International Finance Corporation New Report Builds Business Case for Gender Equality

May 18, 2017

Takeaways

IFC's new report shows the business case for equality goes beyond senior leadership

Businesses that invest in gender equality often see notable returns. Take Banco BHD León (BHDL) for example in the Dominical Republic. In the bank’s home market, women make up 70 percent of university graduates and more than half of all primary household providers but remain underserved in the financial sector. By targeting women’s specific needs and preferences, BHDL was able to develop a series of financial and non-financial products specifically for female customers. In less than a year, more than 30,000 customers have benefited from insurance and assistance policies tailored to women’s needs, and BHDL has seen returns of 35 percent.

BHDL’s results are by no means inimitable. Yet, despite an increasingly well-documented body of evidence in favor of the business case for investing in women, too few companies capitalize on the opportunity. Why?

Two barriers keep companies from fully embracing the business case for gender equality. First, the business case is most frequently framed in terms of national or sector-wide benefits such as GDP growth or decreased inequality, which do not translate well into a company’s profit and loss sheet.  Second, most research directly relevant to individual firms has focused on a single aspect of the business case, namely, the benefits of gender diversity in senior leadership roles. Think of Credit Suisse’s research showing that boards with female representation outperform those without during times of crisis.

But only looking at benefits from closing gender gaps at the leadership level doesn’t tell the whole story. After all, women engage with the private sector not just as senior leaders, but also as employees, entrepreneurs, customers and community members. Documenting how firms can close gender gaps within each of these firm level stakeholder groups is essential to gaining a deeper understanding of the business opportunities that accrue from investing in gender parity.

A new way to think about the business case

This is where the International Finance Corporation (IFC) comes in. IFC is a member of the World Bank Group (WBG) and the largest global development institution focused exclusively on the private sector in developing countries. In Investing in Women: New Evidence for the Business Case, IFC documents how companies around the world have grown, innovated, and profited by closing gaps between men and women. While disparate in terms of sector and geography, these cases share a common message: the business case for investing in women is by no means limited to senior leadership.

The argument becomes even more persuasive when firms look beyond women’s leadership. In the report, IFC covers examples ranging from that of Banco BHD León to a solar lighting company that increased sales by 30 percent by developing a distribution system run by women entrepreneurs.

Four tips to put the business case into action

Companies that want to leverage the business case for investing in women would do well to consider three key points:

  • Gather the right data: Integrating and analyzing sex-disaggregated data into existing business metrics can help capture unexpected insights and opportunities. For example, the microfinance group FINCA DRC established a network of digital agents by partnering with male and female entrepreneurs, and only discovered in a subsequent evaluation that women agents delivered 12 percent more transactions than their male counterparts, allowing the agency to pinpoint success factors for the broader network such as agent location and business type.
  • Look for gender gaps in seemingly unrelated business challenges: Behind business challenges often lie invisible gender gaps. Identifying and addressing these means considering gender inequalities even when not immediately apparent. For instance, Soltuna, a fish processor in the Solomon Islands, was able to identify opportunities to save $166,000 a year and earn an additional $1.58 million in annual revenue by investing in women to decrease absenteeism and presenteeism.
  • Take on challenging situations: Counterintuitively, the most challenging contexts can provide the largest opportunity for improvement, and thus the biggest potential gains. In Papua New Guinea, the Business Coalition for Women reduced the social and economic costs of gender-based violence, which can routinely add 3 percent to 9 percent to company payroll expenditures through issues like increased turnover or health costs.
  • Look at the big picture: Taken at scale, closing gender gaps helps create markets that improve the operating and investment climate for the private sector. For instance, where childcare is supported, women are more likely to receive wages, increasing the talent pool for businesses. In India, recent legislation requires 26 weeks of maternity leave for all businesses employing more than 10 people. Where employers offer childcare, workers’ peace of mind results in higher productivity.

The business benefits for investing in women are real: companies just need to look in the right places and work on a holistic strategy to reap them.

Learn more:

Read Investing in Women: New Evidence for the Business Case at IFC.org/GenderSmartBiz or join the conversation on social media with @WBG_Gender and #Gendersmartbiz.