How Gender Lens Investing Works for Both Business and Society

Performance Measurement & Improvement

Photo courtesy of the Shell Foundation

WDI’s two-year study on ‘gender smart’ business practices reveals benefits and costs

Gender lens investing isn’t just about gender equality. It’s also about business. In fact, if you ask many investors propelling these models forward, it’s firstly about business. The problem is, until now, it’s been hard to prove. Historically, investors have relied on anecdotes to demonstrate the power of this approach to investing.

In June 2019, with funding support from The International Development Research Centre (IDRC)  and USAID, six investors with more than $700 million in assets under management — the AlphaMundi Foundation, Acumen, AHL Venture Partners, Root Capital, SEAF, and Shell Foundation — launched the Gender-Smart Enterprise Assistance Research Coalition (G-SEARCh). The goal of the consortium was to conduct new research in the gender lens investing community, focused on post-investment support provided to small- and medium-sized enterprises (SMEs).

The research project aligns with the William Davidson Institute (WDI) at the University of Michigan’s mission to provide decision makers with the tools of commercial success, which leads to both economic and social progress. WDI participated in the consortium and studied the effects of a relatively new type of gender lens investing strategy: gender smart technical assistance (TA) activities. “There’s a gap in evidence and know-how that holds back other investors and funders from wanting to implement the different types of gender-smart TA engagements,” said Yaquta Kanchwala Fatehi, Program Manager for the Performance Measurement and Improvement team at WDI.

The G-SEARCh consortium recently published Business and Social Outcomes of Gender-Smart Technical Assistance Activities in Small and Medium Enterprises: Building the Evidence Base for Gender Lens Investing lays out the findings and lessons learned. It shares data compiled and case studies on companies that received TA support, conclusions and calls to action, and specific steps investors can take to build greater equality and bolster business results.

The Business Outcomes Of Gender Lens Investing

There’s more to gender lens investing than simply investing in women-owned or women-led businesses or gender-forward companies. New strategies include promoting gender diversity within the investment firm and implementing a gender lens to the investment cycle. An additional strategy is the design and implementation of gender-smart TA within portfolio companies. WDI’s work focused on the outcomes of embedding equality and inclusiveness across operations. WDI also considered the costs of implementing such TA activities.  (The data limitations preclude strong conclusions — most companies in the study could not provide in-depth cost information due to the burden of data collection and long-term outcomes could not be measured due to research time constraints). However, the data that were gathered suggest that there were benefits. Additionally, 86% of the companies continue to use the TAs even after the close of investor funding suggests the benefits outweigh the costs for the vast majority of companies.

The challenge and advantage of a TA strategy is that it needs to be customized for it to work effectively. An experience must closely match the profile, needs and goals of the organization. WDI studied the impacts of internal strategies, like HR policies and management mentoring programs, external strategies, such as marketing to more women, and a mix of both, such as stakeholder training and sex-dissaggregated data collection and analysis. Each activity led to a different result.

For example, in one WDI case study, a financial services company in Latin America found low utilization of its non-financial products by women. The firm responded by creating a targeted promotional program to share the benefits of a medical and dental assistance product with women clients. It developed social media messaging, completed credit officer training and sent out customized information. As a result, it saw an 8% increase in women using this product.

TA activities also can enhance brand loyalty, improve workplace culture, push for formalized commitments to gender equality, increase sales numbers, and attract new funding. It largely depends on objectives, impact pathways and implementation strategies, Fatehi said. In the 21 small and medium enterprises (SMEs) studied by WDI, 86% of the organizations reported improved brand loyalty from customers and external partners and 38% reported higher sales numbers after utilizing these tools.

Businesses are excited about the investment opportunities that come from participation. “We talk about this program with potential funders and investors,” reported one SME management team. “They are keen to hear that we are promoting gender-transformative learning and development programs, which is definitely a step in the right direction in terms of their confidence in investing in us.”

