Responsibility Trilogy: For a Diverse World and Productive Firms

Let’s talk a little bit about women. As we know, the proportion of women on company boards and management teams is still far from balanced. In Finnish listed companies, women make up about 30 percent, and in the United States, the boards of the 3,000 largest listed companies make up just over 20 percent. Does this matter from an investor’s perspective? Is.

If five Caucasian 50-year-old straight graduates are headed by a globally operating company, one can rightly consider how clear a vision it has of the changing needs of society and customers, such as young dark-skinned moms. Coming from too narrow a funnel, I would say overly heterogeneous, the board and management can genuinely be a risk to the company’s success.

Of course, the sheer number of women in management does not tell the whole truth. Equally important is the role of women in companies (and in life) in general. Is equal pay paid for the same work, how does motherhood affect a woman’s status, and so on.

Achieving gender equality and strengthening the rights and opportunities of women and girls, as well as other genders, are so important that the investor should also be interested in them.

Our investment pays broad attention to equality

Gender lens investing, or freely translated Mimmi investing (or investing in the position of women), is raising its head, especially in the United States. Mimmi investing refers to an investment style that consciously invests in companies that take action to improve equality in the workplace and promote qualified women to management positions.

A research house called Equileap has evaluated the listed company, which is worth more than $ 2 billion, in addition to their women’s leadership positions, based on, among other things, pay equality, parental leave, and non-discriminatory recruitment practices, and sexual harassment prevention.

According to Equileap’s Gender Equality Global Report and Ranking, Australia, France, and the Nordic countries, in particular, stand out in such a comparison. In the recent 2021 rankings, the Norwegian DNB bank, the Australian real estate company Mirvac, the British communications company WPP and the French L’Oréal are leading. A spicy detail is the ranking six – more familiar from Baileys and Smirnoff – the British Diageo, which also excels in other sustainability assessments. However, a company often automatically bulges out of responsible funds because of its core business, i.e. alcohol.

In addition to management positions and well-being at work, the focus of gender lens investment is on respecting the status and rights of women throughout the companies’ value chain. For example, the US apparel group GAP Inc. has excelled in improving the position of women both in its supply chain and in sponsoring athletes. By the way, the CEO of GAP is a woman, does it have anything to do with it?

Our attention as a customer and investor

Also relevant to our investment is how the needs and wishes of different genders are taken into account in the design of companies’ products and services. A lot of products are still designed to meet the needs of a man of standard size and quality, even if the target user base is much wider and more diverse.

Taking the different genders into account in product design can improve a company’s success simply because it is nice for the buyer to be considered a user of the product – that is, for example, the phone can also be used in a smaller hand. So such products sell.

Some products and services are such that their users are only women. Men are less likely to need menstrual pads or products to relieve menopausal symptoms. There is a growing demand for such products, and fortunately also a supply. There has even been a genre called femtech, which means companies that develop products and services specifically for women.

There is another key angle to our investment. It’s placement. It is important for women that they are considered not only as clients but also as investors and financiers. Even a big investment decision can be made by someone other than a man – such as:

One could imagine that neither of them would be able to listen to any chauvinistic rubbish from the representatives of the target companies. In this way, equal treatment of women can also affect companies’ access to finance.

Diversity improves a company’s return and reduces risks

Even if you’re not from the women’s business, there’s also a relevant angle for the investor to consider. Studies show that gender diversity in the management of a company can increase the return on equity and profits made by the company with less risk than many other projects. In addition, women’s participation in product development and innovation has appeared to improve returns compared to inventions developed by men among themselves.

The attitude of companies towards the diversity of their personnel, management, and customers is not only a personal value issue for the investor but also a relevant issue for the company’s future success.

Do you want to invest in a company where the lack of management diversity limits the profitability of operations?

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