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Investment case for gender equality clear and strong

— 1 minute read

The investment case for advancing gender equality in corporations is strong and clear with a proven bottom line for diverse financial institutions according to a new report.

Evaluating the glass ceiling, a new study by Calvert Research and Management has outlined the business case for corporations to support more diverse workforces throughout the organisations with a clear impact on the company’s bottom line. 

Calvert, an Eaton Vance responsible investing affiliate, said that investors needed to push for changes as it would have a material impact on long-term shareholder value. 

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A recent study by MSCI found that companies with at least three women on their boards had median increases of 10 per cent in return on equity and 37 per cent on earnings per share. 

In contrast companies with no female board members had decreases of 1 per cent and 8 per cent respectively. 

A McKinsey analysis further confirmed that companies in the top quartile for diversity on executive teams were 21 per cent more likely to outperform on profitability and 27 per cent more likely to have superior value creation. 

Calvert’s own research evaluated the material benefits of gender diversity to both the bottom line and broader economy and highlighted relevant trends in government and investor actions. 

The research supported three main findings: 

  1. Companies that prioritise diverse and inclusive workplaces, demonstrated by greater female presence in leadership positions, have stronger financial performance over time
  2. Women’s labour force participation is likely to increase when strong and effective family-friendly policies are in place
  3. Investors have a role to play in ensuring boards and management support policies that promote gender equity. Successful companies must be able to understand the various trends that will determine their competitive future and plan accordingly.

Calvert has found that investors and governments are already pushing for greater diversity with some countries like Iceland and Norway already having board quota levels for diversity. 

Investors are also pushing for diversification with 52 per cent of US investors of the opinion that companies should take a public stand on workplace diversity and 57 per cent think that diversity affects their trust when considering investing in or recommending a company.

 

Investment case for gender equality clear and strong
Gender equality
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Eliot Hastie

Eliot Hastie

Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms. 

Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.

Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).

You can email him on: [email protected]

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