The Social Outcomes of Gender Lens Investing

While business boosts rank high in the reasoning for pursuing gender lens investing and TA activities, there are compelling social effects that follow these economic benefits. Of the 21 companies in the sample, 71% of SMEs reported increased pride for the company among its stakeholders (customers, producers, distributors and/or employees); 67% of SMEs reported increased skills and knowledge among their stakeholders.

Through TA programming, Nova Coffee, a company in Rwanda that sources its coffee from small-scale local farmers, decided to make significant efforts to train women coffee farmers on mitigating and adapting to climate change effects. With those offerings, over 90% of the 120 women farmers surveyed in the case study gained access to critical agricultural training. There also was a major shift in how they interacted with climate change.

Before the sessions, 49% believed climate change rarely impacted their farming and 77% were taking no steps to change their practices. After the program, 96% of the farmers changed their farming practices around climate change. With another similar coffee company in the region, as it became clearer that women could participate in the local coffee production industry with their improved abilities, child marriage in the area began to drop. The impacts of these efforts rippled through the lives of these women and their children.

“To help women farmers is to help the nation because women are detail-oriented in their business; they take care of their children and community, and more so than the men. When you give the money to women, they will use it on their families and help their families to be resilient,” a Nova Coffee representative shared.

The Future of Gender Equality in Business

This study not only explored the potential power of gender-smart TA practices, it also compiled a list of best practices for TA implementers that would increase the probability of success, including:

  • Empower the company receiving the investment for TA activities to guide the process. “Trust your portfolio company,” said one SME management team. “That’s exactly what our investor did… They heard where we needed the most support and how we believed that support should be delivered.”
  • Leverage internal and external expertise from the start to contextualize the material to local cultural and gender norms. This customization is critical to improving women’s participation and minimizing resistance from male heads of households and male leaders in the community.
  • Integrate insights gained from TA implementation into other business functions and projects. Furthermore, sharing successes with other groups and investors could attract additional funding and increase support.


[Find more of these tips and insights in the full report, along with case studies, a toolkit and other resources.}

Despite the burgeoning  evidence, there’s a lot more room for study into this area. The research pool will benefit from a better understanding of the monetary and human resource costs, as well as the long-term impacts of the practice, said Fatehi. Such research would help to analyze the net benefits of TA and the correlations between business and social outcomes further highlighting possible benefits to the businesses’ profitability. This could then increase the likelihood and scale of adoption of gender-smart TA by other investors, funders and businesses.

“We haven’t answered every single question,” said Fatehi. “We’re just scratching the surface and giving people confidence that there can be social and business outcomes from well-designed gender- smart technical assistance when companies and investors implement and assess this strategy.”

Announcing New Labor Practices Group

Research shows improving worker’s lives in small ways can have big bottom line impact

Happy workers, with their basic needs met, will be more productive workers. More productive workers contribute positively to the bottom line. It sounds like common sense, but proving this with hard data has not always been the norm.

Achyuta Adhvaryu is doing just that. Adhvaryu, associate professor of Business Economics and Public Policy at the Ross School of Business at the University of Michigan, and his work with Good Business Lab (GBL) are proving the hypothesis that small improvements in worker happiness have a positive return on investment for companies.

Adhvaryu’s work has found its place with the William Davidson Institute’s consulting services, in the newly formed Labor Practices group. The new practice area will add value to the work happening across WDI, and will enhance learning opportunities at Michigan Ross and U-M, while demonstrating that good labor practices are an important tool of commercial success.

Adhvaryu, along with the team at GBL, test innovative workplace policies via large-scale randomized control trials in real business environments, to quantify the impact of employee-oriented investments. To date, GBL’s work has focused primarily on four areas: a holistic view of physical and mental health; skills training programs; worker voice; and, hiring and selection. This work has shown that even small investments in workers’ happiness and well-being can sometimes have a significant impact.

