Taking small steps together: incorporating a gender lens approach for small and growing businesses - a case study

ABSTRACT

Through laws and everyday practices, formal and informal institutions exert gendered effects that increase inequalities between women and men. Impact investing firms can act as catalysts for shifting informal norms and customs that negatively affect women as entrepreneurs, employees, and suppliers. Gender lens investing (GLI) plays a critical role in guiding investments with the objective of women's empowerment and more equitable workplaces and communities. Although various GLI metrics and screening tools exist, little research has examined how small impact investment firms can increase gender inclusive policies and practices in existing portfolios of social enterprises led by mixed gender founding teams. This paper presents a case study that chronicles the initial steps taken by NESsT, a small impact investing firm, in piloting gender inclusive policies and practices in its portfolio companies and internal operations. We discuss the pilot results, findings, key takeaways, and recommendations for integrating GLI into investment portfolios.

KEYWORDS:

• Gender lens investing
• impact investing
• women’s economic empowerment
• institutional theory
• gender smart investing
• small businesses
• social enterprises

1. Introduction

Gender lens investing (GLI) is a relatively new and promising approach that enables impact investors to make strategic and inclusive decisions that yield more equitable outcomes and stronger portfolio company performance. Globally, women's labour force participation lags behind men's (World Economic Forum 2020) and women experience disproportionately higher barriers in accessing resources and opportunities than men to participate in the workforce and benefit from that participation (Buvinic and Furst-Nichols 2016). As such, GLI offers a particularly timely and needed strategy to enable investment funds to contribute to reducing such gender gaps.

The COVID-19 pandemic has exacerbated these challenges for both the investment community and small and growing businesses (SGBs); the consequences of which are likely to be extensive and long lasting (Zhou et al. 2020). Not only has the pandemic affected workplace gender disparities, it has also led to increased risk of gender-based violence (GBV) globally, where economic and social stresses are combined with measures to restrict movement and contact (United Nations 2020).

Investment funds can play a key role in mitigating the negative effects of the pandemic in their portfolio companies by identifying opportunities to increase resilience to future shocks from a gender lens perspective through improved access to childcare support, healthcare solutions, personal protective equipment, and flexible working options for men and women employees and suppliers alike. It is especially important for investment funds to continue working closely with portfolio companies to provide needed tools and support to ensure safe and equitable working environments for all employees and suppliers. Women must be active in decision-making and leadership positions, and involved in the design of sustainable solutions.

While GLI offers a promising tool to address such timely challenges, there exists a gap in the literature regarding its universal definition, application, and impact. This paper takes a multidisciplinary approach to understand how GLI is defined and assess motivations and outcomes that drive GLI adoption. We present a mixed-methods case study of a small investment fund's recent adoption of a GLI strategy to highlight such drivers, challenges, and outcomes.

1.1. Research questions

This paper contributes to the growing body of GLI literature in three key ways. First, we develop a theoretical framework drawing on institutional theory and gender and feminist development perspectives to analyse GLI strategies. Second, we present a case study of a small impact investment firm's adoption of a GLI strategy in its existing portfolio. And third, we highlight the key elements that contribute to successful inclusion of GLI strategies in a cost-effective and rigorous approach that is likely to lead to sustainable outcomes. We then present recommendations for doing so. We address the following key research questions:

• How is GLI defined and what drives increased GLI?

• What steps need to be taken to incorporate a gender lens for impact investors in existing mixed gender/male owned SGBs?

• What challenges must be overcome by impact investors to successfully incorporate GLI practices?

• How can the impact of GLI practices be measured in SGBs with a cost-effective and rigourous approach?

2. Conceptual framework

2.1. Institutional theory and gender

Institutions house both informal and formal rules and procedures that structure social interaction by constraining and enabling actors’ behaviour (Helmke and Levitsky 2004, 727). Formal institutions are the visible ‘rules of the game’; they can adapt quickly to changing economic circumstances and are generally legally enforced. In contrast, informal institutions are the invisible ‘rules of the game’, made up of norms, values, acceptable behaviours, and codes of conduct. They tend not to be legally enforced. Change to informal rules occurs more indirectly, usually as a result of accidents, learning, natural selection, and the passage of time (North 1990, 88). Informal rules most often evolve to complement formal rules.

