Since the term ‘gender-lens investing’ first entered circulation over a decade ago, gender considerations continue to weave further into the vernacular of private investing. The concept differs from promoting diversity metrics at the firm level, focusing instead on the impact of capital investment on the inclusion, empowerment and equality of women worldwide.
Perhaps nowhere is this approach more critical than in the realm of infrastructure, where so many of the essential structures and systems that communities rely on are inherently biased. Women and girls have different needs from public services than men and boys, and all too often those needs are not factored into design and community integration. This is largely due to the substantial majority of men employed in decision-making roles.
According to 2019 research by McKinsey, women are underrepresented at every level of business in the energy, resources and infrastructure (ERI) industries – and to a greater extent than in industries overall. The study found that only 28 percent of women in ERI industries are promoted to manager level, versus 43 percent for all industries.
The gender-differentiated impacts of infrastructure delivery can limit women’s economic and social opportunities by restricting their time, access to transport and education. In some cases, particularly in underserved and disadvantaged communities, poor-quality infrastructure can even disproportionately affect women’s safety.
“In our research we have identified several factors that contribute to gender disparities, including economic and social inequality, limited investment and planning capacity and in some cases policy instability,” says Gema Sacristán, chief investment officer at IDB Invest, the private sector arm of the Inter-American Development Bank.
“Furthermore, designing, building and operating infrastructure using the one-size-fits-all solution only widens these gaps, weakening it as a force for inclusive and sustainable development.”
Designing infrastructure with women in mind – while being cognizant of the diversity of women’s needs as influenced by intersectionality – could therefore have significant social and economic benefits. This is one area where private capital is already making a difference.
In its mission to deliver safe water and sanitation to low-income communities, impact asset manager WaterEquity has put gender equality at the core of its strategy. “The lack of access to clean water and sanitation is disproportionately felt by women,” says its director of impact and ESG, Genevieve Edens. “Since women typically have the burden of collecting water, if there is inadequate infrastructure, they have to carry it home, clean it and purify it so that it’s potable water.” This has an adverse impact not only on women’s health, but also on their time.
“There are big wins
to gain if you manage
to create inclusivity
For WaterEquity, assessing the benefit of an investment begins with segmenting the ultimate impacts. “First, we look at the different types of facilities and the types of benefits that water and sanitation will have on women and girls in particular. For example, getting access to piped water is different from getting access to a wastewater treatment plant in the town that you’re living in,” Edens explains.
Stakeholder engagement plays a key part. “We want to understand not just the gender breakdown of workers in the construction phase, but also whether women have been consulted in the project design phase,” says Edens. “Was there a gender-disaggregated assessment? That can be really important in making sure a project is successful. Without considering women as a separate segment that may have different opinions than men, there can be mistakes that are made in the project design.”
But thinking this way does not come naturally to all investors. Marco Serena, head of sustainable development impact at developer and investor Private Infrastructure Development Group (PIDG), explains that taking a gender-lens approach requires a change in mindset.
“One of the key challenges is that infrastructure is usually upstream – I’ve heard many times, even from our team, the rationale that if we’re investing in a power station or a road, then ultimately, we’re doing a power station and a road. The benefits will flow and it’s beyond the remits of that investment to understand if they’re equal for men and women, or if we can maximise benefits for women,” he says.
“That was the first shift in culture that we had to take: just to understand that the actual impacts are not equal.”
PIDG takes a coordinated approach to gender. This involves setting KPIs for gender targets which typically involve capital allocation for women-centred businesses, combined with screening for risks such as gender-based violence and harassment in and around infrastructure assets. As an impact investor, however, it is also critical in parallel to look beyond the more traditional risk due diligence at the opportunities to improve the lives of women and girls, says Serena.
IDB Invest’s Sacristán agrees: “We are always trying to minimise gender-based risks, but we also strive to maximise our developmental impact. One area where we have really been leaders is in the use of incentives around employment – including recruitment, retention and leadership – of women in the clean energy sector.”
Building careers in Latin America
Atlas Renewable Energy is a pan-Latin America platform established by Actis in 2017.
Atlas Renewable Energy has introduced a range of programmes to improve local women’s access to employment, entrepreneurial opportunities and leadership positions across the region.
This includes 580 women who have been trained in solar panel installation. “The objective here is that they end up with a qualification, which allows them to build a career, rather than just a job, so the focus is on transferable skills, and training and development, not just job creation,” explains Actis partner Lucy Heintz.
Gender diversity for all
While impact investors have led the way in efforts to advance women’s equality through infrastructure, more non-impact funds are applying a gender lens to their ESG strategies, in a way that is expanding the parameters of traditional risk management. A key issue they set out to tackle is the significant shortfall of women employed in infrastructure sectors.
Asset manager Igneo Infrastructure Partners has set diversity as one of its five minimum standards for ESG performance, which all the firm’s portfolio companies are required to meet within 18-24 months of acquisition. “If a company has poor performance on diversity, then in the asset management plan we have to come up with a solution, a way that we’re going to address the issue during our ownership of the company and bring their standards up to ours,” says Sophie Durham, Igneo’s head of ESG.
