QUES­TIONS FOR Jackie Van­der­brug

The woman who wrote the book on gen­der-lens in­vest­ing de­scribes how im­por­tant it is to a thriv­ing global econ­omy.

Rotman Management Magazine - - CONTENTS - In­ter­view by Karen Chris­tensen Jackie Van­der­brug, Co-chair, Im­pact In­vest­ing Coun­cil, Bank of Amer­ica

How do you de­fine ‘Wome­nomics’?

We think of it as a lens on how the grow­ing eco­nomic power of women is fun­da­men­tally chang­ing our world. The met­rics of Wome­nomics range from the grow­ing num­ber of fe­male en­trepreneurs to women’s grow­ing pur­chas­ing power. With­out this lens, peo­ple — and in­vestors in par­tic­u­lar — can eas­ily miss how quickly things are chang­ing.

De­scribe what it means to in­vest with a ‘gen­der lens’.

Those of us who have been im­mersed in de­vel­op­ing the prac­tice of ‘gen­der lens in­vest­ing’ chose the term be­cause it en­com­passes bi­ol­ogy and cul­ture, and it in­vites analysis that is in­clu­sive of men and women. We wanted to broaden the con­ver­sa­tion from ‘in­vest­ing in women’ (i.e. wom­en­led or owned busi­nesses) to look­ing at all types of in­vest­ment op­por­tu­ni­ties and how gen­der knowl­edge — in­clud­ing bi­o­log­i­cal and cul­tural at­tributes — can in­form bet­ter in­vest­ing de­ci­sions.

A gen­der lens can add per­spec­tive on nu­anced ge­o­graphic and cul­tural dif­fer­ences. For in­stance, a bank may find that sharp­en­ing its analysis of ‘the life­time value of male and fe­male bank­ing cus­tomers’ — in­clud­ing loan size, loy­alty and re­fer­rals — re­veals un­ex­pected in­sights on prof­itable new seg­ments. And by us­ing a gen­der lens, a con­sumer goods com­pany op­er­at­ing in In­dia would rec­og­nize that an In­dian mother-in-law’s sig­nif­i­cant role in fam­ily pur­chas­ing de­ci­sions dif­fers by ge­og­ra­phy and class.

You can think about it as point­ing the lens of a cam­era and the way in which you can open and close the aper­ture to con­trol the depth of field; one gen­der may move into the fore­ground or be­come blurred, de­pend­ing on how you ma­nip­u­late the aper­ture. Ei­ther way, a gen­der lens helps you frame the con­text, the is­sues and your re­sponse more ac­cu­rately.

A re­cent re­port found that all of the in­come gains that mid­dle-class Amer­i­can fam­i­lies have ex­pe­ri­enced since 1970 are due to the rise in women’s earnings. Please ex­plain.

That was in Barack Obama’s fi­nal Eco­nomic Re­port of the Pres­i­dent, and it has to do with women’s in­creased par­tic­i­pa­tion in the labour force. The re­port found that me­dian fam­ily in­comes were $11,000 higher in 2013 than they were in 1970; and with­out women’s in­creased par­tic­i­pa­tion they would have been $9,000 lower. An­other way of look­ing at it is that our econ­omy is two tril­lion dol­lars larger and has seen a 13.5 per cent ex­pan­sion due to the in­creased par­tic­i­pa­tion of women.

One thing to note is that this is also due to men’s in­creased care­giv­ing roles. While there is still sig­nif­i­cant in­equal­ity of un­paid work, men’s care­giv­ing hours rose three times from the late 1960’s to 2013.

Over the next 40 years, we will see the largest-ever in­ter­gen­er­a­tional trans­fer of wealth, as women re­ceive 70 per cent of in­her­i­tances from their Baby Boomer par­ents. What are the im­pli­ca­tions?

For a long time we’ve been hear­ing about ‘the power of the purse’ — the fact that women make 75 to 80 per cent of con­sumer pur­chas­ing de­ci­sions. Yet, very lit­tle think­ing has been done about hu­man-cen­tred de­sign from a gen­der per­spec­tive. What is go­ing to hap­pen is, women will con­tinue to make a lot of con­sumer pur­chases, but there will be a dif­fer­ence in terms of women’s un­der­stand­ing of their own­er­ship of as­sets, and that will drive many things dif­fer­ently — from their choice to own prop­erty ear­lier, to in­vest­ing dif­fer­ently.