Institutions can be maintained for long periods of time, despite potential inefficiency (DiMaggio and Powell 1983; North 1990). The literature identifies several causes of inefficient institutional outcomes, including habitual behaviour, path dependence, lock in, and lack of formal and informal rule alignment (Table 1).

Table 1. Causes and influences of inefficient institutional outcomes.

Cause	Influence	Outcome	Source
Habitual behaviour	Informal institutions provide a sense of stability.	Informal rules have tenacious survival ability, even after formal rules change.	North (1990)
Path dependence	Incremental institutional change that is seldom discontinuous.	Unproductive paths may persist due to historical influences.	North (1990)
Lock-in	A symbiotic relationship between existing institutions and organizations that evolves as a consequence of the incentive structure provided to those institutions.	Even when the formal rules change, organizations that benefitted from outdated informal rules that would otherwise lose benefits if they adopted new informal practices aligned to formal rule changes will continue to participate in detrimental informal rule practices in order to retain positions of power.	North (1990)
Lack of formal and informal rule alignment	Formal and informal institutions clash after formal rules are changed.	Noncompliant behaviours proliferate and result in the formation of underground economies.	Feige (1997)

Formal and informal rules can exert a gendered effect, both nominally and substantively (Acker 1992; Chappell and Waylen 2013). Nominally, institutions are gendered through gender capture: men continue to inhabit positions of power in greater numbers than women. Institutions are substantively gendered through numerous mechanisms that result in gender bias (Htun and Piscopo 2010). For example, both women and men are significantly more likely to vote to hire a man applicant versus a female applicant with the same academic record (Steinpreis, Ritzke, and Anders 1999; Moss-Racusin et al. 2012). Informal institutions are gendered through the acceptance of the ‘masculine power advantage, widely viewed as a cultural norm and informal rule for the proper arrangements of political and social power’ (Duerst-Lahti 2008, 165). This process is not due to a conscious strategy to exclude women but rather a process reinforced through repeated and often subtle accumulation of small advantages by men (Burns 2005, 138; Lovenduski 2005, 50). As a result, organizational rules, routines, policies, and discourses have overlooked women's needs and interests (Acker 1992, 567; Hawkesworth 2005, 147).

Formal rules that do not ensure gender equality contribute to barriers limiting women's access to capital, networks, resources, and land titling (World Bank 2020). But while reforming formal rules may end officially sanctioned gender bias, it will not necessarily overcome all institutionalized forms of male bias as tenacious, informal rules may undermine formal rule change (Waylen 2013, 216).

Organizations, such as existing or potential firms, will adapt their activities and strategies due to the opportunities and limitations in the formal and informal institutions (North 2005). Institutional development can be intentionally affected by economic agents, such as entrepreneurs, and by individual and collective behaviour (North 2005; Welter and Smallbone 2011, 114). Prevalent economic incentive structures influence these behavioural shifts for entrepreneurs (Baumol 1990). Increasing evidence indicates that gender inequalities are detrimental to a company's performance as well as long term economic growth and development (Forsythe, Korzeniewicz, and Durrant 2000; McKinsey 2018; IFC 2019). This type of evidence can ‘incentivize’ entrepreneurs to adopt GLI practices and impact investors to adopt GLI strategies.

2.2. Feminist perspectives in development

GLI can play a critical role in guiding investments with the objective of women's empowerment and more equitable workplaces and communities. Feminist perspectives in development call attention to social norms that shape differences in men's and women's ability to access resources, benefit from those resources, and control those benefits to improve their well-being (Boserup 1970; Klasen 2018). Specifically, they help to illuminate and address differential power dynamics between individuals within and between communities and social groups, paying particular attention to the construction of power relationships and the influence those have on individuals, groups, and communities (Rocheleau 1996; Kaijser and Kronsell 2014). Intersectionality evolved within feminist theory as an analytical tool to shed light on how structures of power emerge and interact, defined as ‘the interaction between gender, race and other categories of difference in individual lives, social practices, institutional arrangements, and cultural ideologies and the outcomes of these interactions in terms of power’ (Davis 2008, 68).

2.2.1. Women's economic empowerment

Tornqvist and Schmitz (2009, 9) define women's economic empowerment as

the process which increases women's real power over economic decisions that influence their lives and priorities in society. Women's economic empowerment can be achieved through equal access to and control over critical economic resources and opportunities, and the elimination of structural gender inequalities in the labour market including a better sharing of unpaid care work.

