How a gender smart strategy can boost your growth and returns

Transcription

1 Public How a gender smart strategy can boost your growth and returns EBAN Webinar Olga Miler, Managing Director, UBS Global Wealth Management Rachel Whittaker, Director, CIO UBS Global Wealth Management June 25, 2018

2 Objectives 1. Understand gender lens investing 2. Apply a gender lens in investment decisions 3. Engage with the companies you invest in to promote valueadding gender diversity strategies Source: Global Impact Investing Network 1

3 Start with a question: Do you apply a gender lens to your investments? 1. Always 2. Gender lens is one criteria among many I consider 3. I don't yet but I'm thinking about it 4. I never consider gender issues in my investments Source: Global Impact Investing Network 2

4 Gender lens investing Investment strategies that 1. seek to intentionally and measurably address gender disparities and/or 2. examine gender dynamics to better inform investment decisions. Source: Global Impact Investing Network 3

5 The economic opportunity Growth of wealth 7% 6.7% World's largest consumer market 6% 1.5% points 70-80% of household purchasing decisions 5% 5.1% Multiplier effect 4% Female Male Spending of over $150billion annually Sources: Boston College Center for Wealth and Philanthropy, 2009 / Forbes: Want a piece of the 18 trillion dollar female economy? May by Michelle King / Harvard Business Review: The Female Economy, 2009, M.Silverstein, K. Sayre / When Women Thrive, Businesses Thrive (EDGE), Mercer Management, Executive Summary,

6 70% of intergenerational wealth transfer in the USA will be inherited by women 40% Of new entrepreneurs in the USA are women $ bn collective credit gap of female-led businesses in EM Sources: Boston College Center for Wealth and Philanthropy, World Bank: Expanding Women's Access to Financial Services, 2014

7 The economic case for diversity US companies with higher gender diversity in leadership are more profitable. Russell 1000 US companies with gender diverse leadership Five-year average, in % Notes: Based on the Russel 1000 companies. Companies have a balanced gender proportion when the amount of women in the board of directors and senior management is at least 20%. Notes: Bloomberg, UBS, 24 th February

8 Premium on ROE 15%+ +18% Companies of women in senior Management +20% Tech companies Source: September 2016, CS, The CS Gender 3000: The Reward for Change, p.22/23 7

9 Recent data shows the greater the diversity in management, the better the dividend +4.6% to +14.8% Source: September 2016, CS, The CS Gender 3000: The Reward for Change, p.27 8

10 The value of diversity throughout the workforce Companies that are diverse across the whole organisation tend to have higher returns MSCI World companies with greater gender diversity have higher profitability 3-year average, in % 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% ROA ROIC ROE ROA ROIC ROE ROA ROIC ROE Women Executives Women Managers Women in Workforce Other Gender diverse Notes: Based on the MSCI World company constituents in December Companies are considered gender diverse is they score above average for the relevant metric. Source: MSCI World, Thomson Reuters, UBS 9

11 Gender diversity pays off for companies and investors First bank to have 50% women in leadership roles Among the most profitable banks in the developed world Pledged balanced workforce by 2025, 40% in leadership World's largest and fastest growing digital agency No gender pay gap One of 2017's most innovative companies Diversity a focus in all hiring: 42% of their team are women Fastest growing workplace software ever 10

12 Gender diverse portfolios tend to outperform the market Performance of a portfolio of companies with more than 20% women in senior leadership positions versus MSCI World 31 December June 2018, in % Gender portfolio MSCI World Index Model framework: At least 2 women member of the board of directors' or 20% member of top management. Within the framework of backtesting, we restructured our portfolio every three months to take account of potential changes in the board of directors or senior management. This means that the number of companies included has changed over time. In our analysis, we are trying to control the country allocation as part of the weighting of the MSCI World Index to select not only Scandinavian and Central European stocks. Sources: Bloomberg, UBS, 5 June

13 Diverse investment teams do better For funds with vintage years the net 16.1% net IRR IRR of diverse funds exceeded the benchmark as well as exceeding the pooled IRR for all vintage buyout and growth funds during the period (12.2%). Source: National Association of Investment Companies (NAIC), Preqin 12

14 Companies with diverse founders do better 63% better In a study of 300 of its portfolio companies First Round Capital found that the teams with at least one female founder did 63% better than the all-male founder teams when looking at how much the company values have changed since the firm s investment in them. Source: First Round Capital: The 10 Year Report 13

