Anita Bhatia urged investors to back solutions that respond to both gender and climate challenges, speaking at the Impact Summit Europe. Diversity and inclusion, and the need for mobilising capital at scale to tackle systemic risks were also at debate
Anita Bhatia, assistant secretary general and deputy executive director at UN Women, said gender and climate action are “inextricably linked to the promised of a shared prosperity”.
In her keynote speech at the Impact Summit Europe, organised by Phenix Capital Group this week in The Hague, she spoke about the “strong business case” for investing more in women, especially as inequality has grown during the Covid-19 pandemic.
UN Women has calculated it may now take 140 years to achieve gender equality, compared with 99 years before the pandemic.
Only 7% of all investments by venture capital and private equity in emerging markets are actually going to women-led companies, according to UN Women. “This contrasts with the evidence that shows that investing in women actually leads to a positive impact at the bottom line,” said Bhatia.
UN Women have worked with the International Finance Corporation (IFC) and the International Capital Market Association to produce the world’s first gender bond guidelines, and is currently talking to “a number of sovereigns, as well as a number of corporates who are interested in issuing gender bonds,” Bhatia said.
“We think this is a real opportunity,” said Bhatia, adding the gender bonds give “robustness” to gender lens investing. “What we do not want to see is gender lens investment being made in the name of gender, which is nothing more than pink-washing,” she said.
Diversity, equity and inclusion
During a session on the link between diversity, equity and inclusion (DEI) and financial performance, Phillip Essl, senior director for impact at the UK’s Big Society Capital, explained that it is a myth that fund managers can avoid applying a DEI approach and remain ‘neutral’.
“We invest in products and services within a given structure and either you exacerbate the problem or you change it, but you can’t really be neutral – and that simple realisation is actually really powerful, because it underpins that call to action,” he said.
“We have seen fund managers take an EDI [Big Society Capital refers to DEI as EDI] lens to their investments and they have been very successful in doing so.”
Essl explains that there is a still a general lack of gender and ethnic diversity among the founders of companies but that this presents a burgeoning opportunity for investors in overlooked areas.
“It’s quite obvious there is a great lack of gender diversity, ethnicity diversity, etc., particularly among founders, so we try to understand those imbalances and try to embed EDI goals in our strategy,” he said.
Mobilising capital to tackle systemic risks
The issue of mobilising capital at scale was also debated at the conference. During a panel discussion with pension professionals, Joost Slabbekoorn, senior responsible investment & governance specialist at APG Asset Management, told the audience:
“Here in the Netherlands, there is really a strong view on systemic issues, with climate change being the number one topic. We receive many letters from participants asking us what are we doing? So it is at the core of the decisions that we are making.”
Engaging versus divesting was part of the discussion. Dutch pension fund ABP, APG’s main client, is the biggest in the Netherlands. Last year, ABP decided to stop investing in oil and gas producers.
“They didn’t see the potential for their engagement to be effective in this sector,” said Slabbekoorn. “And that’s a huge milestone, because you basically park an entire sector outside of scope, and you lose your influence over that.”
However, he added, they continue to be involved in the sector indirectly from the demand side, engaging with companies to help them reduce their demand for energy.
Louise Aagaard Jensen, senior ESG manager at PKA, said: “PKA very much believes in active ownership, and also collaborative engagement, these are the best possible ways for us maximise our influence in companies.”
PKA is one of the biggest pension funds in Denmark, with €54bn assets under management, representing most of the country’s healthcare sector. Ninety percent of its 350,000 members are women, “which may also be why ESG and sustainability have been on the agenda for PKA for decades now,” Jensen added.