Investors miss the enormous potential of gender lens investing

Investors miss the enormous potential of gender lens investing

Even though neglected in Germany and Europe, gender-smart investing can be an important and effective tool in generating opportunities and supporting the economy.

Hedda Pahlson-Moller (facilitator of the roundtable) (Credit: Philipp Külker)

Businesses run by women are still in the minority, making up only around 14% of all businesses in Germany. Studies have shown that limited access to capital is one of the biggest obstacles faced by female entrepreneurs: Greater diversity and more equal opportunities in the business sector depend on investors working towards removing this obstacle. There is, of course, more than one way of investing in women. The investment strategy known as ‘gender lens investing’ is not limited to financially supporting female entrepreneurs, but can also refer to funding improvements to products and services intended to benefit living and working conditions of women and their families, as well as to investing in the assembly of entire workforces. As a result, gender lens investing can also benefit male entrepreneurs, providing their companies demonstrate a strong awareness of gender diversity.

These conclusions were drawn by a group of some 20 investors at a recent round-table event in Berlin, based on the work and research of Suzanne Biegel, investor and founder of Catalyst at Large. Organized by the Vodafone Institute for Society and Communications in collaboration with PLAN W, Süddeutsche Zeitung’s female-oriented business magazine, the event promoted a discussion of the benefits and limitations of gender lens investing.

Gender lens investing roundtable (Credit: Philipp Külker)

Gender lens investing or GLI refers to a concept recognized worldwide as an important and effective tool in generating business opportunities and supporting the economy — and yet the approach has, until now, been largely neglected in Germany and the rest of Europe. “Not taking into account a gender-lens in investing will ensure that investors miss enormous potential and opportunities”, says Hedda Pahlson-Moller, angel- and impact investor and facilitator of the roundtable. “Not to mention the risk of missing critical insights and market opportunities.”

Alica Deißner (Director Strategy and Programmes, Vodafone Institute) (Credit: Philipp Külker)

According to the World Bank, an estimated 280 to 320 billion dollars need to be invested in girls and women to provide powerful leverage in tackling poverty and improve living and working conditions for women and their families across the globe. Currently, only two billion dollars of all public and private sector investments worldwide — predominantly from Asia and Australia —achieve this focus. “Gender lens investing has a long way to go, especially in Europe”, says Alice Deißner from the Vodafone Institute. “We are working hard to spread awareness of the concept.”

Studies show that promoting gender lens investing makes financial sense: Overcoming gender disparities among entrepreneurs could potentially raise the gross domestic product (GDP) by 12 trillion dollars worldwide. There’s also striking evidence to indicate a positive correlation between investment returns and gender-informed investments.

The round-table discussions demonstrated that investors are in need of more information to increase an awareness of gender lens investing and its benefits. The discussions also highlighted the necessity of a shift in investment culture in order to provide female founders and entrepreneurs with more access to capital. “Gender lens investing is new territory, and as such, stakeholders in the financial scene need to find the courage to change existing investment habits”, says Angela Kesselring, the founder of PLAN W and the Managing Director of SZ Scala. “We have made it our mission, as the women’s magazine of the Süddeutsche Zeitung, to provide a platform for all women working to change the economy.”