Setting out recruitment priorities and tracking progress against diversity targets is a key pillar in Igneo’s action plan. “When you look across our portfolio, we’ve doubled female representation at the board level in five years. Women represented 23 percent of senior management in our portfolio companies in 2021, approaching our long-term ambition to reach 30 percent female representation,” says Durham.
Among Igneo’s companies are Spanish car parking business Parkia, Scandinavian ferry operators ForSea Ferries and Scandlines, and OLT, which operates a floating regasification terminal in offshore Italy. All of these stand out for their progressive female representation in heavily male-dominated sectors.
That said, there is no silver bullet to the recruitment problem, particularly in non-senior positions. “You can find great female CEOs and CFOs, but where we have found it more challenging is in moving the dial when it comes to the workforce as a whole,” adds Durham. “That’s because it is even more difficult to find women for the more operational roles, like engineering and process operator positions, which often work 24/7 shifts.”
Lucy Heintz, partner and head of energy infrastructure at sustainable infrastructure investor Actis, says addressing the technical skills gap among women is key to making progress in this regard. Portfolio company Lekela, a renewable energy firm, runs community investment programmes focusing on developing the technical skills of women in Egypt, such as needlework and tailoring. At Lekela’s West Bakr Wind project in the Gulf of Suez, the company runs an apprenticeship programme for female engineers. “If you think about some of the cultural aspects in Egypt, that’s unusual and we’re really challenging the mindset and pushing things forward,” says Heintz.
Partnering for impact in Pakistan
In 2019, PIDG invested in a programme to improve the domestic cabling in a densely populated area of Karachi, where it was originally very unsafe.
“One of the challenges there for the local utility partner was accessing some of the neighbourhood, as there were many women in the house during the day and those women were not allowed to have visitors and technicians,” explains PIDG’s Marco Serena. The utility company partnered with a local organisation for female empowerment to train women in an outreach programme for training other women. “This meant that women were effectively marketing that solution, taking a role in the community for the first time, as well as directing men to do the work because they were entrusted with the responsibility.
“That’s an example of a partnership. If you stop at being a non-active investor or non-impact investor as an infrastructure investor, you will just do the loan or the guarantee for the programme of the replacement of cables, and then end up with a lower-than-target replacement rate if we had done this without that partnership,” says Serena.
Uniting for the cause
When it comes to integrating gender into strategies, the door is clearly open for investors of all shapes and sizes to boost women’s equality and empowerment. “According to the 2XCollaborative, of which Finnfund is a founding member, globally 67 percent of asset owners identify gender diversity as an area of interest within their investment portfolios,” says Jussi Ahonen, head of digital infrastructure and solutions at impact investor Finnfund.
“There is a lot of interest among investors and we do see that gender-lens investing has become mainstream. It’s actually quite rare to see a company looking for financing that has not prioritised equality,” he adds. “Especially in traditionally male-dominated sectors such as digital infrastructure, there are big wins to gain if you manage to create inclusivity for women.”
Compared with reducing carbon emissions – the other ESG titan, which typically absorbs the best part of any conversation around responsible investing – applying a gender lens can also be cheaper. “Obviously it requires some investment of time, and potentially financial investment, but compared to converting an entire ferry to battery power, diversity initiatives are a very cost-effective method of making improvements that can have an outsized impact on a business,” says Durham.
“Our experience is
that it doesn’t cost
much more to include
a more targeted
Serena agrees: “The reality is that if you’re doing the initial scoping study for the project development of a hydro or a road or any infrastructure investment, you will include social aspects of it, which you can do at that point. Our experience is that it doesn’t cost much more to include a more targeted gender equality analysis.” Instead, what puts people off, according to Serena, is the targeted nature of a gender-focused approach. “The trade-offs are overstated, the synergies are understated, and one of the main barriers, in my view, is the intentionality and what it takes to get there.”
On the impact side, frameworks such as the 2X Challenge and IRIS+ are increasingly helping to classify, monitor and report on gender-related outcomes to a consistent global standard. But to cast the net wider and enable more infrastructure investors to maximise the benefit for women, there is a cultural shift to tackle first. For Heintz, this represents taking a purposeful, integrated approach to gender and diversity. “I think it’s really important to be deliberate, proactive and intentional,” she says. “The finished article is still a long way away, but having a targeted strategy is an important part of being proactive.”
“Diversity is not reserved for impact funds,” adds Durham. “It’s something that all businesses need to think about. It’s included in our due diligence of every asset that that we own, even if it’s not our core objective as a fund.”
Ultimately, for the door to open wider and unlock more opportunities to maximise the benefit for women, we inevitably have to ‘follow the money’. If more women are in the room where investment decisions are being made, it stands to reason that matters of gender equality will be higher on the agenda, boosting representation across the infrastructure value chain. If they build it, they will come.