Transforming conventional private equity investment to gender smart investment requires a fundamental mindset shift and fresh approach, one that can help realise a new, more inclusive paradigm for value creation and communities.

Capital is a powerful tool for mobilising activity and achieving transformative change. Women can lead the charge recognising that their empowerment will enable women to realise their potential as leaders of economic and social development and agents of change in their communities. There are significant opportunities including in sectors where there is a demand-supply mismatch such as healthcare and education, food systems and climate resilience. Perhaps nowhere is this more evident than in Southeast Asia, which is amongst the fastest growing and most diverse regions in the world.

Women are often left out of the equation due to a complex mix of institutional, cultural, economic, and political factors. The available data paints a clear picture: the biggest challenge to close the gender gap is wage and labour force participation. Yet, women control a majority of household buying power directed to food, healthcare, education, childcare, consumer durables, and financial services and represent a majority of the workforce in a number of these sectors.
In this essay we first outline why focusing on the potential of women as leaders, entrepreneurs, investors, consumers and decision-makers is integral to shared prosperity and ripe for integrating impact considerations holistically into the investment cycle. Then we share some key lessons from our experience for how this can be achieved with measurable, positive social and environmental outcomes for communities alongside competitive financial returns.

1. Sweef Capital – Putting diversity and empowerment at the heart of investment decision-making

Sweef Capital’s unique investment approach aims to unlock the potential of women in a growth driven private equity context. The investment thesis is grounded in strong fundamentals and impact driven outcomes. Across Asia alone, ~50 million people are expected to enter the middle class in the next 2 years driving significant consumer growth and women are expected to control most of the consumer purchasing power.

The evidence also shows that women’s entrepreneurship is key to economic stability, GDP growth, sustainable development, innovation and business strength. Approximately a quarter of small and medium enterprises are owned by women entrepreneurs in Vietnam, Indonesia and the Philippines. Across Thailand, Philippines and Malaysia women entrepreneurs hired 17% more women than male counterparts and women use their incomes differently, spending 90 cents of every dollar they earn on their families, including on their children’s education, health and nutrition compared to 30-40 cents devoted by men, creating a strong multiplier effect. And yet, access to capital remains low, constraining potential. IFC data indicates $900 billion to $1.1 trillion of SMEs’ capital requirements are unmet in East Asia, with a disproportionate impact on women entrepreneurs. On average, only 5 to 6% of micro-enterprises, 12 to 15% of small firms, and 17 to 21% of medium-enterprises led by women have access to appropriate capital.

This aligns with our experience. Our investment thesis is that bringing gender into focus is a good investment; good for women and good for society. We see positive trends in women entrepreneurs re-imagining solutions to address systemic underinvestment in key sectors. We actively seek investment opportunities where impact is integral to the business model and growth prospects and where gender equality and diversity are pivotal value drivers for the enterprise’s leadership, operations and value chains.

We have learned that focusing solely on investing in women entrepreneurs is necessary but not sufficient. Our diversity-driven strategies go broader to include women’s multiple roles and contributions – as entrepreneurs, business leaders, employees, and consumers. Our approach looks to companies led by women; and companies operating in sectors with high prevalence of women employees;, providing products and services that meet the unmet needs of women and girls, and operating as role models by demonstrating a clear commitment to gender equality and to diverse and equitable workplaces. We literally score the performance and potential for our investments applying the Sweef Capital Gender ROI™ which looks at all of these dimensions. Then we work actively with our enterprise partners to improve their performance and embed diversity as a value driver over the life of the investment.

We find opportunities at the intersection of growth and unmet or underserved needs. These include healthcare, education, sustainable foods and consumer goods, and climate resilience. Women are starting businesses in response to a perceived need based on their personal experiences. These sectors, where women figure prominently in leadership and workforce, present opportunities to apply diversity and gender equality interventions that lead to improved outcomes across multiple dimensions. We observe encouraging trends among women entrepreneurs who are envisioning innovative solutions to tackle the issue of a chronic underfunding of these vital sectors against the backdrop of strong and growing consumption demand.

Taking the example of healthcare: Women are central actors in the health system representing 70% of the health workforce., They typically experience greater barriers to accessing effective care, and utilise their consumer power to invest in the health and well-being of their families. We have identified high potential women led enterprises across the health value chains – in biotechnology, telehealth, medical devices, and diagnostic medicine as well as medical infrastructure, including women-led hospital addressing community family health needs against a environment across the region of limited access, underinvestment in infrastructure, chronic overcrowding and lack of skilled healthcare workers.

