Increasingly, studies are indicating that gender inclusion is not only the right thing to do in terms of promoting gender equality and reducing poverty but also a key strategy for improving business performance, efficiency, and productivity.
According to recent research findings:
Gender-diversity in executive teams is correlated with greater profitability and value creation. (McKinsey, 2018)
Companies with more women are more likely to introduce radical new innovations into the market. (Díaz-García et al., 2013)
Higher percentages of women in leadership positions lead to higher levels of performance. (Calvert Impact Capital., 2018)
Gender-diverse value chain leads to stronger relationships with the supply base, new business opportunities, and a more agile value chain. (IFC, 2016)
Greater diversity positively leads to better decision-making. (Rock and Grant, 2016)
The business case for building gender equitable businesses has been established with data, but it’s being ignored. We need to work together as a sector to make sure that investing in women is taken seriously and becomes central to investing in SGBs.
There is a $320B Financing gap for female entrepreneurs in formal sector small and medium enterprises in developing countries alone, and $93B is the credit gap for women-led SMEs.
Companies that prioritize gender inclusivity in their labor force experience an additional $28 trillion increase in productivity from women’s participation and earnings. These earnings do not account for the multiplier effect that results from their tendency to invest 90% of their earnings back into their family’s healthcare, food, and education, which further increases economic activity around the world.
A quantitative analysis of Calvert Impact Capital’s portfolio companies in 2018 indicates that on average, companies with the highest percentage of women on boards and in leadership positions outperformed those with the least. These results suggest a strong and positive relationship between women in leadership positions and financial performance.
Greater diversity can positively influence the way management teams digest information needed to make the best decisions.
One fundamental reason for this difference is that diverse teams are less likely to succumb to ‘groupthink’ and are more likely to question and process the information more carefully (Rock and Grant, 2016).Mitigating against groupthink includes gender diversity as well as the inclusion of other groups who have traditionally not been able to access decision-making positions due to ethnicity, class, race, LGBTQ identities.
Unequal opportunities for women can also directly affect a company’s bottom line by diminishing their company’s reputation with employees, consumers and supply chains (BSR, 2019).
“Diverse teams are more likely to constantly reexamine facts and remain objective. They may also encourage greater scrutiny of each member’s actions, keeping their joint cognitive resources sharp and vigilant.” – D. Rock & H. Grant, 2016 Harvard Business Review
Including gender diversity in the decision-making process, can increase a company’s reputation and lead to greater sales and efficiency (Turban et al, 2019).
NESsT witnessed significant improvements in the performance of its portfolio companies due to the active participation of women as decision-makers, employees and suppliers.
By bringing a gender lens to their businesses, SGBs perform more efficiently and effectively and are able to achieve greater impact – Nicole Etchart, co-Founder and co-CEO, NESsT
In its portfolio of 200 enterprises, 50 percent of the jobs created have employed women. In fact, 70 percent of NESsT’s portfolio has targeted women either directly as employees or suppliers or indirectly by providing products and services for women clients. 51 percent of these enterprises are women-owned and 44 percent have women in their senior management teams.
NESsT’s portfolio company, Retalhar, trains and contracts women from low-income communities to produce the upcycled corporate gifts and blankets, increasing their household income and livelihoods.
Portfolio company entrepreneurs have also noted that as decision-makers, women take initiative to introduce improvements to processes and systems and as employees, women are dependable, detail-oriented and responsible workers, frequently contributing to creating a friendly and supportive work environment for their co-workers.
Sources:
https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity
10.5172/impp.2013.15.2.149
https://www.calvertimpactcapital.org/storage/documents/calvert-impact-capital-gender-report.pdf
https://www.empowerwomen.org/en/resources/documents/2017/01/sheworks-putting-gender-smart-commitments-into-practice--at-the-workplace?lang=en
https://hbr.org/2016/11/why-diverse-teams-are-smarter