The gender pay gap and focus on diversity at the executive level of companies have taken a more central role in recent years with the rise of funds focused on governance practices and the recognition that companies with diverse boards and leadership typically outperform their non-diverse peers. A recent poll done by CNN found that women worldwide have been hit hardest by the COVID-19 pandemic, however, which has resulted in a widening pay gap as well as having financial repercussions for women long-term.
The survey found that women reported the top five areas of disruption for their lives included future planning, their sense of community, mental health, access to healthcare, and financial stability. Women worldwide reported employment loss at greater proportions than men, with the majority of caretaking falling on the shoulders of female members of families.
“The pandemic threatens to create long-term gaps in terms of girls’ education as well as women’s participation in formal paid labor, which in turn risks strengthening traditional patriarchal gender norms and the division of labor within the household and the economy,” wrote Nadje Al-Ali, professor of international studies at Brown University.
The survey highlights the need for pandemic recovery to happen in an inclusive and equitable manner for all genders and a recognition of the long-term impacts that women will feel financially because of the pandemic.
Investing In Gender Diversity and Contributing to Girls Who Code
For investors that seek to capture the potential higher performance offered by more diverse companies, the IQ Engender Equality ETF (EQUL) offers a dual impact opportunity for investors. The fund is one that seeks to invest in companies with a gender balance within their workforce, board of directors, and senior management and evaluates the gender pay gap of companies, their sexual harassment policies, parental leave, and other metrics.
The fund is also an impact fund. It was created in alignment with Girls Who Code, a nonprofit organization that seeks to increase the representation of women in computer science by offering clubs and programs for any and all girls, half of which constitute historically underrepresented groups. IndexIQ donates a portion of its management fee to Girls who Code.
EQUL seeks to track the Solactive Equileap US Select Gender Equality Index which includes U.S. companies of any market cap and includes the 75 highest scoring companies. Companies are assigned an Equileap score that is 40% based on gender balance in the workforce and leadership, 30% on equal compensation and work/life balance, 20% on its gender policies, and 10% on its transparency, accountability, and commitment.
The index excludes companies that take certain percentages of their revenue from unconventional fossil fuels, nuclear energy, controversial businesses (gambling, adult entertainment, alcoholic beverages, tobacco products, cannabis, and military equipment), controversial weapons (anti-personnel mines, biological and chemical weapons, cluster munitions, depleted uranium, and nuclear weapons), or companies that infringe or violate established international initiatives and guidelines.
Companies are also excluded from the index for a year if any time in the previous two years they have engaged in unethical practices that involved discrimination of any sort against their employees.
EQUL carries an expense ratio of 0.45%.
For more news, information, and strategy, visit the Dual Impact Channel.