gender-lens-investing

Closing the Gender Gap with Gender Lens Impact Investing

Women have made enormous strides over the last half-century, but still lag behind men in key areas like pay, promotion, and education.

Gender Lens impact investing – that is, making investments that seek both financial returns and a positive effect on the status of women and non-binary people – is a potentially powerful approach to addressing this problem.

The World Economic Forum estimates that women worldwide have achieved just 68% of parity across indicators including political representation/participation, economic inclusion, health and education–and the shortfall actually widened during the pandemic. If current trends continue, it will take 135 years to close the gender gap worldwide.

Gender Gap Impacts Global GDP

Women face particularly strong obstacles to full participation in the global economy. For instance, women now make up more than half (55%) of the world’s unbanked population. That means that almost 1 billion women have no safe place to store their money and have no access to financial products like insurance and loans.

In addition, there is a significant digital divide, which is increasingly relevant to success in today’s interconnected world. Men are more likely to have internet access than women, and women are 21% less likely to own a mobile phone than their male counterparts.

The gender gap hurts women, but it is also bad for society as a whole. The McKinsey Global Institute estimated that if women were able to participate equally with men in the world’s labor markets, global GDP would rise as much as $28 trillion or 26 percent in ten years.

Gender Inequities in the U.S. Economy

Gender equity is a global issue with the largest gaps in the world’s poorest countries. But even in the United States, women struggle to achieve parity. 

According to an article from the Pew Research Center, women still earn about 16% less than men in the U.S., although this has improved from a 36% pay gap in 1980. 

A 2021 report noted that while women are highly educated, earning 57% of all undergraduate degrees, 48% of law degrees, 47% of all medical degrees and 38% of all MBAs, they make up just 11% of senior executives at the world’s largest 500 companies. 

If there’s one bright spot, it’s that more women sit on corporate boards than ever before, thanks in part to research from 2017 showing that companies with three or more female directors were 45% more profitable than their peers. The 2021 edition of an annual board study found that, for the first time, 30% of all S&P 500 company board directors were female, up from only 16% in 2011.

Inequality Widens During Pandemic

However, for rank and file workers the COVID-19 pandemic has been bleak.  Women worked disproportionately in the sectors with the biggest job losses – retail, restaurants, education and hospitality – and struggled to take care of children and older relatives as the COVID crisis hit. McKinsey estimates that women were 1.8 times more likely to lose their jobs during the pandemic than men. 

How to Make Gender Lens Impact Investments

If you’re concerned about gender equality, you may wonder how you can incorporate this theme into your impact investing strategy.

This approach is often referred to as gender lens investing

What is Gender Lens Investing?

It can can take many different forms.

Some gender lens impact investments focus on women-owned or women-led companies or in businesses that promote workplace equity.

Others invest in companies that provide products or services that improve women’s lives. 

Another approach is to loan funds to non-profits involved with functions such as education and microfinance that promote gender equality and empowerment.  

One of the challenges of gender impact investing is how diverse it is. Different funds and managers have different philosophies about how to seek gender impact, and you’ll want to read their materials carefully to make sure their ideas align with yours. 

Asset Classes for Gender Lens Investing

Like other forms of social impact investing, gender lens investing can also focus on different asset classes.

For instance, a micro-enterprise fund structured to provide small amounts of capital to women who want to start businesses might be structured as either a private debt or private equity vehicle.   

Private Debt. The MicroVest Short Duration Fund, for example, provides financing to low-income financial institutions in emerging markets. These institutions, in turn, lend money to individuals and businesses in developing markets, where small and medium-sized businesses drive nearly 40% of GDP and 70% of new job creation. 

Since its founding, MicroVest has disbursed over $1 billion in loans, helping build the infrastructure for economic growth in underserved and unserved communities.

A large percentage of these loans go directly to women or to women-owned and led businesses.  The fund generates regular interest payments and is relatively uncorrelated to movements in the larger stock and bond markets.  This may make it attractive to investors seeking a combination of income, diversification, and impact, but it is only available to large investors.  

Some long-standing non-profits, such as Friendship Bridge and Calvert Impact Capital borrow money directly from investors to help finance their micro-finance, women’s empowerment, and other programs. These loans are typically available in much smaller amounts. The loans can be for varying periods of time and may offer either market-rate or below-market-rate yields.   

Private Equity. For investors seeking higher returns – and who have longer time horizons – social impact gender lens investments might take the form of venture capital. These types of funds invest directly in women-owned start-ups which offer strong long-term growth potential.

For instance, the Plum Alley Venture Fund invests in companies led by female founders in science, technology, engineering, and mathematics.

Women-owned companies attracted just 2.3% of all venture capital funding in 2020, down from an already anemic 2.8% level in 2019, according to Crunchbase. Plum Alley’s fund aims to narrow this gender gap, while funding innovation in the environment, health, next-generation enterprise, and inclusive growth sectors. 

Since 2015, Plum Alley has invested $35 million in 24 women-led businesses, including Einride, an electric and autonomous trucking company, Openwater, a developer of low-cost laser-based internal body imaging technology, and Mammoth Biosciences, the first CRISPR-based platform for disease detection in healthcare as well as across agriculture, manufacturing, forensics, and more. 

Public Equity. And finally, for investors who want the convenience, diversification, and liquidity of a mutual fund, there are a number of options focused on gender equality. 

Pax Ellevate Global Women’s Leadership Fund is one of the oldest and largest of these funds.

Beginning with a pool of the 1,600 companies in the MSCI World Index, it invests in 400 global companies that outperform according to a variety of “women’s leadership” metrics, including representation of women on the board of directors and among top executives.   

