Investing in stocks that crush the market feels great. Investing in companies that crush the market and make the world a better place feels even better. And in good news, research shows that companies that are doing well and giving back can actually outperform your everyday widget maker.
Yes, we’re talking about socially responsible investing (SRI), or investing with an environmental, social, or governance lens. But even more specifically, we’re talking about gender lens investing, which can deliver great returns while also helping to accelerate gender equality at work.
There’s plenty of research that shows investing in women is a good idea. Did you know diverse teams perform better? And I mean, a lot better — like up to 95% better. How about that diverse teams make better decisions? Again, way better decisions…decisions that are 87% better. Not to mention the fact that employees are happier and more likely to stay at diverse companies.
Companies with women at the helm are also more capital efficient and see a higher return on invested capital and equity. A Catalyst report showed that companies with higher representation of female board directors perform significantly higher financially. The companies that sustained three or more female board directors for least four years significantly outperformed companies with low female board representation by 84 percent on return on sales, 60 percent on return on invested capital and 46 percent on return on investment. In addition, a report from McKinsey Global Institute found that gender equity could add up to $12 trillion to the global GDP by 2025.
But the truth is, we have a lot of work to do to achieve gender equality at work. In fact, this lens is particularly timely with trends like the #MeToo movement and what’s been happening with Nike, Google, Microsoft, and some of the other big-name companies that may be in your portfolio.
Some experts estimate that we’re decades, if not centuries, away from gender equality at work. And in the meantime, top talent will likely gravitate to companies that offer the most rewarding and value-driven environments for their employees. These are exactly the company cultures that long-term investors should seek out.
At InHerSight.com, we make it easy for investors (and working women) to find the companies with the competitive edge of a happy, gender-diverse workforce. We measure everything from women’s representation in leadership to paid parental benefits to salary satisfaction and much more, then roll it up into one simple score.
You could think of us as Glassdoor for women. By combining individual insights with living stories, the site yields powerful representative data for investors, companies, and prospective employees. Investors can use InHerSight data and feedback to get a picture of which companies are doing the best job to develop workplaces that have established high gender diversity standards and empower women — according to the women who’ve experienced the company policies firsthand.
So the next time you’re evaluating the stocks in your portfolio, check their InHerSight scores first. Heck, if you’d been investing through a gender lens, you might have gotten in on companies like Netflix — which gets great scores from the women who work there — just a little bit earlier.
By Cara Hutto and Ursula Mead