Women's economic empowerment highlights the need for not only equitable participation of women in the paid labour force, but also eliminating barriers women face outside of the workplace to access, control, and benefit from that participation (Buvinic and Furst-Nichols 2016). There is evidence to support that women's increased access to opportunities and resources reduces the likelihood of household poverty and increases positive wellbeing outcomes, human capital, and capabilities (Kabeer 2012).

Intersectional approaches to GLI can pinpoint where additional services or support are required. For example, very poor women may need more intensive services to support their ability to engage in off-farm paid labour opportunities, such as skills training, childcare, transportation costs, and financing mechanisms than do more economically advantaged women or those more centrally located to markets (Buvinic and Furst-Nichols 2016). Working women, in general, are still responsible for gender normative care tasks, such as childcare, leading to increased levels of time poverty compared to working men. Therefore, working women must make important trade-offs between their time allocation to productive and reproductive tasks (Kabeer 2012). For example, working women may not accept promotion opportunities due to the associated increase in time demand, enabling male colleagues to rise faster into leadership positions (Sirianni and Negrey 2000).

Persistent gender gaps result in poorer economic outcomes in almost every sector (Klasen 2018). Globally, women's economic participation has regressed; approximately 55% of women participate in the formal global labour market compared to 78% of men, resulting in negative economic outcomes (World Economic Forum 2020). For example, in Egypt – where women's workforce participation is only 24.7% – Booz and Company (2012) estimated that if women's participation rates matched those of men, it would result in a 34% increase in Egypt's total GDP. For another example, less than half of the 190 economies covered in the World Bank's 2020 Women Business and the Law report have legislation mandating equal remuneration for work of equal value, an important area of reform for governments hoping to reduce the gender wage gap (World Bank 2020).

Depending on the context, impact investors can play an instrumental role in shifting discriminatory formal laws or informal social norms and practices that continue to negatively affect women as entrepreneurs, employees, and suppliers. GLI practices adopted by impact investing firms can facilitate stronger economic, wellbeing, equality, and empowerment outcomes both in the workplace and the broader community.

3. Literature review

Over the past decade, GLI has grown from a niche strategy adopted by a small group of impact investors to a global interest supported by public and private stakeholders. There are currently at least 192 ‘named’ active gender lens investment vehicles, totalling assets under management (AUM) of $7.7 billion USD across public and private markets, representing a 61% increase since 2018 (Turner 2018). Here we present a discussion to synthesize how GLI has been defined by investment actors and what drives GLI adoption.

Yet, no universally adopted definition for GLI currently exists. Investment actors have developed their own working definitions and rationale. The first reference of GLI focused on three common strategies or ‘lenses’ for supporting women and girls through investing: (1) access to capital; (2) workplace equity; and (3) products and services that benefit women and girls (Criterion Ventures 2010). These continue to serve as the foundational criteria for GLI activities.

Table 2 presents subsequent definitions operationalized by a selection of other investment actors from the public and private sector.

Table 2. Gender lens investing definitions.

Source	GLI Definition
Criterion Institute (2015)	Incorporating a gender analysis into a financial analysis in order to get to better decisions.
VERIS (Carlile et al. 2015)	Investments that support five areas: (1) women's leadership; (2) women's access to capital; (3) products and services beneficial for women and girls; (4) workplace equity; and (5) related shareholder engagement and policy work.
DFAT (2015)*	An investment approach that intentionally uses gender as a category of analysis and value to create both financial return and positive social impact that is actively measured.
GIIN (2019)	Investing with the intent to address gender issues or promote gender equity.
Intellecap (Maheshwari et al. 2019)	An intentional incorporation of gender analysis into financial due diligence during the investment process to promote social and/or economic empowerment of women in addition to achieving financial returns from the investments.
Value for Women (Marquez, Lazarte, and Moctezuma 2019)	The deliberate incorporation of gender factors into investment analysis and decisions in order to improve social and business outcomes.
ICRW (2020)	Integrating gender analysis into financial analysis. Gender-smart investing is the use of capital to simultaneously generate financial returns and advance gender equality.
Biegel et al. (2020)	Investments made with an intentional approach to look at gender factors in investments in order to get to better business, social, environmental, and investment outcomes, via mitigating risk, seeking opportunities, or both.
CDC Group, IFC (2020)	An investment strategy that seeks to intentionally and measurably use capital to address gender disparities between women and men, and to better inform investment decisions.

