Concerned about Gender Equality? Invest in Companies Working to Create a More Equal World
As a conscious investor, you can support gender equality initiatives by investing in companies that respect and foster equality across their workforce and communities.
The U.S. workforce is almost evenly split between women and men, but when it comes to pay and opportunity, the picture looks very different.
Did you know that, across the United States, women make an average of 77 cents for every dollar men earn? This discrepancy in income persists across all industries, from white-collar careers in finance and software engineering to blue collar roles in warehousing and construction. Additionally, men are 70% more likely to promoted into executive positions over the course of their career compared to women. Late-career statistics are even starker: Men are 142% more likely to be in VP or C-suite positions compared to their female colleagues.
So, while women are making substantial contributions to the workforce, we still have a long way to go in terms of income equality and promoting women to leadership roles.
As we look at the current corporate landscape, it’s clear that the status quo is ripe for reform, and that companies can and should play an important role in driving change. And one of the most interesting ways we can work for change in gender equality is through conscious investing.
How Can My Investments Support Gender Equality?
Gender equality, included among the United Nations Sustainable Development Goals, aims to empower women and girls and foster a level playing field across all sectors by 2030. As a conscious investor, you can support gender equality initiatives by allocating your investments to companies that respect and foster equality across their workforce and communities.
For example, imagine you have two companies in your region that create apps for smartphones. Company A hires two new developers, Jack and Jill. Both are responsible for writing back-end code for the same app. Both are full-time employees. Both have two years of experience. Jack’s salary is $85,000; Jill’s is $65,000.
Across town, Company B also hires two full-time developers, Bill and Bonnie. They also have the same job description and responsibilities. But at this company, Bill and Bonnie are both paid $85,000.
Which company would you choose to invest in?
If Company B is more appealing to you, you’re already thinking like a conscious investor interested in gender equality issues. And that’s exactly what we want to encourage: We want to help everyone become conscious investors, mindful of not only which companies are working toward the causes they care about, but also how their investments can influence positive change.
When we look at companies working toward gender equality, for example, we zero in on equal pay for equal work, like our hypothetical Company B that pays male and female software engineers the same. We look for companies striving to have boards that are 50% women and 50% men and making significant progress toward equal representation. Or, we highlight companies that have strong policies addressing sexual harassment and safe workspaces, so all employees feel valued and secure.
Which companies are already making strides in gender equality? Here are a few:
- Accenture: The global management consulting and professional services firm announced in 2017 that it aims to achieve a “gender-balanced workforce” of 50% women and 50% men by 2025. As conscious investors, we’re encouraged that this tactic goes beyond leadership, covering all their employees. If they can pursue this goal even more aggressively, perhaps in the next year or two, all the better.
- Hasbro: With a commitment to better representation, the toy giant increased the presence of female directors on its executive board to 42% in October 2017. We’ll be watching to see if they can get to 50/50.
- HP Inc.: Including women’s initiatives in its global diversity and inclusion activities, the laptop and printer manufacturer is dedicated to growing women’s tech careers through ongoing mentorship and training programs. It also conducts a yearly audit of wages to ensure fair and equitable pay for its employees and makes adjustments as needed. On a positive note, its 2018 wage review showed “no evidence of systemic pay inequity across the workforce.”
If you’re interested in seeing what investing in gender equality could look like with your own portfolio, take a look at the COIN Gender Equality Impact Area, which contains companies striving to improve equal practices in their workplaces, industries, and communities.
Why Should I Invest in Gender Equality?
Think back to Companies A and B we mentioned earlier. When you invest with Company B, the one that paid male and female developers the same wage, you’re saying that you see that their workplace supports equal pay for equal work. You also indicate that you’re willing to direct your money, as a shareholder, to encourage similar practices moving forward.
Then, when other like-minded investors choose to behave the same way, it sends a powerful message, en masse, to executives: Fair practices can be good for business. Companies that lag behind get the reverse message: Unequal policies may hurt your business over time.
This isn’t just sentiment, in fact, the data bears this out. A 2018 study from McKinsey & Company found that companies in the top quartile for gender-diverse executive teams were 21% more likely to have above-average profits. The study also reported that companies with gender-diverse executive teams often showed strong financial results, particularly in terms of healthy operating margins and longer-term value creation.
So, to continue with our hypothetical scenario, let’s imagine that so many conscious investors chose to invest in Company B that Company A recognized that it had to change its wage practices in order to stay competitive. Now Jack and Jill at Company A both get paid $85,000, and the business is developing an official policy to implement equal pay for equal work across the entire company. After doing so, Company A also retained more employees than ever before, leading to reduced turnover costs and a stronger bottom line, and even more conscious investors came on board. Win-win!
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