Time to act, part II: Seven Steps investors can take today on Gender Based Violence & Harassment

Forceful stewardship

This article recaps lessons on investors and Gender-Based Violence and Harassment (GBVH)  from our 14 October online roundtable with Lauren Compere, Managing Director at Boston Common Asset Management  and Henriette Kolb, Manager for Gender and Economic Inclusion at the International Finance Corporation who provided practical and complementary expertise on GBVH . A recording of the conversation is available here. This blog complements Time to Act, Part I: tackling gender-based violence requires  more assertive investor engagement. DAWN Worldwide is generously funding our project.

The topline: addressing specifics of GBVH at company and industry level is essential, but chances of success will increase if efforts are embedded in larger and more systematic standards related to the treatment of women as employees and contributors across the economy. Investors should be prepared to lead by example. Positive peer pressure and public leadership can go a long way to have a positive impact on the mitigation of GBVH.

Compere and Kolb challenged the investment community to think more strategically about integrating GBVH considerations into their internal systems and in their engagement with listed and unlisted companies. Certain priority actions for investors emerged:

  1. Leading from the Top:  Request that CEO pledges on gender equity and inclusion include a commitment to end GBVH in their workplace. Investors can support “claw back” legal action to recover compensation and bonuses paid to CEOs who fail to act on this commitment. Leadership from CEO and executive management on these issues can also accelerate progress and empower employees to speak up.
  2. Get the Data Right:  Engage standard setters on the need for clear and comparable metrics for assessing GBVH risk at companies in high-risk industries: this is currently not the case.
  3. Gender-Specific Screening:  Specifically, investors can screen their portfolios for sectors with a high proportion of women in their workforce (e.g., education, healthcare, apparel, and garment manufacturing) with male supervisors and managers, then create detailed behavior change plans to engage with industry groups. Outside of equity holdings, investors should pay attention to GBVH risk in Infrastructure and private investors can have a significant impact on outcomes. Infrastructure investors can develop GBVH mitigation plans for problems that appear throughout the project lifecycle. Particularly for long-lived assets, it is important to move beyond due diligence, to create a monitoring strategy for GBVH.
  4. Engage on What Matters Most:  Examine opportunities to engage with companies on GBVH in a targeted way across high impact sectors. This could include for example, companies who have committed to the UN Global Compact, and how they are acting on these commitments in relation to GBVH.
  5. Collaborate:  Engage peers to support shareholder resolutions on ending company recourse to mandatory arbitration, which obscures the prevalence of sexual harassment in the workplace (see for example Goldman Sachs, Tesla, or Apple. The 2022 proxy season is an excellent time to scale up the coverage and support for resolutions on ending the use of mandatory arbitration clauses.
  6. Alignment:  Put their own (investor) house in order before engaging with companies: acknowledge that these issues exist in finance and within most companies and provide disclosures on GBVH then make the same requests at investee companies.
  7. Capital Spending/Procurement:  Focus on gender-equity in procurement –  globally, only 1% of the $11 trillion spent annually on public procurement is awarded to women-owned businesses. Research indicates that women’s economic empowerment dampens exposure to GBVH so supporting women-led businesses in procurement is a major step.

Kolb highlighted the persistence of gender related violence and its amplification during the pandemic. The needs of women in society, and specifically the right to be free from abuse and harassment remain unaddressed. This is despite women’s significant contribution to the global economy, and to the continued existence of the human species. Kolb also noted that women control most of the global consumer spending, estimated at well over $30 trillion in value.

For most countries and investors who have commitments to action on gender equity, substantive progress on GBVH remains limited, whether internally or in their portfolios. Kolb’s work at the IFC shows that leadership can turn talk into action and have results with positive impact on women’s lives. Before Covid-19, violence against women both online and offline was pervasive, with one in three women globally experiencing violence at the hands of men, according to the WHO, and the pandemic has only made things worse.

Investors can positively impact corporate culture on GBVH

Investors can act in their standard portfolios,  in gender equity-linked investment products such as sustainability bonds, and through internal controls. According to Kolb, “beyond underwriting and buying gender-linked sustainability and SDG bonds, large investors can also lead by example, ensuring internal systems are in place to ensure employees feel comfortable identifying gender-based violence in their own workplace.” The IFC’s work in Papua New Guinea, the Solomon Islands, Myanmar, and other jurisdictions has demonstrated that simply addressing gender-based violence and sexual harassment in the workplace is not enough to ensure change in society. Educating people on how to understand, identify and explain why GBVH is unacceptable and how approaches within the workforce and in communities can change to deliver better health, equity, and productivity outcomes are important first steps. There is an opportunity for investors to use their voice with companies and governments to ensure that GBVH concerns are part of workplace safety dialogues on bullying, mental health, and gender-based violence, but also in capacity building and vocational training that empowers women professionally and financially. An IFC client in the Solomon Islands, for example, reduced absenteeism by 25 percent through a range of initiatives, including putting policies in place for creating a respectful workplace, addressing sexual harassment, and supporting employees affected by domestic violence. It also trained both women and men in financial literacy and opened new, better-paying job opportunities for women, including for job roles traditionally held by men such as electricians and plumbers. These examples show the range of interventions available to investors and corporate leaders seeking to drive lasting change and to improve outcomes for women across the economy.

