Global sustainable equities: equal footing
The Jupiter Global Sustainable Equities team discusses the benefits of investing in companies which are better enabling equality in the workplace.
Industries around the world have been increasingly focused on driving greater diversity and inclusion across the breadth of their workforce. While significant progress has been made in recent decades, there is a further opportunity to align capital to companies attracting and retaining women in the workforce. In the developed world, analysis can be focused on gender pay gaps or inclusive working practices, such as increased flexibility and attractive parental leave policies; while in the developing world, analysis includes better understanding accessibility and enabling participation of women in the workforce.
The global economy stands to gain from enabling greater numbers of women to enter and, importantly, to remain in the workforce. The IMF recently released a study that showed increased female participation in the global economy could increase respective national GDPs by an average of 35% 1 , showing significant economic benefits.
From an operational productivity standpoint, findings from a McKinsey study indicate companies with greater diversity and support for women’s economic empowerment exhibit competitive success relative to peers, resulting in up to 35% higher financial returns 2 . Considering the social impact multipliers of female workforce inclusion, there is a link to female employment rates and reduced household poverty 3 .
Given the above findings, there are frameworks and considerations we can embed to better understand the broader alignment of capital allocation decisions, through alignment to the UN Global Compact, a framework built on ten principles focused on human rights, labour, environment and anti-corruption. Aligning our investments to the UN Global Compact helps to achieve the societal goals of the UN Sustainable Development Goals, including SDG 8.5 on “full employment and decent work for all women and men”.
This also requires employees to be empowered and enabled to participate. The gap in income poverty between women and men increases during women’s peak productive and reproductive ages. Globally, 42% of women of working age are outside the paid labour force, compared with a mere 6% of men 4. For companies this means that they risk not being able to employ the best people they need. Leading approaches address gender equality through hiring and employment practices, and steps are taken to address barriers and biases to career progression. For some sectors where gender representation has historically been poor, we have found that some leading companies will actively seek to encourage future employees by engaging in educational programmes, and promoting the development of applicable skillsets.
When applying our capital allocation framework, we consider societal norms which exist in both the developed and developing world and specific characteristics of sectoral behaviour. Intersectionality with climate change and natural capital also exacerbate these considerations: extreme heat, scarcity of natural resources, such as water, and other environmental challenges are more likely to affect women who depend on natural resources for their livelihoods, particularly in low- and middle-income countries. Companies looking to maximise the business benefits of gender equality need also to look at the approaches taken within their suppliers, promoting practices that best strengthen supply chains by securing labour rights and economic participation. As well as strengthening their own businesses this can have large impacts for social mobility and economic inclusion.
Gender equality supports better social outcomes
Given our ten-year investment horizon, aligning to progress in achieving the societal goals embedded in the UN SDGs, in our view, will not only result in attractive long-term economic return but also in more sustainable businesses which are leading the transition to a more sustainable world.
2 Diversity matters. McKinsey & Company. 2015. Cited in Unpaid and unrecognised: How business can realise the benefits of tackling women’s invisible labour. Work and Opportunities for Women. May 2021. p7.
3 Trends in Women’s Employment and Poverty Rates in OECD Countries. Italian Economic Journal. 12 October 2019.
4Time to Care. Oxfam. January 2020. p.31
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