*DFAT = Department of Foreign Affairs and Trade, Australia; GIIN = Global Impact Investing Network; ICRW = International Centre for Research on Women; IFC = International Finance Corporation.

We see two main trends in how investors and stakeholders define and operationalize GLI. First, the GLI definition has evolved to incorporate different approaches. While some definitions maintain the original focus on women as entrepreneurs, employees, and consumers, other approaches articulate the need to look at additional categories, including (1) women as leaders; (2) women as suppliers in the value chain; (3) women as shareholders and activists; (4) do no harm to women in the community; and, (5) the use of gender smart technical assistance (Criterion Ventures 2010; Carlile et al. 2015; DFAT 2015; GIIN 2019; ICRW 2020; Maheshwari et al. 2019; Marquez, Lazarte, and Moctezuma 2019; Biegel et al. 2020; CDC, IFC 2020). For example, the Global Impact Investing Network (GIIN) (2019) includes a focus on women's representation in boardrooms under ‘women as employees and leaders’. Concurrently, some GLI definitions have shifted to fully integrate a gender analysis into financial analysis, highlighting the need to better understand the gendered nature of systems or structures on investment opportunities and values other mainstream investors may miss (Biegel 2014). A gender analysis, for example, would yield an articulation of specific gendered issues and considerations to address throughout the investment. A gender analysis could also unveil potentially hidden risks, such as a lack of diversity that can lead to long term blind spots in a company and decreased profitability (Anderson and Biegel 2015). For example, there is a tendency to undervalue the economic impact of women and girls as consumers. An investor could gain a competitive advantage by identifying women as decision-makers in consumer purchasing via a gender analysis.

In some cases, the focus has shifted from GLI to gender-smart investing (GSI); but in practice, both terms are used interchangeably. GSI may be more appealing to investors unfamiliar with GLI as it points more clearly to the benefits of incorporating gender inclusive practices as ‘smart’ investment strategies.

Second, there is an increasing demand to incorporate standardized metrics to measure GLI outcomes. In 2017, GIIN's definition identified two main approaches to GLI. The first approach focused on promoting women-owned businesses and female beneficiaries and the second focused on supporting gender equality within business operations (regardless of ownership). The second approach addressed gender from pre-investment activities (e.g. sourcing and due diligence) to post-deal monitoring (e.g. strategic advisory and exiting). For investors, this second approach examined companies in terms of their vision or mission to address gender issues and their organizational structure, culture, internal policies, and workplace environment. It included the use of data and metrics for the gender-equitable management of performance and to incentivize behavioural change and accountability (see GIIN 2019 for more detail).

The decision to adopt GLI strategies can be motivated by different aims and goals. We summarize the case for GLI from three different standpoints:

1. The social justice case;

2. The business case; and,

3. The case for small and growing businesses.

3.1. The social justice case

GLI can serve as an effective strategy to alleviate poverty and reduce gender inequality. Compared to men, significantly less women participate in the labour force globally, yet women allocate approximately 2.5 times more time to unpaid work as caregivers and on domestic, reproductive responsibilities than men (UN Women 2016; World Economic Forum 2020). Existing gender inequalities, such as lower labour force participation, lower wages, greater unpaid care responsibilities, and access to fewer resources and education experienced by women contribute to a gendered poverty penalty. This penalty accounts for approximately 5 million more women living in extreme poverty across the world, particularly in South Asia and Sub-Saharan Africa (Sanchez-Paramo and Munoz-Boudet 2018). Experts estimate it will take approximately 99.5 years to close the overall global gender gap (Cann 2018) and approximately 257 years to close the Economic Participation and Opportunity gender gap due to insufficient progress, which will be further hindered by disproportionate impacts of the COVID-19 pandemic (Cann 2018; World Economic Forum 2020).

Incorporating intersectional approaches to GLI can also pinpoint where additional services or support are required for women with intersecting identities. Indigenous women, black women, female-headed single parent households, poor women, or Lesbian, Gay, Bisexual, Transgendered and Questioning (LGBTQ) individuals may face additional constraints and need specific types of support (Gatome 2021).

