Over the past two years, the Covid-19 pandemic has exacerbated existing gender inequalities, with job-loss rates for women almost twice as high as those for men.

But even in the five years before the pandemic emerged, progress towards gender equality was slow, with female participation in the labour force hardly changing at some two-thirds the level of men.

This progress is likely to be more uneven heading into 2022 and beyond, given how jobs done by women have been disproportionately affected by the pandemic.

Why gender equality matters for economies

Narrowing the gender gap at work could significantly lift global economic growth, addressing some of the shortfalls in investment needed in public, private and household spending.

Increasing the diversity and inclusivity of workforces can help lift per-capita incomes and growth by boosting utilisation rates, as well as the productivity of the workforce by making better use of human capital – the economic value of a worker’s skills and experience.

In a world where populations are ageing and labour-productivity growth sluggish, a stronger commitment to increasing diversity and inclusion by companies and governments would provide a much needed shot in the arm for the global economy.

What’s more, the benefits of closing the gender gap in the workplace are considerably higher than the social spending required to achieve it.

Why gender equality matters in business

There are also clear business reasons for greater diversity in the workforce. A diverse workforce helps to create:

• A larger talent pool
• A better understanding of customers and global operations to increase sales opportunities
• Increased brand value
• Greater employee productivity, engagement and lower staff turnover

Companies that seek to create genuinely diverse and inclusive environments should be better businesses in the long run.

Firms with greater gender diversity on executive teams are more likely to enjoy above-average profitability than those that do not.

How can investors find these companies?

Investors have a fiduciary duty to ensure that the businesses they invest in seek to operate in a responsible manner.

According to the Ten Principles of the UN Global Compact, responsible businesses should ‘support and respect the protection of internationally proclaimed human rights’ and eliminate ‘discrimination in respect of employment and occupation’.

One way investors can identify companies that are committed to promoting greater gender diversity is to screen firms based on a number of criteria.

For example, our Multi-Asset team uses a Gender Equality Equity Basket which only admits companies that operate policies and practices supporting the United Nations Social Development Goal No.5: gender equality.

These are companies that can demonstrate a record of:

• Promoting women into leadership positions
• Seeking a pro-gender balance in the workforce
• Showing commitment to pay equity
• Innovative parental leave and/or other supportive/protective practices

Screening in practice

Getting reliable data can often be a problem. That’s why we selected metrics that have the most comprehensive data disclosure.

For example, representation of women on boards (pass mark: more than 45%), on executive teams (pass mark: more than 25%) or in senior management positions (pass mark: more than 25%); female participation in the workforce (pass mark: more than 25%).We sought to prioritise companies that score well on all these criteria.

We also reviewed: pay gap data (where disclosed) and corporate messaging on this topic; corporate policies on childcare and caring responsibilities; ways of tackling attitudinal bias within the wider industry; and how corporates sought to attract and promote talent.

What we found

We ended up with a basket of 20 stocks. There is a significant bias towards Europe – with France and the UK our largest single-country exposures.

The largest sector weights are Financials, Consumer Discretionary and Communication Services. Furthermore, the basket favours momentum, value and quality investment styles.

And finally…

Research shows that around 82% of single women who live alone participate in the labour market, compared to only 64% of women who live with a partner, and less than 50% of women living with a partner and children.

Now compare these numbers with participation rates for men. Some 90% of single men living alone participate in the workforce. This number rises to 94% for men who live with a partner and around 96% for men with a partner and children.

Clearly a lot more work needs to be done to achieve gender equality. As investors, we can play an active role.