15 An untapped opportunity? 85bn 2% 1.9bn 12% Source: Fortune, 2017: 14

16 Gender diversity delivers social dividends too Sources: UN SDG, UBS 15

17 Gender lens impact investing Sources: UN SDG, UBS 16

18 Gender lens due diligence Look for (and avoid) bias in product and service design Look for balanced company structures from the start Use your investment and funding as an opportunity for engagement 17

19 3 Opportunities 1 Look for (and avoid) bias in product and service design 18

20 Source: Splinter News, 2015 ; Techcrunch, 2016; The Atlantic, 2016; News Ltd.,

21 "Fixing it is great, but constantly retrofitting for women is not the best road forward" Londa Schiebinger, Stanford Professor Source: Stanford: Ignoring diversity hurts tech products and ventures 20

22 Successful products require broad collaboration "So this is my theory as to why I see a disproportionate number of very successful technology product managers that are female. A balanced ego, strong emotional intelligence, humility, and extraordinary stamina." Camille Hearst Lea Hickman Mina Radhakrishnan Marty Cagan Jane Manning Martina Lauchengco Kate Arnold Source: Behind Every Product: & Why Women Make the Best Product Managers, Silicon Valley Product Group,

23 What can you do? Look for diversity in the product leadership and design team gender neutral products are difficult to make by teams of one gender Does the company segregate customer feedback and analytics so they can spot differences test the BETA as much as you can on diversified groups Do they apply a balanced strategy CMO, COO, advisory board, influencer and network strategy 22

24 3 Opportunities 2 Look for balanced company structures from the start 23

25 "It's much easier to change the course early on than trying to steer a really massive ship later" Tracy Chou, Project Include Source: Stanford: Ignoring diversity hurts tech products and ventures 24

26 Reality check: MIT entrepreneurship course Sources: Stanford: Ignoring diversity hurts tech products and ventures; 2017; Jiacheng Yang, Learning Entrepreneurship at MIT 25

27 Network effect Systemic issues around diversity that get ignored early on just might grow into deal-breakers that make a hot, young startup less attractive to potential suitors in the years ahead. Mike Pena, Stanford Sources: Stanford: Ignoring diversity hurts tech products and ventures; 2017; Jiacheng Yang, Learning Entrepreneurship at MIT 26

28 What can you do? Look for companies that make diversity a priority And that make hiring processes neutral re-write job ads to be gender neutral (e.g. Textio), blind code test hiring process Reach out to women or networks for referrals Use supply chain power: demand from suppliers to adhere to unbiased standards 27

29 3 Opportunities 3 Use your investment and funding as an opportunity for engagement 28

30 Show it! 41% of new entrepreneurs are women 10% of VC capital went to femaleled firms Rising attention rising opportunities, e.g. female angel networks, conferences, funds Differentiation and early mover don't shy away from showing what you are doing, e.g. web-site, communication Network effect expand contacts, and customer base Source: // Bloomberg 29

31 What can you do? Use a gender lens to expand, rather than to narrow Assess start-ups: workforce consumers impact value chain Encourage investee companies to take a gender lens approach Demand transparency Example questions (selection) Is it a topic? Principles, biz data, biz targets split? Organization: Founders, non-ex board, workforce, advisors? Customers: who are they? Women as influencers? Expansion? Products: innovation opportunity? Bias avoided? Suppliers? Marketing and PR: unbiased? New opportunities to leverage? Society: potential impact for broader society? Source: Wharton: Gender Lens Investing 101 / Stanford Social Innovation Review, 2014: The Rise of Gender Capitalism, S. Kaplan, J. Vanderburg 30

32 Use existing frameworks and resources for inspiration Gender balance in leadership and workforce Executive and non-executive board Senior management Workforce Promotion and career development Equal compensation and work-life balance Fair remuneration / equal pay Parental leave / flexible work options Policies promoting gender equality Training and career development Recruiting strategy Freedom from harassment / safety at work / human rights Supplier diversity / social risks in supply chain Commitment to women's empowerment / gender audit Source: equileap.org,. Bloomberg 31

33 End with a question: Will you apply a gender lens to your investments in future? 1. Always 2. Gender lens will be one criteria among many I consider 3. I still need to think about it 4. I will not consider gender issues in my investments Source: Global Impact Investing Network 32

34 "There are 3 kinds of companies: those who make things happen; those who watch things happen; those who wonder what just happened." Philip Kotler Celebrate diversity 33