Why Do So Few Companies Invest in Gender Equality?
Businesses that invest in gender equality often see notable returns. Take Banco BHD León (BHDL) for example in the Dominical Republic. In the bank’s home market, women make up 70 percent of university graduates and more than half of all primary household providers but remain underserved in the financial sector. By targeting women’s specific needs and preferences, BHDL was able to develop a series of financial and non-financial products specifically for female customers. In less than a year, more than 30,000 customers have benefited from insurance and assistance policies tailored to women’s needs, and BHDL has seen returns of 35 percent.
BHDL’s results are by no means inimitable. Yet, despite an increasingly well-documented body of evidence in favor of the business case for investing in women, too few companies capitalize on the opportunity. Why?
Why companies don’t invest in gender equality
Two barriers keep companies from fully embracing the business case for gender equality. First, the business case is most frequently framed in terms of national or sector-wide benefits such as GDP growth or decreased inequality, which do not translate well into a company’s profit and loss sheet. Second, most research directly relevant to individual firms has focused on a single aspect of the business case, namely, the benefits of gender diversity in senior leadership roles. Think of Credit Suisse’s research showing that boards with female representation outperform those without during times of crisis.
But only looking at benefits from closing gender gaps at the leadership level doesn’t tell the whole story. After all, women engage with the private sector not just as senior leaders, but also as employees, entrepreneurs, customers and community members. Documenting how firms can close gender gaps within each of these firm level stakeholder groups is essential to gaining a deeper understanding of the business opportunities that accrue from investing in gender parity.
A new way to think about the business case
This is where the International Finance Corporation (IFC) comes in. IFC is a member of the World Bank Group (WBG) and the largest global development institution focused exclusively on the private sector in developing countries. In Investing in Women: New Evidence for the Business Case, IFC documents how companies around the world have grown, innovated, and profited by closing gaps between men and women. While disparate in terms of sector and geography, these cases share a common message: the business case for investing in women is by no means limited to senior leadership.
The argument becomes even more persuasive when firms look beyond women’s leadership. In the report, IFC covers examples ranging from that of Banco BHD León to a solar lighting company that increased sales by 30 percent by developing a distribution system run by women entrepreneurs.
Four tips to put the business case into action
Companies that want to leverage the business case for investing in women would do well to consider three key points:
The business benefits for investing in women are real: companies just need to look in the right places and work on a holistic strategy to reap them.
Alexa Roscoe is a Strategy Officer at International Finance Corporation. She has published extensively on strategies for inclusive business and on the business case for gender equality. Follow her on Twitter @AlexaRoscoe.