These are just a few examples of the impact investing initiatives now available in the market that promote gender equality. Your financial advisor can help you choose the ones that align not just with your values, but with your investment objectives and risk tolerance.

For more information, or to start incorporating gender lens impact investing into your portfolio, contact Colorado Capital Management.   

Lee Strongwater, Senior Financial Advisor
Senior Financial Advisor

An entrepreneur and world traveler, Colorado Capital Management vice president and co-owner Lee Strongwater brings a global perspective to investments and life planning.

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Jason Black, Financial Advisor (CFP)

Jason Black, CFP ®

With a drive to live purposefully and passionately, Jason focuses on helping clients to live in abundance.

Jason is a partner and senior advisor at Colorado Capital Management.  He brings more than 15 years of varied experience working in the financial services industry. He joined CCM after a long search to find the perfect firm that aligned well with his values and mission. Jason is passionate about helping individuals and families live abundant and intentional lives. He is proud to be part of a Certified B Corporation, doing meaningful financial and investment planning for clients, while also focusing on socially responsible business practices and making a positive impact. As a Chartered SRI CounselorSM, Jason has a strong background and keen interest in sustainable investing and enjoys helping clients understand the merits of this approach. Jason is also a Certified Financial Planner™ and has a bachelor’s degree in business administration from the University of Colorado. 

Before joining CCM, Jason worked with Jackson National as a consultant for financial advisors. He helped create meaningful connections with families, creative asset allocation strategies, and tax-advantaged retirement-income solutions. During his tenure there he worked with over four thousand financial advisors across the country, was recognized multiple times as consultant of the year, and also managed a team of twenty-five individuals. 

Jason is happily married to his wife, Bridget, of thirteen years, who he met while in college at CU. Together they have a son and daughter, and a Frenchie named Coco Disco. They live in the Whisper Creek neighborhood of Arvada. When Jason is not at work, he and his  family can often be found making turns in Summit County, wakesurfing in Glendo, WY, cooking, dancing and traveling.

Erica Loughrey, Associate Financial Advisor

Erica Loughrey

Erica is passionate about providing purposeful advice to help clients enjoy a meaningful life.

Erica is an advisor at CCM. She joined the firm in 2021, fulfilling her desire to work for a values-based company with a deep commitment to making an impact. She moved from her hometown of Anchorage, Alaska and quickly fell in love with the sunny and beautiful state of Colorado. She brought with her prior experience as a para-planner and is delighted to be engaged in a profession that empowers individuals to flourish financially. She believes strongly in exceptional client service and creating lifelong generational relationships.

In 2022, she accomplished two of her major career goals, finishing her master’s degree in financial planning (MSFP) and earning her Certified Financial Planner™ designation.

Erica enjoys spending time outdoors and traveling to exotic locales. In her free time, you can find her out skiing, hiking, scuba diving, practicing yoga or jetting off to new places to explore. She has a never-ending list of travel plans, having already visited over 20 countries, and feels lucky to have so many wonderful opportunities and adventures.

Lee Strongwater, Senior Financial Advisor

Lee Strongwater, WMS

An entrepreneur and world traveler, Colorado Capital Management vice president and co-owner Lee Strongwater brings a global perspective to investments and life planning.

For more than 15 years, Lee has passionately assisted clients with their financial planning and portfolio management needs. He especially enjoys helping them live more meaningful lives and invest in ways that are aligned with their values. Lee holds a bachelor’s degree in political science from the University of Colorado and a master’s degree in international affairs from Columbia University. He also holds the Wealth Management Specialist (WMS) certification.

Before joining Colorado Capital Management, Lee was a managing partner at Strongwater-Schott, a fee-only investment management and financial planning firm in Denver. Prior to that, he was an entrepreneur who helped start and manage several small firms, including a children’s product company that went public in 2007.

Lee is an active volunteer for several organizations. He is a past President and current member of the Board of Directors for the Boulder Jewish Community Center, an organization that is highly respected on both a local and national level. Lee is also on the Investment Committee of Girl Rising-Global Education, a venture philanthropy fund that invests in social entrepreneurs with culturally-relevant ideas. The fund’s investments promote gender equality and improve educational outcomes for girls and boys living in poverty in Kenya and India.

Lee is married and has two daughters. He enjoys hiking, skiing, traveling—mostly to Mediterranean countries—and trying out new recipes from his journeys. When he’s not on the go you can find him engrossed in a book.

Steve Ellis, Senior Financial Advisor

Steven Ellis, CFA

Steve Ellis has spent his career making an impact, so it’s not surprising that Colorado Capital Management’s founder and president launched the firm’s entry into impact investing.

He brings over 30 years of experience as a financial advisor to high net worth clients. His early work included teaching college courses in accounting and finance, consulting for a major accounting firm, and researching and acquiring investments as the chief due diligence officer of a leading national financial planning firm. Since 1989, he has advised individual and institutional investors on the management of their wealth. Steve is a Chartered Financial Analyst (CFA), holds a business degree from the University of Colorado, magna cum laude, and a master’s degree from Cornell University.

Steve launched the firm’s entry into impact investing in 2012 and is committed to helping build the field. Steve is a passionate speaker on the topic. He has taught about impact investing at various conferences and classes around the country, including as a past faculty member at Middlebury Institute of International Studies. He is listed in the Who’s Who in Impact Investing.

Steve is married, with two daughters, enjoys hiking, biking, skiing, tennis and bridge, and is actively involved in the community. He has served on numerous boards and committees for a wide array of nonprofit organizations, including the Boulder JCC, Rose Community Foundation, Jewish Family Service, and Friendship Bridge. His passion for impact and community service helped lead Colorado Capital Management to become a Certified B Corporation and to build a strong culture of volunteerism and philanthropy.