Non-profit investment firms and funds, and philanthropic investors are often motivated by the social justice case for GLI, which are viewed as important drivers for achieving gender equality and women's economic empowerment outcomes through their investments.

3.2. The business case

Increasing evidence suggests that gender inclusion is a key strategy for improving business performance, efficiency, and productivity (Klasen 2018). Research has shown that:

• Companies with more women are more likely to introduce radical new innovations into the market (Díaz-García, González-Moreno, and Sáez-Martínez 2013).

• Gender diversity in executive teams is positively correlated with greater profitability and value creation (McKinsey 2018; IFC 2019).

• Higher percentages of women in leadership positions lead to higher performance levels (Calvert Impact Capital 2018).

• Gender diverse value chains lead to stronger relationships with the supply base, new business opportunities, and a more agile value chain (IFC 2016).

• Greater staff diversity positively correlates with better decision-making (Rock and Grant 2016).

There is also evidence that investments in female-founded startups deliver higher revenue. A 2018 study by Boston Consulting Group found that for every dollar of funding, female-led startups generated a return of 78 cents, while male-founded startups generated a return of only 31 cents (Abouzahr et al. 2018). In the investment market, lack of funding indicates that there is less competition for female-owned companies, which on average perform better than those with all male founders, rendering female-led companies very promising investment opportunities (Ibid).

Commercial and for-profit investment firms and funds are more likely to be motivated by the business case for GLI, which is viewed as an important driver for achieving improved performance through investments.

3.3. The case for small and growing businesses (SGBs)

Few studies have demonstrated the benefits of gender inclusive practices specifically for SGBs.¹ Calvert Impact Capital, an impact investing firm and an early adopter of GLI strategies, identified positive effects from GLI in its portfolio. A recent performance analysis found that, on average, companies with the highest percentage of women on boards and in leadership positions outperformed those with the least (Calvert Impact Capital 2018). Other research has identified negative effects of implicit gender bias, sexual harassment, groupthink, and gender stereotyping on businesses regardless of size or sector (Chan et al. 2008; Rock and Grant 2016; Braun et al. 2017; Keplinger et al. 2019). Companies and workgroups with the lowest prevalence of gender-based harassment are often those with the greatest gender balance (ICRW 2018). These findings are relevant for SGBs. Unequal opportunities for women can also directly affect a company's bottom line by diminishing its image with employees, consumers, and supply chains (Business for Social Responsibility 2019). At the same time, including gender inclusive practices in the decision-making process can increase a company's reputation and lead to greater sales and efficiency (Turban, Wu, and Zhang 2019). SGBs can also use their gender-inclusive activities to attract more funding from other impact investors (Abouzahr et al. 2018).

SGBs are more likely to be motivated by evidence that GLI strategies support increased business performance. Even social enterprise SGBs are driven by the need to balance efficiency with impact that could be derived from incorporating gender inclusive policies and practices.

4. Piloting gender lens strategies in NESsT's impact investment fund

This section presents a case study on NESsT, an impact investing firm, and its recent adoption of a GLI strategy for its portfolio of SGBs. We provide background on the firm and its portfolio of companies, and present the methods, analytic framework, limitations, findings, and recommendations from the case study.

4.1. Background

NESsT is a US-based 501(c)3 organization and impact investing firm committed to transforming lives by investing in socially driven SGBs that empower the most underserved and vulnerable communities. In 2019, its incubation programme and fund included 19 social enterprises located in three emerging economies: Brazil, Peru, and Poland.² NESsT chose to fund these 19 social enterprises because of their social missions and business models geared towards creating quality jobs for vulnerable populations. Although NESsT did not originally focus on gender equality as a target metric of its 2019 portfolio, half of the jobs created by these companies employ women, more than half of these companies are women-owned (51%), and 44% of portfolio companies’ senior management teams include women.³

In 2019, NESsT was awarded a grant from the Aspen Network of Development Entrepreneurs’ (ANDE) Gender Lens Impact Measurement Fund to create a GLI strategy to:

1. Intentionally and measurably address gender disparities;

2. Examine gender dynamics to better inform investment decisions; and,

3. Facilitate adoption of GLI practices by SGBs and the investment community, particularly for early stage SGBs.

NESsT developed its GLI strategy based on the collection of sex-disaggregated metrics and data aligned with its four investment goals: Gender equality; Dignified employment; Poverty alleviation; and, Business performance (Table 3). NESsT recognized that if its portfolio of enterprises employs GLI, they will be able to identify existing gaps preventing gender equity and inclusion, and will be able to address these gaps, resulting in better overall business performance. Whether gaps are specific to the double burden faced by women, or to implicit biases on the part of employers in relation to hiring, training, remuneration, and workplace practices, closing them will enable stronger, more focused, and more diverse teams that can improve overall work performance.

