Slow progress on gender equality, should stock exchanges be doing more?

“Progress is not an illusion, it happens, but it is slow and invariably disappointing.”

George Orwell’s words could not be truer when it comes to gender equality, both in the workplace and society more broadly.

The shocking reality is that we still have many miles to go before coming close to a level playing field. At the current rate of progress, the gender pay gap will not close for over 100 years, and the global average of women on boards will not reach 30% until 2027.

This prediction was cited in a recent report by the Sustainable Stock Exchanges Initiative, entitled ‘How stock exchanges can advance gender equality’. The report shines the light on a number of important indicators that are simply not showing progress in the direction many are pushing for.

In particular:

• Women take home 1/10 of global income while accounting for 2/3 of global working hours
• Girls and women have equal access to education in only 25 countries
• 1/3 experience physical or sexual violence in their lifetimes

Gender equality is at the heart of the international sustainability agenda, with UN Sustainable Development Goal No. 5 focused on achieving gender equality and empowering all women and girls. This goal is an objective but also part of the solution. And this rings true for businesses as well. Gender equality is an objective in its own right but is clearly part of the solution for well-managed, well-performing and sustainable companies.

The report goes on to highlight:

• If better served, women-owned small businesses could add around $285 billion to the global economy
• The global economy could be up to $28 trillion larger in 2025 if gender gaps were eliminated
• Female representation in leadership has shown to improve performance metrics such as ROA, ROE, and EPS while reducing volatility
• Family leave can boost employee morale, reducing turnover and making it easier for businesses to retain skilled workers

And so for investors, the writing is on the wall.

Gender equality is critical for sustainable development AND it brings economic benefits. Within the investment industry products are beginning to crop up that reflect this too. For example, earlier this year AXA Investment Management launched a gender diversity equity fund, designed to capitalize on companies promoting gender diversity. The fund will take a bottom up approach to stock selection to ascertain the companies with the best fundamentals and gender diversity perspectives.

And last year Bloomberg launched a financial services gender equality index, an index which pulls together standardized aggregate data across company gender statistics; employee policies; gender-conscious product offerings; and external community support and engagement.

But despite these exciting developments, we continue to move forward at a snail’s pace. And here’s where stock exchanges can play a role, as the critical nexus bringing listed businesses and investors together.

As the SSE report identifies, stock exchanges, through their unique relationships with both companies and investors, can address issues such as female representation in leadership, pay parity, family leave, sexual harassment in the workplace, flexible work, and support for women-owned small business.

Research shows that empowering women is the right thing to do. With overwhelming evidence of positive business impacts, it’s also the smart thing to do.