Participants also learned about the challenges for investors in creating effective GBVH stewardship strategies that build on existing ESG approaches. Compere noted that “GBV on its own is perhaps more challenging for investors to build stewardship around, whilst harassment has strong risk management, compliance and risk mitigation considerations, which may be more familiar themes for investors.” In addition, a majority of GBVH occurs in local communities, in private households or deep in supply chains with informal sector workers. This makes shareholder engagement more challenging, but should not deter investors from wielding their influence. Beyond the community and family spheres, the ability of investors to engage directly with corporate leaders, and to lead by example in their own operations is an easy win.

Investors need to better understand company supply chains & demand more consistent data

Compere highlighted how GBVH can be a part of workplace safety dialogues, but also noted that GBVH can be obscured by larger issues such as supply chain coordination, workforce management, and other operational concerns. Additionally, in the consumer goods, apparel, agriculture, and mining sectors, GBVH can be deep in the supply chain, requiring updates to due diligence practices and more resources to uncover systematic problems. Compere identified additional opportunities for investor leadership on:

  • Requesting greater standardization in reporting and cataloguing of gender-based violence by sustainability standards providers, including SASB and GRI.
  • Communicating the need for sustainability standards and ESG ratings providers to provide more transparent and uniform approaches to flagging GBVH risks in companies and in company supply chains in high-risk sectors.
  • Bringing investor groups such as the UN-PRI into a more substantive working group that can articulate a global action agenda, including articulating shared expectations for companies and investors on GBVH, building on prior work, including the 2020 report ‘Addressing GBVH‘ led by the EBRD, CDC and the IFC.

Do investors need a business case for addressing GBVH?

Kolb noted that despite the clear moral case for action, it is still necessary and useful to make the business case. The IFC and others have done this consistently for years: the business case for reducing and ending GBVH encompasses costs to economy, GDP, labor force shortcomings; and damages to corporate performance from women excluding themselves from leadership and research roles, among other costs to society. Examples from the Solomon Islands illustrated how domestic abuse can lead to significant worker absences, lowering productivity and output via unexplained absenteeism.

Investors already have strong precedents for leading with the moral case for action, including on child-sex trafficking engagement with the hotel sector [6]. A well-defined business case adds to this and demonstrates agency for investors who are unsure of their role and purpose in starting stewardship Programmes on GBVH.

ILO Convention create space for investor stewardship on SDG5

In discussing the role of policy, Compere highlighted the importance of ILO Convention 190 on Violence and Harassment. The new Convention has a strong focus on GBV and covers the public and private sectors, rural and urban, formal, and informal economy. With its focus on the workplace, the new framework should be useful as a reference point for investor dialogues with companies and trade associations in high impact sectors, including agriculture, apparel, healthcare, and education. These are all sectors where the workforce is in majority female, and supervisory and management roles male dominated, creating a work environment where GBVH is routine. Alongside the ILO’s work to mainstream GBVH, Compere expects the EU’s recently introduced mandatory human rights due diligence process to give rise to more comparable data on the issues. Monitoring and enforcement will remain a challenge for both the ILO Convention, whose ratification does not come with any enforcement mechanisms, and the EU Directive. This means investors have a key role to play in establishing expectations and monitoring function in relation to these and other international standards.

Legislation provides a floor for investor action on GBVH. It is time to raise the ambition.

Over 155 countries have passed laws on domestic violence and over 140 have laws on sexual harassment in the workplace, yet these regulations are not always compliant with international standards or implemented and enforced in a systematic manner. Kolb highlighted that gender equality and associated national legislation should be setting the floor for expectations and investor action on GBVH. Investor engagement with companies, trade associations and in the public policy process can be more ambitious than baseline societal expectations. Legal and regulatory requirements are just the beginning. Committed leadership from executive management teams in the investment community is necessary to firm up inhouse procedures for employees to articulate disrespectful behavior, including formal and informal reporting channels.

Improving access to capital for female entrepreneurs a global opportunity

Panelists also raised the importance of allocating more capital to women owned businesses. Henriette Kolb highlighted the need for greater gender parity at the top of the capital distribution value chain: increasing female members on Investment committees would be a terrific way to initiate change at the top of the financial system. Gender balance in institutional investment and venture capital investment committees is male dominated in all markets and this impacts on who has access to capital. In the US, less than 3 percent of the total VC money distributed in 2018 went to women-led businesses, for example [5]. Investors can play a role in mobilizing networks of influence and capital flows to support female economic empowerment across markets. According to Kolb, it is “time for investors to lean in to improve women’s access to financial credit and financial literacy. We know from our work around the world that increasing economic power and pay parity for women can dampen violence.”

Setting priorities for a decade of action on GBVH

The speakers highlighted opportunities in the decade ahead, and the need for ‘right-sizing’ solutions for specific geographic and industry contexts. Investors should be asking companies to explain how GBVH is assessed in supply chains, starting with industries where women and girls are key to the workforce. A comprehensive approach would be necessary and fresh solutions, such as company or investor support for the financing of safe houses so that women have an ability to leave abusive relationships would be necessary. Given the relationship between financial dependency of women on male partners, financial literacy and basic education for women is also an essential lever for change. Roundtable participants heard how distinct types of investors have different tools that can be mobilized. Compere acknowledged that GBVH is just a single supply chain risk issue so there needs to be a shared set of expectations for companies to streamline investor engagement. Setting standards and expectations via engagement with industry associations in industries with endemic GBVH is an effective way to start.

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