Blog Posts — March 8, 2022

Q&A with Equileap: ‘women’s rights lagging within ESG evolution’

For the past five years, Equileap, a leading provider of gender equality data and insights, has issued an annual report card on the inclusion of women at public companies around the world.

There has been very slow progress in recent years in improving women’s working standards, and the 2022 Equileap report, out last week, shows the trend persists. Of nearly 4,000 companies surveyed, only 19 closed the gender pay gap in 2021 — a tepid increase from 15 in 2020. Only 18 companies have balanced gender representation across all levels (board, executive, management and workforce), up from 10 a year earlier. The percentage of female executives worldwide has grown to 18% of the total from 17%. Just 5% of the companies have a female CEO.

Such underwhelming figures reinforce the importance of celebrating International Women’s Day on March 8, a date to reflect on how much has been done to advance the role and wellbeing of women and acknowledge how much more work lies ahead. 

This year we must specially consider the effects that the COVID-19 pandemic continues to bear upon women’s working conditions. According to McKinsey research, more women than men are now considering quitting their jobs, particularly those caring for children at home.1

As we reported last year, the asset-management industry is playing a key role in forcing gender-related change within public companies. According to Veris Wealth Partners, assets invested in gender-lens funds topped USD 12 billion as of June 30, 2021, up from USD 2.4 billion in 2018.2 A much larger amount is invested in broader ESG mandates that observe gender criteria. 

Pushing in the right direction as well are many legislative initiatives. Last year saw the launch of Europe’s Sustainable Finance Disclosure Regulation, under which investment firms must disclose the gender pay gap and board gender diversity of investee companies. This is an important step from a piece of legislation well on the radar of asset managers. Transparency brings awareness, which eventually leads to change.   

And in a much-discussed new rule approved last August, Nasdaq now requires companies that will list in its US exchange to publicly disclose board-level diversity statistics, including gender and ethnicity, and to have or explain why they do not have at least two diverse directors.

To find out more about how the situation of working women has changed in the past 12 months, we caught up with Diana van Maasdijk, chief executive officer and co-founder of Equileap. We last talked to Diana almost three years ago, where she discussed the slow, ongoing battle to close the gender pay gap in Europe.  

Below is our exchange.

Diana, Equileap’s report on gender inclusion at companies looks at criteria such as gender balance from the board to the workforce, pay gap and policies relating to parental leave and sexual harassment. What do the latest findings show about progress on these issues?

“After two years of a pandemic, I wasn’t sure if we would still see progress as in previous years. The good news is, there is progress. The bad news is, it continues to be very slow. We are still getting shocking numbers from the almost 4,000 companies we cover. 

“Only in an incredibly small number of companies is the average salary of a woman the same as the average salary of a man. And only 18 companies publish that they have a gender-balanced team throughout their board and all their workforce levels. Those continue to be really low numbers. And these are the largest public companies in the world. 

“One positive story is that for the first time in five years after the #MeToo movement started, more than 50% of the companies publish an anti-sexual-harassment policy. But then again, why is only half of them addressing this issue? Why not more? We still have a long way to go.”   

How is that slow progress showing up in investment portfolios? 

“We see growing interest in both gender-lens investing and in ESG strategies that integrate gender criteria. What we have noticed in the past two years, and particularly linked to the pandemic, is that ESG investors are looking to strengthen the ‘S’ in ESG. And there is very little social data on the workforce and supply chain. Equileap’s data falls exactly under the ‘S’ pillar, and we are seeing a very steep increase in the interest on ESG products with a stronger S component.”

And how are investors using gender-equality criteria in their strategies and investment decisions?

“We have seen growing interest in two particular areas: one is engagement, on issues like lack of women at different levels of a company, no publication of the pay gap, not enough parental leave policies, etc. The other one is ESG integration. Gender criteria can be combined with environmental and governance criteria to strengthen ESG portfolios.”

One reason to be optimistic is the growth of impact investing. What role does that the advancement of women’s rights play in impact portfolios, and what’s the relationship with the UN Sustainable Development Goals (SDGs)?

“There is a clear relationship between the SDGs and gender data. Equileap’s data can be used to create an SDG5 (Gender Equality) fund, for example. But then there are other goals where women’s rights are key to accomplishing targets. SDG10, for example, aims to end all inequalities around the world. To get there, you need data on gender balance, equal treatment of workers, supply-chain practices and gender pay equality. Similarly with SDG8, which aims for decent work and economic growth. That includes decent work conditions for everyone, and means adding a gender lens to work and supply-chain conditions. Equileap covers all of these.
“We know that impact investing works to improve our world but also to improve financial growth. In our analyses, we have seen that the 20% of companies with the highest gender equality scores outperform the bottom 20%.”

Finally, ESG considerations continue to grow rapidly in professionally managed portfolios, driven by public and regulatory demand. Yet, within this broader evolution, women’s rights seem to be a lagging cause.

“Yes, I think so. I hope efforts to integrate women’s rights into ESG regulation will catch up with other issues. It’s very important to focus on the environment, but the social issues should not be forgotten. There is no reason why we cannot focus on the E, the S and the G at similar speed. Investors are hungry for this.

“I believe it is the asset managers who are putting the foot on the brake, waiting to see what regulation will demand. But, investors would like to see more. Just last year, the largest asset owner in the world, the Japanese Government Pension Fund, launched a gender-lens fund with USD 3 billion. My guess as to why not more asset managers are creating funds and making these available is because they are not yet convinced that one can create social impact and financial returns at the same time. Even though we see report after report proving the opposite.

“We have always believed that what gets measured gets managed. And there is clear momentum behind gender data disclosure. Five years ago, when there was no data on gender balance, people used to say, ‘we can’t do this because we don’t have the data.’ That is no longer an excuse.”

McKinsey & Co., ‘Seven charts that show COVID-19’s impact on women’s employment,’ March 8, 2021.
2 Veris Wealth Partners, ‘The Data Shows Gender Lens Investing is Growing. There is More Work To Do,’ December 16, 2021.