Hi, we are Heather Esper and Yaquta Fatehi from the William Davidson Institute at the University of Michigan (WDI) and Ben Fowler from MarketShare Associates (MSA).
Gender-lens investing deploys capital in women-owned, -led, and -forward companies and gender integration into business functions and has many documented benefits:
- Boosting company performance, returns for investors, and benefits to society (Source: 1, 2).
- Gender inclusion in business practices can reveal new opportunities for growth (e.g., increasing sales or attracting new capital),
- Enhanced innovation, efficiencies, and ability to address business challenges. Examples include developing products based on women’s preferences, improved workplace culture, retention, and brand loyalty).
- Broader positive impacts for women and their communities (Source: 1, 2).
However, these benefits come with a price tag, whether through technical assistance or other means, and there remains limited evidence of financial returns.
The growth of gender-lens investing is threatened by this lack of evidence. The 2022 State of the Field from GenderSmart suggests it is essential to help investors and businesses understand that better gender data can lead to improved business decisions and outcomes and canhelpassess risk and opportunity (Source: 3).
During the 2022 AEA annual conference, we led a session that explored how evaluators can reduce the evidence gap for investors and small and medium-sized enterprises (SMEs) in LMICs. We also examined how to help investors and businesses collect and use better gender data to inform decision-making. In doing so, we engaged our audience and jointly developed takeaways:
- What to measure:
- Ask gender-focused questions that help fill data gaps for SMEs (such as how women vs. men perceive the company’s products and services). Hear more from a business doing this here.
- Go beyond typical financial outcome indicators to include other business benefits like innovation, workplace culture, and gender perceptions. Focus on understanding possible associations between firms’ financial benefits and social impacts.
- Assess longer-term financial projections instead of short-term financial outcomes from investing in gender.
- How to measure:
- Better understand and recognize the capacity, motivations, and incentives of different market actors for measurement.
- Create long-term buy-in for measurement among SME leadership and employees.
- Exchange ideas and lessons about metrics by having regular conversations among evaluators, impact investors, and SME leaders.
- Consider the business’ stage of growth when collecting gender-focused financial data. Early-stage companies may not have as much bandwidth as growth-stage companies to collect gender data but making the business case for gender data collection early on can help young companies do so when they reach later stages.
- Customize the impact measurement timeframe because change happens differently in diverse contexts. This requires patience and conversing with funders about building flexibility into their timelines.
- Ensure there is appropriate budget, resources, and technical training for investors and SME staff on measurement.
- Engage in tech-enabled data collection such as mobile and electronic surveys, which can be more cost-effective than in-person data collection and provide a greater sense of physical security and anonymity while ensuring women’s voices are included.
Click here for an investor’s thoughts on what companies and investors should start, stop and continue doing related to gathering gender-focused financial data.
- Newly released Women Inclusive Return on Investment (WI-ROI) Framework from MSA under USAID’s Feed the Future Market Systems and Partnership activity led by DAI.
- Learn more about WDI’s measurement work on the G-SEARCh consortium with six impact investors here and here.
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