BNY Mellon’s Heidi DuBois on Social Investing and Closing the Global Gender Gap
By Luna Atamian, Consultant, and Kristina Joss, Senior Consultant, Salterbaxter
In Davos during the World Economic Forum this year, BNY Mellon released a new study in partnership with the UN Foundation entitled Return on Equality, which took a financial perspective on closing the global gender gap. The report revealed that beyond the moral imperative, tackling gender equality has the potential to unlock billions in market value.
We recently had the opportunity to sit down with Heidi DuBois, Global Head Corporate Social Responsibility and Social Investing at BNY Mellon, a global investments company, to learn more about social investing and its potential to address global development challenges.
Read on to find out more about social investing, the Return on Equality report, what it means for the company and society, and what is next.
Can you start by defining what social investing means at BNY Mellon and why it is important to the business?
We defined social investing broadly when we launched our paper, Social Finance at Scale, in 2015. It refers to any investment activity that generates financial returns and also has a social or environmental impact. That covers four major categories under the broad umbrella that we call social investing:
· Responsible investing
· Environmental finance
· Development and microfinance
· Impact investing
There are global mega trends that make social investing increasingly important. The adoption of the United Nations (UN) Sustainable Development Goals (SDGs) in 2015 inspired the finance industry as a whole to evaluate the opportunities in achieving the goals. The Business and Sustainable Development Commission, for instance, has identified a $20 trillion economic opportunity associated with achieving the goals. We also considered how millennials tend to think about investing. They often choose to work in a place with purpose that connects to their values, and they want to invest in the same way. Considering these two trends alongside other global influences in the financial sector, we were able to make a compelling case for innovation and new collaboration in this space.
How did the Return on Equality white paper with the UN Foundation come about and what was BNY Mellon’s motivation for involvement?
This is a great story of stakeholder engagement and partnership at its best. We have had a partnership with the UN Foundation for several years now and together, we decided to focus on Goal 5, which focuses on achieving gender equality and empower all women and girls. We made this decision for two reasons:
First, Goal 5 is an enabling platform that influences many of the other goals. Second, we at BNY Mellon have invested a great deal in diversity and inclusion. While it’s a growing area of strength for us, we still see it as a continued opportunity area for the financial services industry as a whole.
What does the report reveal about investing in gender equality and the opportunity to tackle Sustainable Development Goal 5?
The paper is ultimately about an untapped opportunity in gender-lens investing, the practice of investing for return while also considering benefits to women delivered by a company’s products and services. We took a sample of five sectors (water, telecommunications, energy, contraception and child care) and ran the numbers to calculate the economic benefits of achieving gender parity. What we found was a $300 billion spend opportunity by 2025 in just those five sectors alone. What investor doesn’t want to take advantage of that?
What are some of the reasons gender-lens investing has traditionally focused more on women-owned businesses and workplace diversity rather than companies that advance diversity through products and services?
It’s perhaps the obvious place to start. Gender-lens investing that’s focused on women-owned businesses and workplace diversity may be considered easier to pursue than seeking out companies that advance diversity through products and services because the metrics are more readily defined. Evaluating products and services unveils that the economic impact is bigger, but the complexity is also greater.
I also think that the adoption of the SDGs reverses the lens. The SDGs are about unmet needs. They reframed the conversation for the private sector: What are the unmet needs of women in the world and how can those needs be met? One way to do that is through products and services that help women unlock their intrinsic potential and give them more control over how they spend their time, control their assets and pursue opportunities for employment.
What can companies, whose products and services do not advance gender equality, do differently?
Companies should think about the role of women in their organization and business strategy. They should ask themselves the following questions: To what extent are my products tailored to women’s needs? Are we dedicating a percentage of our R&D budget to products designed for women? Are we defining metrics that measure retention of female clients or customers?
What can this report tell us about the potential for social investing that applies to other global development challenges, beyond gender equality?
If it tells us anything it is that it’s the tip of the iceberg. These are five sectors specific to gender equality, but there are extensive financing needs associated with the SDGs. You could take this methodology and apply it to other issues like responsible consumption and production or sustainable communities. We have just started to scratch the surface of what’s possible!
What is the tipping point needed to bring social investing to scale and how is BNY Mellon driving that effort?
Over the past few years, we’ve been working to crystalize our role in addressing challenges and barriers to realizing social investing at scale. We believe there are five categories of actions to overcome these challenges:
· Aligning expectations to create attractive investments products
· Building track records, frameworks, and presentation standards necessary to generate investor confidence
· Institutionalizing sharing of information among investors and stakeholders as best practices to promote efficient use of capital
· Creating incentives that shift thinking about value creation and support good governance and positive policy frameworks
· Pursuing innovation and risk mitigation by leveraging expertise through partnerships.
Using Research to Fuel Meaningful Action
From our conversation with Heidi, it is clear that translating growing investor interest in social investing into significant capital allocation will require fundamental changes to the current system. This means looking beyond the improvement of products to meet investors’ goals and performance expectations at the enabling environment. We need to strengthen the infrastructure, skills and incentives that form business decisions today and overcoming those challenges will need support from all members of the investment community.