In your book you talk about the im­por­tance of rais­ing the ‘Gen­der IQ’ of prod­ucts and ser­vices. What does a high Gen­der IQ look like?

An or­ga­ni­za­tion that is thought­ful about how its prod­ucts and ser­vices work for all is think­ing about hu­man-cen­tred de­sign from the be­gin­ning. They’re think­ing about dif­fer­ences in needs and the par­tic­u­lar real­i­ties and tal­ents of men and women, and how they dif­fer, de­pend­ing on what the com­pany pro­duces.

For ex­am­ple, take trans­porta­tion. Women use pub­lic trans­porta­tion quite dif­fer­ently than men do. They tend to do what’s called ‘trip chain­ing’. When they leave work, they of­ten stop to do an er­rand on the way home; or they may drop the kids off at day­care on the way to work. There is less of a straight­for­ward com­mut­ing model there. Med­i­cal is­sues are an­other ex­am­ple: Treat­ing dis­eases and look­ing at the de­sire for phys­i­cal im­prove­ment can also be con­sid­ered from a gen­der per­spec­tive.

My favourite ex­am­ple right now is think­ing about soft­ware de­sign from the per­spec­tive of how men and women

Men’s care­giv­ing hours rose by a fac­tor of three from the late 1960’s to 2013.

use soft­ware dif­fer­ently. The idea of ‘de­sign­ing for in­clu­sion’ is es­sen­tial for com­pa­nies that want to suc­ceed in the fu­ture. We’ve def­i­nitely moved on from ‘pink it and shrink it’—just mak­ing a prod­uct smaller and pink.

There are lots of op­por­tu­ni­ties for lev­els of nu­ance in terms of fi­nan­cial ser­vices. For in­stance, un­der­stand­ing how women in an emerg­ing mar­ket con­text may or may not feel com­fort­able walk­ing into a bank branch, mak­ing a com­plaint, etc. These kinds of hu­man fac­tors are es­sen­tial to de­sign­ing ser­vices.

The Mckin­sey Global In­sti­tute has re­ported that if women’s par­tic­i­pa­tion rates were the same as men’s, it would add up to $28 tril­lion (26 per cent) to an­nual global GDP by 2025. How would this hap­pen?

That re­port [“The Power of Par­ity: How Ad­vanc­ing Women’s Equal­ity Can Add $12 Tril­lion to Global Growth”] was fan­tas­tic, be­cause it put into con­text the po­ten­tial ben­e­fits for all of us of women’s eco­nomic par­tic­i­pa­tion — and it also un­packed some of what would be re­quired to achieve that.

It’s one thing to say, ‘If women worked more, the econ­omy would ex­pand’. The re­al­ity is, there are a lot of rea­sons why women don’t work more — and some of them are very im­por­tant. This is not about say­ing that the ex­ist­ing un­paid work that women do is not valu­able to so­ci­ety. What I ap­pre­ci­ated about the Mckin­sey Re­port is that they came up with 15 out­come-based in­di­ca­tors of global gen­der equal­ity, and said, ‘Here are the pre­cur­sors to en­abling sus­tain­able eco­nomic ex­pan­sion and gen­der equal­ity in so­ci­ety.’ All of these things col­lec­tively are re­quired in or­der to un­leash the kind of sus­tain­able eco­nomic power that we need.

Tell us a bit about Ja­pan’s ‘gam­ble’ on Wome­nomics.

Ja­pan faces a real chal­lenge with re­spect to its work­ing pop­u­la­tion: There are in­di­ca­tions that by 2030, it will be 21 per cent be­low what is needed. Prime Min­is­ter Abe an­nounced that if the coun­try tapped its most un­der­uti­lized re­source — Ja­panese women — it could in­crease its GDP by as much as 15 per cent. It’s a sim­i­lar kind of model to the Mckin­sey Re­port, rec­og­niz­ing that women are an un­der-lever­aged eco-

nomic as­set that we have to en­gage in or­der to pros­per.

