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Protecting Women Will Make You Money (Foreign Policy)

September 12, 2019

From the article:

"When it comes to evaluating an investment, especially overseas investments, the list of potential risks is long. There’s currency risk, liquidity risk, geopolitical risk, regulatory risk, inflation risk, credit risk, climate risk, and more. Not usually on the list? The risk posed by high rates of gender-based violence.

U.S. firms invest over $6 trillion overseas each year, representing a quarter of all foreign direct investment globally. As of September 2018, the Overseas Private Investment Corporation (OPIC), the United States’ soon-to-be reformed development finance institution, had extended loans to U.S. businesses investing abroad worth nearly $23 billion. These funds have been used, among other things, to build telecommunication towers in Ecuador, to develop a wind farm in Ukraine, and to extend affordable mortgage loans to homebuyers in Guatemala...

Most political risk insurers don’t, said Nancy Lee, an expert on development finance with the Center for Global Development. 'To my knowledge, they do not insure against violence against women or discriminatory treatment of women,' she said. 'And that is probably because they don’t see that as a significant commercial risk to the viability of the investment.'

If large and influential organizations like the World Bank and OPIC did systemically factor gender-based violence into their country assessments, it would have a strong signaling effect. The global financial system has power that goes far beyond one-off financial decision-making. The priorities expressed in the financial sector have the power to move markets, even societies. If private-sector investors asked questions about patterns of gender-based violence, it would push governments to care.

While gender lens investing is still in its infancy, it’s gaining traction. Project Sage, an initiative of the Wharton Social Impact Initiative, identified 87 venture capital funds using gender lens investing in 2018, up from 58 in 2017. And last November, the first ever gender-smart investing (another term for gender lens investing) summit was held in London with some of the biggest investors in the world in attendance, including UBS, Morgan Stanley, and Unilever. With Criterion’s help, the governments of Australia and Canada have already begun to implement the approach.

Still, even as institutions are beginning to embrace the concept, gender lens investing continues to be treated for the most part as niche, applicable to only a small subset of impact-related investments, rather than as an approach that has relevance for the entire portfolio.

But the same was true of climate risk just a few decades ago..."

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Senior Policy Fellow