Table 3. Four motivations for NESsT's GLI strategy.

Goal	Description
1	Achieve gender equality within internal operations and encourage portfolio companies to strive for gender parity within their operations.
2	Portfolio companies that expand their pool of talent should include greater gender diversity to increase business effectiveness and overall performance. As gender equal companies grow, their impact in alleviating poverty through dignified employment could increase.
3	New GLI-focused funding streams could expand economic and employment opportunities for women in low-income and at-risk conditions. This additional philanthropic and investment capital could also fund gender inclusive capacity building and technical assistance programming for portfolio companies.
4	By adopting a holistic, metric based GLI strategy, awareness raising, capacity building and training, NESsT will be equipped to assess and improve the impact of invested capital by: measuring current gaps and trends in the communities where portfolio companies operate; identifying differential impact of providing dignified employment to women and men; and catalyzing behavioural, structural, and systemic improvement in how women are both perceived and treated in the workplace and community.

Source: NESsT.

Note: Sourced from internal NESsT documents. NESsT's GLI definition is also presented in Aidis, Etchart, and Truzzi (2020).

4.1.1. Staff gender ratios at NESsT

In 2019, NESsT employed 16 staff and grew to 26 staff in 2021. Of these 26 staff members, five staff members work at NESsT's US-based headquarters and 21 work in NESsT's six target countries: Brazil, Chile, Colombia, Peru, Poland and Romania. NESsT has historically had a higher percentage of women employed as staff and management, while the board of directors and the loan credit committee has had higher percentages of men (Table 4). NESsT does have an operational sexual harassment policy and anti-discrimination policy.

Table 4. Women in staffing roles employed at NESsT in 2021.

Staff roles and positions	Percentage of women staff (%)
Board of Directors (N = 10)	30
Senior Management (N = 10)	60
Investment Committee (N = 5)	40
NESsT Employees (N = 26)	58

4.2. Methodology

This case study employed quantitative and qualitative methods to understand NESsT's implementation of a GLI strategy and its impact on portfolio companies. Here, we present the three approaches used to gather secondary and primary data.

4.2.1. Desk review

A review of the existing published and grey literature was conducted with the purpose of identifying GLI definitions and metrics that could be used or adapted for NESsT's portfolio companies. Three main sources of metrics were chosen to compile a master list of metrics: GIIN Impact Reporting and Investment Standards (IRIS) Metrics, the Mennonite Economic Development Associates’ (MEDA) Gender Equality Mainstreaming (GEM) Framework, and the International Centre for Research on Women's (ICRW) Gender Scoring Tool (Aidis, Etchart, and Truzzi 2020).

GIIN's IRIS metrics are based on a generally accepted impact accounting system that impact investors use to measure, manage, and optimize their impact (GIIN 2019). In 2019, GIIN developed 30 additional gender-focused metrics. MEDA's GEM Framework was developed as a practical manual and toolkit for investors to apply a gender lens in their investments (MEDA 2018). The framework builds upon the environmental, social, and governance (ESG) investment standard by mainstreaming gender across ESG criteria. The GEM scoping assessment included 28 questions and the full GEM assessment contained over 100 questions. The ICRW's Gender Scoring Tool provides sector specific questions using a gender lens that help to inform gender smart investing. The gender scoring tools contain 34–37 core questions, available online for agriculture and off grid energy sectors (ICRW 2020). The indicators developed by all three sources were compiled into a master list of 140 GLI indicators grouped into 11 thematic areas (Table 5). NESsT used this list of indicators to develop its own indicators based on their relevance for its portfolio companies.

Table 5. Gender metrics indicator categories.