They put to­gether a range of ini­tia­tives to try to close this gap, in­clud­ing tar­gets and mea­sure­ment in terms of women’s work­force par­tic­i­pa­tion and pro­fes­sional ad­vance­ment, sup­ported by the in­creased avail­abil­ity of day­care and af­ter-school care; child­care leave ben­e­fits, pa­ter­nity leave, and a more fam­ily-friendly over­all work­place cul­ture — which means mak­ing it clear that no one should be at their desk 70 hours a week.

There are ar­eas that are al­ready show­ing re­sults, in­clud­ing in­creased places at day­care fa­cil­i­ties and a slight drop in the per­cent­age of women leav­ing the work­force af­ter the birth of a child. But these changes will not hap­pen overnight. There is a so­ci­etal shift re­quired, along with cor­po­rate cul­ture shifts and the time re­quired to build a solid pipe­line of tal­ent. In the most re­cent World Eco­nomic Fo­rum Re­port, Ja­pan ac­tu­ally dropped in rank from 101 out of 144, to 111, and some peo­ple looked at that and said, ‘Wome­nomics is fail­ing’; oth­ers — and I am in this camp — say, ‘No, these things just take time’.

Black­rock CEO Larry Fink has said that re­spon­si­ble in­vest­ing strate­gies are the only way to change un­sus­tain­able cor­po­rate be­hav­iour. How does gen­der fit into the pic­ture?

I agree that re­spon­si­ble in­vest­ing is one of the strong­est ways to shift cor­po­rate be­hav­iour, be­cause com­pa­nies care about what in­vestors care about. In­creas­ingly, in­vestors are de­mand­ing dis­clo­sure on cor­po­rate prac­tices from an en­vi­ron­men­tal stand­point, from a so­cial and work­force stand­point, and from a gov­ern­ing stand­point, so cor­po­ra­tions are aware that these are fac­tors they need to be mon­i­tor­ing. Many are al­ready mov­ing in this di­rec­tion — but there is noth­ing like in­vestor de­mand to ratchet that up.

Re­spon­si­ble con­sump­tion also makes a dif­fer­ence. The way that con­sumers choose to pur­chase par­tic­u­lar brands and ser­vices is watched very care­fully by cor­po­ra­tions. Gov­ern­ment reg­u­la­tions matter, too. To be listed on many stock ex­changes around the world, you now have to pro­vide a dis­clo­sure of di­ver­sity at dif­fer­ent lev­els of your or­ga­ni­za­tion. In Aus­tralia, we have seen an in­crease in di­ver­sity at board lev­els — not af­ter a man­date for it, but af­ter man­dated dis­clo­sure. The ways in which laws al­low for checks and bal­ances, and en­hanc­ing in­vestors’ aware­ness of these is­sues, can make a big dif­fer­ence go­ing for­ward.

What are the con­se­quences for economies when en­ter­pris­ing women don’t re­ceive fund­ing to start and build busi­nesses?

We all lose. Clearly, our global econ­omy is fac­ing some un­prece­dented chal­lenges — whether it be the growth of cli­mate change and ex­treme weather, ter­ror­ism or chal­lenges in the po­lit­i­cal realm. There is, as never be­fore, a de­mand for in­no­va­tion across the board, and one thing we know for sure about in­no­va­tion is that it thrives on di­ver­sity. Not hav­ing women at the ta­ble as you think about how to ad­dress your or­ga­ni­za­tion’s chal­lenges does a dis­ser­vice to us all.

The idea of ‘de­sign­ing for in­clu­sion’ is es­sen­tial for com­pa­nies that want to suc­ceed in the fu­ture.

Jackie Van­der­brug is the Man­ag­ing Di­rec­tor at U.S. Trust and co-chair of the Im­pact In­vest­ing Coun­cil for the Global Wealth & In­vest­ment Man­age­ment di­vi­sion of Bank of Amer­ica. She is the co-au­thor of Gen­der Lens In­vest­ing: Un­cov­er­ing Op­por­tu­ni­ties for Growth, Re­turns and Im­pact (Wi­ley, 2017).

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