“It’s important to understand the impact poverty has on everyday life and how if you eliminate or mitigate those barriers that hold people back you can unleash their potential,” said Adhvaryu. “Our work is bringing a unique understanding of worker well-being, backed by rigorous data and impact evaluation methodology, to the discussion.”

Business metrics surrounding return on investment and attention to a profitable bottom line are commonplace when implementing new procedures and investing in capital intensive equipment. The practical output of Adhvaryu’s research has led to the development of a portfolio of programs and workplace policies based on evidence demonstrating that worker well-being through specific policies produces a positive return on investment when implemented properly.

As an example, GBL recently completed an innovative worker voice project at Shahi Exports, the largest garment manufacturer in India and one of the largest in the world. The study was completed with support from Michigan Ross students, WDI and financial assistance from Humanity United. The result was Inache, a new, mobile-based technology that empowers workers to communicate anonymously to share concerns and problems, and report grievances with their employer. The low-cost, easy-to-use technology solution came about after two randomized controlled trials conducted at Shahi facilities, both demonstrating a 3-4% reduction in absenteeism with the use of similar tools.

“Often workers don’t communicate grievances due to fear of repercussions. We conducted three trials in which we provided workers with the right kind of voice and a solution that was easy to access,” said Adhvaryu.

Achyuta Adhvaryu

Often workers don’t communicate grievances due to fear of repercussions. We conducted three trials in which we provided workers with the right kind of voice and a solution that was easy to access.

The insights from those trials enabled the GBL team to develop, test and implement Inache. The technology, which GBL built from scratch is rooted in principles of human-centered design. The low-cost solution also helps to bridge important usage barriers, such as low technological literacy rates among workers.

“Inache was rigorously designed after intensively studying different opportunities for communication, and determining what would be most effective for both employees and the employers,” said Adhvaryu. “WDI-Ross student team then helped to develop a market entry strategy for the product.”

Michigan Ross students took part in this process through the Multidisciplinary Action Project (MAP) course. MAP is Ross’s flagship action-based learning course, in which MBA students consult with organizations to solve real-world problems under guidance from faculty advisors at the business school. Each project requires analytical rigor, critical thinking and teamwork. The Ross MAP team benefited from the support of faculty advisors Adhvaryu and Paul Clyde, WDI president and Michigan Ross professor, as well as WDI and GBL. This collaboration will pave the way for more opportunities for Ross students to work together with WDI and GBL.

“The work that Ach is doing examines what holds people back from growing their income and improving their well-being,” said Clyde. “Ach and his team have developed programs that use randomized controlled trials to show that improving worker well-being can and does positively impact employers in ways that can affect the bottom line.”

The continued research potential and the practical applications of Adhvaryu’s work and GBL will continue to bring benefits to Ross and WDI. The collaboration is another offering for Ross MAP student teams, as well as a new consulting strength for WDI and its partners.

“There are great opportunities for students to get involved during their education U-M, working with firms to solve their real-world problems,” said Clyde. “That’s what this is focused on – any tools that improve labor practices will increase the probability of commercial success and thus are very much in line with what we do at WDI.”

WDI has a focus on the development of business models and practices that come out of real research and improve the ability of a company to operate profitably. Profitable companies will employ people and provide goods and services that consumers value, thereby providing social value. The mission of WDI aligns with the work that Ach and GBL are doing to achieve this.”

GBL and WDI have found a way, using hard evidence that is rigorously sourced from academic studies, to change the culture around workplace programing for workers and help to make it a key part of a firm’s investment strategy. The end goal is to convince companies that if they incorporate key principles of good labor practices in their business operations, they can impact productivity and show a positive effect on profits and their bottom line in addition to meaningfully improving their workers’ well-being.

Women workers outside of a Shahi Exports garment facility in Delhi. Image credit: Nayantara Parikh
Women workers outside of a Shahi Exports garment facility in Delhi. Image credit: Nayantara Parikh

Lead Photo: Workers in a Shahi Exports shop floor in Bangalore, India. Image credit: Nayantara Parikh

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