The gender agenda

Despite growing efforts to address the number of women at the top of City firms, the UK’s business landscape is still far from a level playing field. So what’s being done to fix the problem – and could the need to kick-start the economy hasten the pace of change?

Given the year is 2020 and the world has come a long way on issues of equality, you could be forgiven for thinking – or indeed hoping – that genuine gender equality would be close to reality within the UK’s business and finance worlds. 

However, as recently as last year, the government-published Alison Rose Review of Female Entrepreneurship showed that huge leaps are still needed to reach parity. 

The report identified that 92% of partners in venture capital firms are male – opening the door to possible unconscious bias against investing in female entrepreneurs – and that up to £250bn could be added to the UK economy if women launched and grew businesses at the same rate as British men. 

In the review’s foreword, NatWest Group CEO Alison Rose stated: “The disparity that exists between female and male entrepreneurs is unacceptable and holding the UK back. The unrealised potential for the UK economy is enormous.”

So what’s being done to rebalance the scales and ensure that women aren’t missing out on the opportunities available – and that the economy isn’t missing out on them either?

Female funding challenge

The Rose Review identified three main action points to help female entrepreneurs thrive in the UK.

The first was to increase the funding directed towards women. One pioneer making progress in this area is Suzanne Biegel, Founder of Catalyst at Large, a consultant in gender-lens investing, spanning entrepreneurship, philanthropy, investment and international development. 

“I didn’t initially intend to become any sort of forerunner,” explains Biegel. However, after selling her successful online learning and communications company to a multinational, Biegel found herself with capital to deploy. 

“I started investing in other women entrepreneurs because, through my work, I was seeing all these amazing businesses that no one else seemed to know about. There was this wealth of talent and opportunity, but these women were undercapitalised.” 

It became clear to Biegel that there was a bigger issue at play. “I was quite public about my investing, because I realised that there were so few women investors to be seen,” she says. “Even at angel level and in the venture capital world, there were very few women in the picture. 

“At the same time, I joined a philanthropic group that focused on social issues that disproportionately impact women and girls – including financial inclusion, access to reproductive health services, and girls’ education.

“And slowly it became clear that women were under-represented, and under-catered for, in multiple areas of business – even those where women were disproportionately the buyers.”

Spurred on by her discoveries, and by an increasing number of funds and associates coming to her for guidance, Biegel now advises other companies on what she describes as today’s megatrend: gender-smart investing. 

“Put simply, it involves investing for returns in organisations with the structure and ambition to recognise the power of women in business and as customers.”

One such project is the Gender-Smart Investing Summit, an invitation-only forum bringing together 300 of the world’s brightest minds in gender-lens investing, which is supported by UBS. 

“We have data that proves there is a financial premium, a diversity advantage, to investing in companies that feature women throughout the organisation – as founders, at the cap table, on the board. 

“But there’s also a risk mitigation factor: there’s evidence of decreased volatility when you have a gender balance. So whether you’re an offensive or defensive investor, you should be looking at this,” says Biegel.

Making diversity more transparent

UBS’s role in the Gender-Smart Investing Summit is no accident: the bank has been exploring and promoting the need for greater gender equality within the industry. 

“Our mission is to help our clients drive the UN’s Sustainable Development Goals, one of which is to achieve gender equality and empowerment for all women and girls,” explains Michaela Seimen Howat, Sustainable Debt Strategist in the Chief Investment Office, Wealth Management, at UBS. 

As such, the bank launched the Global Gender Equality ETF (exchange traded fund) in 2018, providing exposure to global companies perceived to be leading the field in terms of gender equality. It became the fastest fund of its kind to attract $100m, and today stands at around $310m.

“If you want to create new investment opportunities you also need to benchmark them,” says Seimen Howat. “And if you want to encourage investment in corporations that have better diversification, you have to make it easy for people to select them and understand why that investment is worthwhile. 

“The data shows that corporations that are better diversified in the workforce also perform better financially, because they dip into a deeper pool of talents.” 

Backing this up is research by McKinsey & Co, which shows that companies with the greatest gender diversity on their executive teams are 21% more likely to outperform their peers on profitability and 27% more likely to create superior value.