Indicator categories	Number of metrics
Employment	14
Income	12
Recruitment, Retention, and Promotion	23
Safety	21
Social and Health	15
Capacity Building	11
Governance	4
Consumers	13
Suppliers	10
Distributors	10
Accountability	7
Total	140

Based on data from GIIN (2019), MEDA (2018) and ICRW (2020).

4.2.2. Portfolio companies sampled: country context and sectors

The sample of NESsT portfolio companies included in the survey were in located in Brazil, Peru and Poland. In all three countries, national legislation is in place that prohibits workplace sexual harassment (World Bank 2020). This provides a strong legal precedent for the private sector to adopt formal business policies against sexual harassment. At the same time, informal social norms and cultural practices often change more slowly and can interfere with the implementation of such formal laws.

The 14 sampled companies operated in a variety of sectors such as information technology (IT), sustainable agriculture, sustainable fisheries, ethical fashion, and the hotel, restaurant and catering industry (HoReCa). In all cases, the vulnerable low- income groups targeted by these companies were made up for one or more of the following criteria: women, small producers, at-risk youth, disabled individuals or those experiencing long term unemployment or incarceration.

4.2.3. Quantitative data collection

This study employed two types of survey tools that piloted indicators measuring gender inclusive practices and policies. The first tool was a structured questionnaire for portfolio company entrepreneurs. The second tool was an adapted version of NESsT's Dignified Employment (DE) survey for portfolio company employees, suppliers, and distributors.

To better understand existing levels of awareness and engagement with gender inclusive practices in its portfolio companies, NESsT conducted a structured questionnaire of company entrepreneurs, administered by NESsT country-level staff. The survey was dictated remotely by phone by a staff member to an entrepreneur who filled in their response in an online form. This tool allowed NESsT to pilot 28 gender metrics that would later be included in NESsT's Performance Management Tool (PMT).

The survey tool for entrepreneurs included two different groups of questions. The first group of questions assessed the entrepreneurs’ readiness to adopt gender inclusive metrics and willingness to integrate a gender equality mindset into their business strategy and operations. This survey included 20 questions presented in a mix of structured, open-ended, and binary format. For example, one question asked, ‘What is your overall reaction to our new gender lens strategy?’ and another asked the participant, ‘Does your business have safety standards in place?’. The second group of questions asked eight binary questions about company-level gender inclusive policies and practices, such as those that prevent sexual harassment or discrimination. For example, one question asks, ‘Does your enterprise have an anti-discrimination policy? Or a policy that ensures gender diversity and inclusivity?’.

During the pilot study in 2019, NESsT had 19 companies in its portfolio of which 14 companies participated in the entrepreneur survey, constituting 77% of NESsT's portfolio (Table 6). Five portfolio companies did not participate for the following reasons: one company was still in the process of onboarding, three were in the process of exiting, and one was not available to participate at the time of the survey due to workload. Thirty-six percent of the 14 participating companies were men-led enterprises (Table 7).

Table 6. Overview of quantitative data collection.

Company locations	Total companies in NESsT portfolio (2019)	Companies represented in entrepreneur survey	Companies represented in DE survey
Brazil	6	4	6
Peru	7	4	6
Poland	6	6	5
Total	19	14	17

Key: In this table the term ‘entrepreneur’ refers to the company's founder who is also the company's designated point of contact. The term ‘employee’ refers to a company's suppliers and/or distributors.

Table 7. Entrepreneur survey sample description.

Company location	Entrepreneurs
	Total surveyed	Total male-led teams surveyed	Total mixed gender teams surveyed	Total female-led teams surveyed
Brazil	4	2	2	0
Peru	4	1	3	0
Poland	6	2	3	1
Total	14	5	8	1

The second survey tool was a new pilot version of NESsT's DE survey. The DE survey is conducted on an annual basis with 10% of the employees, placements, and/or suppliers of NESsT's portfolio companies. In cases were the companies employ less than 50 employees, they include a sample of at least 10 employees. The purpose of the DE survey is to gain a better understanding of portfolio company performance in terms of providing dignified employment. Depending on the portfolio company's business model, employees, employee placements, suppliers and/or distributors are surveyed. NESsT's existing DE survey measures metrics on demographics, enterprise and household income, and job security. As part of this case study, NESsT added eight survey questions to the 2019 DE survey to assess employees’ understanding of the existence of policies and practices for preventing sexual harassment and discrimination. For example, one new survey question reads, ‘Do you believe that the enterprise that employs you or the enterprise that you supply to/distribute for protects men and women from sexual harassment?’ with three possible responses, ‘Yes’, ‘No’, and ‘I don't know’ and an open-ended comment box.