Access to education is a chronic problem where learning opportunities are not equally available and is reflected in the labour market outcomes for women. Access to education, from early childhood to adulthood, affects opportunities and choices through people’s lives. The impact reverberates into employment options, life choices and chances and economic outcomes. The World Bank puts quantifiable losses from girls not completing 12 years of education between US$15 and $30 trillion in future earnings globally. Recognising these gaps, women are stepping forward with solutions in the care economy and in education solutions to provide their children and communities with stronger foundations (refer to Box 1 below for example).

Women play a vital role in the global food system, representing almost half of the total agricultural workforce in low-income countries and are the primary providers of food to their families. Globally, women are responsible for 85% – 90% of household food preparation and most of the food purchases. There is a clear opportunity to invest in developing women’s power as producers and consumers of food products to drive food security solutions. Women entrepreneurs are leading the sustainability charge in business and investing, including recognising the opportunities and starting businesses that provide more sustainable nutritious options. Women tend to take a very practical approach to sustainability, both in their personal lives and in businesses. Trending shows that they are more willing to make changes for a healthier family, healthier economy, and a healthier planet.

Climate resilience is another key theme as women are disproportionately affected across multiple dimensions: 8 in 10 people displaced by climate change are women; women and children are 14x more likely to die in a natural disasters, and bear the brunt of dealing with climate shocks, lack of access to clean energy, drinking water and sanitation and the care burden of effects of pollution. This exacerbates gender inequalities already affecting women, gaps critical to achievement of the United Nations Sustainable Development Goals (SDGS).

Women can be key contributors to climate action and resilience. Where women are at the decision making table they are leading board level sustainability conversations. Companies with 3 or more women in senior positions score better across all dimensions of organisational performance. Firms with a third of female directors held emissions at 0.6% compared with 3.5% from those without any women on the board. Enterprises out-performing on climate have a target market growing in decision-making power and influence who will most likely make purchasing decisions based on sustainability criteria.

2. Working at the intersection of Gender and Impact to drive value creation

We have learned that a gender and empowerment lens illuminates the intersectionality of impact. Women are both disproportionately affected by the issues of climate change and lack of basic services and access in healthcare and education and understand the needs of their communities and are well-placed to offer solutions. Just as issues are compounding, the solutions can be symbiotic. As women- broadly half of the population- are often disproportionately affected, applying a gender lens illuminates new information, challenges assumptions, and gives content to a paradigm that puts resilience, opportunity, and inclusion at the centre.

“Gender equality must be at the forefront of global efforts to address the climate crisis. Women and girls are disproportionately affected by climate change, and their leadership and active participation in climate action is essential for building a more just and sustainable world.”
— UN Secretary-General António Guterres.

When women have access to economic resources and opportunities, they can contribute to the development and growth of their families, communities and societies. Investing with that focus can provide women the platform to actively shape and grow innovative solutions. And those solutions can have a positive impact across multiple dimensions. For example, solutions building capability in science and technology education can drive impacts across multiple sustainable development goals including health and climate resilience and food security.

3. Gender Smart Investment In Practice

Sweef Capital has grounded its approach to investment and impact in a deep understanding of these market factors to create an institutional platform for investment that is differentiated by its focus and scalability.
In our experience the potential of this approach really comes to life through its application to investment opportunities.
The way that the investment and impact analysis complement and reinforce one another is illustrated in Box 1 applied to our investment in a woman-led Vietnam based education company increasing access to science and technology education available to more children including to girls.

Ultimately, gender smart investments can help create more value for different stakeholders – individuals, families, investors, portfolio companies, and communities. Driving more private capital through a gendered lens, investing, and building the examples of success and lessons learned will help create a track record and encourage increasing investment. All organisations can look at their own performance and we encourage more organisations to join us in making a commitment to diversity and gender inclusion as an integral part of their approach in a structured and disciplined way and cultivating a culture and investment philosophy that values the impacts created for women as leaders, in the workforce, through value chains and in our society. Empowering women economically means greater access to economic resources, opportunities, and skills, they become active agents of change fostering environmental sustainability, social inclusion, and shared prosperity which form the foundation of a more sustainable and equitable society. That benefits us all.