Data Shows Business Outperforms With Women

Originally posted on Bloomberg.com

Matthew Winkler and Angela Sun
(With assistance from Shin Pei)

The World Economic Forum recently released the most comprehensive report to date on global gender equality. It showed that women will get equal pay – in 170 years.

While the news may be disheartening for women and gender equality advocates, it’s particularly grim for another audience: investors.

Demand for socially-responsible investment strategies has grown exponentially over the past decade. Today, $21.1 trillion – or one out of every six dollars – is invested in assets that incorporate sustainable investment strategies. This growth reflects mounting evidence that sustainable investment strategies outperform traditional benchmarks. One gender focused strategy investing in S&P 500 companies with the most women in board, management and workforce roles has outperformed the benchmark by 141 percent over the past 10 years. Shares of women-led companies outperformed the S&P 500 Index by 7 percent, improving on their prior 12 month advantage by 3 percent. These and similar outcomes are driving a growing focus on diverse leadership – and the kind of data investors can use to build parallel investment strategies.

Environmental, social and governance (ESG) data was originally conceived for socially-conscious investors, especially those engaged with mutual funds and exchange traded funds. Since then, it’s become an essential tool to help investors determine which companies are managing their operations most effectively, with the best sustainable returns.

The ESG criteria included in the database of S&P 500 firms reveals 22 major companies led by women. According to data compiled by Bloomberg, companies led by women Chief Executive Officers who have held their position for at least two years appreciated 37 percent since the fourth quarter of 2014. The S&P 500 advanced 21 percent during that same time period. The average annual gain for women CEOs during their tenure is 30 percent compared with the 17.5 percent average annual increase for their (male) predecessors.

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