Reviewing Early Stage Fund Practices that Incorporate Gender Lens Investing

In order to understand how other early stage impact investing funds are incorporating gender lens investing in their portfolios, NESsT reviewed the activities of four main funds: Calvert Impact Capital, Root Capital, Alpha Mundi and Acumen. Two of these funds (Alpha Mundi and Calvert Impact Capital) have been collecting gender metrics since 2012.

All four funds have been tracking the positive social and environmental outcomes related to greater gender equality in their portfolio companies.

Alpha Mundi provides debt and equity financing to scalable social ventures in strategic sustainable human development sectors such as microfinance, affordable education, fair trade agriculture and renewable energy.  In its 2017 report, AlphaMundi describes its process of integrating gender analysis throughout the investment process. This process includes embedding gender analysis in its pipeline screening and due diligence process. It also involves initiating discussions on gender equality with companies prior to investment in order to agree on metrics to track and report at the company and beneficiary level. In addition, by mobilizing resources through its foundation donations, Alpha Mundi has been able to provide technical assistance for companies to analyze their gender data and develop a tangible plan for improving gender equality.

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In its 2015 report, Acumen developed a diagnostic tool for social enterprises and institutional investors to measure their impact on women as consumers. Acumen refined this approach by developing the lean data approach in 2017. Lean Data is a customer-centric, technology-based approach to impact measurement built to help Acumen, its investees and their clients to more effectively listen to customers in order to better understand social impact and to capture actionable customer insights. So far, the Lean Data team has completed over 220 projects with 123 companies across 27 countries, with insights from 65,000 customers. In 2019, Acumen launched a free online lean data course teaching companies how to use low-cost technology to gain high-quality data and insights on impact from their customers. Later that year, Acumen spun-off its lean data work to a newly launched social enterprise, 60 Decibels. By creating a separate company, Acumen and 60 Decibels hope to accelerate the adoption of Lean Data as a standard for impact measurement among the wider community.

In its 2018 report geared towards investors, Calvert Impact Capital lays out the business case for gender equity as good for investment, good for businesses and good for society. This report identifies and addresses the two main reasons for limited GLI: lack of demonstrated business case for GLI and confusion among investors as to how to incorporate gender into their process and analysis. To address the first issue, Calvert analyzed their own portfolio’s performance over the last 11 years and found that on average, companies with the highest percentage of women on boards and in leadership positions outperformed those with the least. To address the second issue, Calvert used its own experiences to outline a practical guide for creating a gender inclusive strategy that could be incorporated by other investors.

Root Capital is primarily focused on supporting agricultural enterprises as change agents in rural communities both in terms of base-of-the power-pyramid farmers and agricultural workers. By applying a gender lens. In its 2017 issue brief, Root Capital uncovered additional roles that women play in agricultural production as midlevel accountants, production managers, and field officers. Without a gender lens, this entire tier of women employees often goes unnoticed even though these women play a critical role in the effective functioning of agricultural enterprises. In addition, it became clear that these women have the potential to transition to become leaders and entrepreneurs.

Later, in its 2018 issue brief, Root Capital introduced a gender scorecard based on eight quantifiable metrics:

Women farmers
Women agro-processing employees
Women in middle management
Women agronomists
The presence of a woman in a leadership position (as an entrepreneur or manager)
Women on the board of directors
Women accessing loans through enterprise’s internal credit fund
The existence of a women’s program, such as a maternity clinic or training program