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DEG: Charting the next steps in gender-lens investing

Gender-lens investing is just the start of the conversation when it comes to equity in private market investments, says DEG’s Katharina Thier.

Katharina Thier

What does DEG’s gender-lens investing strategy entail?

Closing the gender gap in economic participation and opportunity is not only the right thing to do, but also the smart thing to do. As a founding member of the 2X Challenge, an initiative designed to mobilise capital towards investments that empower women, and 2X Collaborative, an industry body for gender-lens investing, DEG is committed to advancing opportunities for women in the investment projects it finances.

We see this as a driver for commercial performance and as a means to promote women’s economic empowerment. This includes advancing opportunities for women through enterprise support, leadership and career progression, and quality employment, as well as products and services that enhance women’s economic participation.

How does DEG engage with PE fund managers on gender equality issues?

As a 2X Challenge member, DEG can qualify its new investments under the 2X Challenge and give its investees – including the funds DEG invests in – the opportunity to be recognised as a 2X-qualified company.

However, DEG does not only see its role as financing clients that are already among the gender champions. Rather, we want to act as an active pioneer and contribute to the transformation of our clients by providing tailored technical assistance and building networks and ecosystems. When working with PE fund managers, the implementation of gender measures like gender gap assessments and action plans at the investee level can be a great lever.

What else can investors do to support women’s empowerment?

DEG recently commissioned a joint study with Austrian development bank OeEB on gender-lens investing. It concluded that investors can support women’s economic empowerment by the following approaches.

First, be a role model. Publicly commit to gender equality and walk the talk. Second, set minimum requirements that all investments need to meet and develop incentivising impact measurement on gender equality. Third, provide technical assistance. Build internal expertise; offer assessments, resources, good practices, support in product development and mainstream technical assistance on gender equality in the investment cycle. Lastly, create and participate in exchange networks on gender equality and invite clients to participate; showcase good practices and connect actors.

How do you see the industry’s approach to gender-lens investing evolving?

As gender-lens investing is evolving as a mega-trend in the global investment field – attracting a broad range of investors as well as public and civil society partners – there is an unprecedented opportunity for capital mobilisation, impact-driven value creation and gender-transformative change. Moving forward, the discussion will evolve from addressing equal representation and counting heads (eg, in boards and investment committees) towards measures of empowerment, removing gender-specific barriers to women’s career advancement and asking for intentionality.

Nevertheless, I strongly believe that the nexus to other impact topics like gender and climate will become increasingly important and gender-lens investing is just the start of a broader discussion on promoting equity through private sector investments.

Katharina Thier is a gender-lens investing expert at German development finance institution DEG

This article was first published by affiliate title Private Equity International