spent $2 billion on first-tier diverse suppliers in 2019. In addition, the Harvard Business Review study outlined how Target and other companies are requiring first-tier suppliers to seek out diverse sources. Coca-Cola is directly providing training and mentorship to WOEs. Tough hurdles remain for many companies, from certifications and accountability to ensuring that programs are not relegated to small sidebars.

In seeking to support and capture the benefits of supplier diversity, it is important for gender lens investing to incorporate a focus on women-owned enterprises and the companies who do business with them.

Bringing Women-Owned Suppliers into the Global Value Chain

More companies should be following in the footsteps of early leaders, according to Vazquez. “We’re frustrated that most large corporations still spend only about 1% on women-owned businesses in their global value chains,” she says. “So the question becomes—how do we move that needle?”

WEConnect International’s recent research emphasizes that WOEs must gain access to both capital and markets from an early stage in order to see sustainable growth and become participants in global supply chains. WOEs in emerging markets face a $1.5 trillion credit gap annually. Without access to buyers, these firms do not apply for enough credit, and without growth, they do not gain ground with later-stage investors. As a result, they often target lower-barrier sectors for entry as suppliers. WEConnect International has launched a range of joint initiatives with major banks to interrupt this cycle.

Where can gender lens investing play a role? The answer is multifaceted. Vazquez stresses that it is crucial for women to retain majority ownership of their growing companies when working with impact and VC investors.

“Keep in mind that women control a sizable chunk of the world’s consumer spending decisions,” she adds. “If women lead the way on buying from women and direct their investments into women-owned firms, we will move the needle instantly.”

At the same time, Vazquez points out that gender lens funds must broaden their focus beyond corporate leadership to examine where companies are spending their money. “Where are companies directing their capital? Every measure of gender equality is important, but gender diversity must run deeper than women on boards and in leadership to include how companies spend their money,” she says.

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