According to Seimen Howat, investors are also increasingly making decisions based on other factors. 

“The demographics are changing: the proportion of investors who are Millennials and/or female is increasing and, with that, other aspects of businesses are growing in importance, such as their environmental and ethical standards.”
 
Equality of opportunity

The second key area identified by the Rose Review was around providing greater family care support for female entrepreneurs – an issue made even more relevant by the impact of the Covid-19 pandemic. 

Research from the University of Cambridge in April showed that women’s lives and careers were being disproportionately affected by lockdown, with working women spending more time on childcare and home schooling than men. 

While the reasons for this are complex, one thing is clear: more is needed to help support women in this area. 

Following the Rose Review’s recommendation for the creation of banking products aimed at entrepreneurs with family care responsibilities, the hope is that the financial world will rally to create more appropriate products to meet these challenges. 

But there’s also work to be done within the financial world to enable women who wish to have a family to do so without it negatively impacting their career progression. 

Some, such as UBS, have worked hard to ensure such programmes are in place. But others are lagging behind.

“There is no single thing that any politician or business can do to flip a switch and redress the gender inequality in this industry,” says Richard Sheldon, Group Partner at Appleby Global and a Guernsey-based specialist in employment law. 

“But there is an increasing focus being given to the topic. The Channel Islands are heavily influenced by the City when it comes to human resources practices, and in July, Guernsey approved the introduction of equality legislation that will help propel things forward – going further than Jersey has to date. 

“At a structural level, that will force employers to look at pay and reward in a different light, and in time that will help to encourage a broader group of talent to the island.”

The topic isn’t only important because of its social and ethical implications, according to Sheldon. “In no business do you want one singular type of voice in the room, because there is no challenge. Diversity should be encouraged both because it is right from an ethical point of view, but also because it’s better business. And that goes for diversity of ethnicity, ability and sexuality as well as gender.” 

Seimen Howat agrees. “Investors want to buy into companies that are well managed and sustainable, and diversity is at the heart of that. 

“If a business isn’t focused on having diverse staff, services and products, it’s already at a disadvantage – because it needs to mirror its client base, and more often than not that client base is diverse.”

Leading the charge

The third major opportunity flagged by the Rose Review was to make entrepreneurship more accessible for women by increasing support locally through relatable and accessible mentors and networks. 

This is an issue that’s already being tackled in the City, including the initiatives led by Biegel and UBS, as well as on the Channel Islands. 

In Guernsey, Sheldon points to a number of initiatives to bring more diversity to boards via non-executive director forums that offer mentoring and experience to women and people from different backgrounds. 

“There is recognition of the need for outside challenge and different voices at the table,” says Sheldon. “The new generation of business leaders coming through have grown up with equality as their default mentality, at least in theory. So in time, and with these initiatives at work, greater equality should be achieved.” 

Sheldon also points out there are key players championing the topic of diversity locally, such as Dave Sauvarin, Chief Executive of Northern Trust’s business operations in the Channel Islands. 

“Dave is of that next generation whereby he goes out and actively pushes equality both from a business and a recruitment perspective,” says Sheldon. “He’s on all the local equality committee boards and is making sure that gender equality is an essential consideration for Channel Islands businesses.”

The way forward

There’s no silver bullet when it comes to redressing the longstanding gender inequality in businesses, but growing levels of awareness suggest that there is hope for the future. 

“This isn’t something that will ever be fixed by a few hours’ unconscious bias training,” says Biegel. “It’s culture work. Investors need to realise their voice has sway, and to invest in companies that are doing better when it comes to diversity. 

“Companies need to hold themselves accountable and ask for help when seeking new team members, because there’s a whole world of amazing women in business out there.”

Alongside its recommendations, the Rose Review threw down the gauntlet that, by 2030, the number of female entrepreneurs in the UK should increase by half. 

If not because it is right ethically, gender equality will surely be achieved eventually, even if the driver is the positive impact it will have on the economy’s bottom line. Smart investors are already voting for diversity – with their capital.