Through a set of checklists, investors and financial services providers can include a gender lens into their portfolio to support women-led businesses, advance gender equality and strengthen economies in Latin America.
Investors have the power to advance gender equality and strengthen economies in Latin America. They play an important role in supporting women-led businesses and businesses that create products that positively impact women and girls. Investing with women and girls in mind, also makes economic sense. According to the International Finance Corporation, investors focusing on companies where gender diversity is an important strategy are rewarded with higher returns of 3.5 percent.
Latin America offers opportunities for investors to make a difference. 73 percent of small and medium sized women-led businesses in the region still lack access to the capital they need, and women entrepreneurs face $93 billion-dollar financial gap in the region. A recent report by Value for Women estimates that only about 11 percent of social impact businesses in Latin America have gender inclusive business models that aim to level the playing field, empower women, or provide solutions to social issues that disproportionately affect women.
To help investors know how and when their investments will make the greatest impact, organizations like Pro Mujer with expertise in investing in women, have an important role to play. It is key to create tools such as gender checklists to help investors identify gender biases in their own investment criteria and processes, and help investors drive change in the companies in which they invest.
This can include ensuring more women hold leadership roles, pushing for policies that advance diversity, inclusion and workplace equity, and creating networks and spaces that connect investors with women entrepreneurs. For instance, according to Calvert Impact Capital, “companies with higher percentage of women in leadership positions and higher percentage of women in board positions outperform companies with the lowest percentage.”
Below are three checklists Viwala, an entity that provides revenue-based lending to companies in Mexico, is currently adopting to add the gender lens to identify more women-led businesses and businesses that positively impact women and girls to add to their loan portfolio. Pro Mujer and New Ventures Group, with the advice from Value for Women, created these gender checklists to include a gender analysis into the financial reviewing process of Viwala’s credits.
Checklist 1: Identifying Women-Led Businesses
To qualify as woman-led, the business needs to meet one of the following three criteria:
- The key decision-maker is a woman
- The business is at least 51% owned by women
- One of the founders is a woman and she is actively involved in firm management
Checklist 2: Identifying Gender-Focused Businesses
A business is considered gender-focused when it intentionally increases women’s or girls’ access to an impactful solution or provides products that directly impacts women and girls.
To qualify, businesses must serve at least 30% women and demonstrate intentionality to improve women or girls’ well-being and/or gender equality. Intentionality can be demonstrated through: A mission or objective explicitly focused on promoting women’s well-being and/or gender equality, OR an explicit strategy targeting women, girls, or gender equality
Checklist 3: Assessing Where Investees Stand on Gender Inclusion
This checklist is organized around seven business areas: leadership; commitment; strategy and policy; workforce; market; community; and data.
For each of these business areas, the checklist includes a key question to ask the investee, follow–up questions for the investee to answer, and corresponding quantitative indicators.
As gender lens investing continues to expand in the region, we recognize there is still a long way to go to create an ecosystem where all investors prioritize gender equality and impact investing. To learn more about our efforts click here.