A total of 136 individuals from 17 portfolio companies participated in the 2019 DE survey, representing employees, suppliers, and distributors from companies in Brazil, Peru, and Poland (Tables 6 and 8). This constituted a 93% response rate. Of these 17 companies, entrepreneurs from twelve companies also responded to the entrepreneur survey. Employees from five additional enterprises were available to participate in the employee survey due to the following reasons: one enterprise that was onboarding at the time of the entrepreneur survey had then been fully onboarded; the three enterprises that were in the process of exiting agreed to have their beneficiaries surveyed; and, one enterprise that had not been available due to workload had then been available. There were also two enterprises that had been involved in the entrepreneur survey that were not involved in the DE employee survey. Employees from these two enterprises were no longer available for the following reasons: one enterprise had already exited NESsT's portfolio by the time the DE survey for employees was conducted and the second enterprise was not available due to workload (seasonal business focused on harvesting). Slightly more men (52%) than women (48%) participated in the DE employee survey (Table 8).

Table 8. Employee survey sample description.

Company location	Employees
	Total companies	Total employees surveyed/ total employees	Total male employees surveyed	Total female employees surveyed
Brazil	6	53 / 1340	28	25
Peru	6	60 / 545	29	31
Poland	5	23 / 173	13	10
Total	17	136 / 2158	70	66

Although there was not a complete overlap between the enterprises responding to the entrepreneur survey and those that completed the DE survey, the information gathered from each cohort is important and sheds light on the gender dynamics of the NESsT portfolio. For this reason, all the responses were included for both surveys.

4.2.4. Qualitative data collection

NESsT occasionally conducts focus group discussions (FGDs) to deepen its understanding of the experiences of its portfolio company employees, employee placements, and suppliers. In the context of the GLI pilot, NESsT conducted a FGD with 14 women employees of a portfolio company in Peru. The purpose of this FGD was to pilot a set of gender inclusive policies that could be included in future portfolio company review processes. The FGD was structured around eight open-ended questions to explore workplace gender policies and practices. One question asked, for example, ‘Do you think it would help to do your job better if your company would implement a policy on sexual harassment?’. The FGD purposely sampled 14 women employees, representing 30% of the company's women employees. The FGD was conducted in Spanish by a local consultant and supported by NESsT's Country Director in Peru.

4.2.5. Analysis

The quantitative data were analysed using descriptive statistics and content analysis. Data were sex-disaggregated to identify differences between respondents. The qualitative data were recorded in structured notes that were then compiled into a spreadsheet. The notes were translated into English and analysed using content analysis.

4.2.6. Study limitations

This study was subject to several limitations. The goal of the pilot was to test the new tools quickly and efficiently so as not to interfere with the participating portfolio company's day-to-day business operations. As a result, not all companies participated in data collection. Although twelve companies were included in both the entrepreneur survey and DE employee survey, two companies that participated in the entrepreneur survey and five companies that participated in the DE employee were different. Additionally, the FGD questions were piloted with only one portfolio company. The results obtained through the pilot testing process were used by NESsT to assess the effectiveness and relevance of the questions and metrics tested for inclusion into NESsT's existing company performance measurement toolkit.

Another potential limitation was response bias. Although it is difficult to completely mitigate the influence of response bias, several measures were taken to reduce response bias effects. NESsT's in country portfolio manager staff conducted the entrepreneur surveys and DE surveys with employees. The portfolio managers conducting the surveys had already worked extensively with these enterprises in the past and had developed a strong working relationship and high level of trust. The FGD was conducted by a local consultant, who built rapport with respondents by using informal local terms and expressions, and ensuring confidentiality of responses. Also, the local consultant incorporated icebreakers to help create a relaxed tone and informal setting during the FGD.

Finally, the assessment of these data was limited to output metrics. Additional in-depth assessment is needed to better understand and verify the outcomes of these metrics on portfolio company employees, beneficiaries and suppliers.

5. Findings and results

This section presents the case study results, organized by theme, and followed by a summary of the operational results for NESsT.

5.1. Company founders show interest in GLI practices but face adoption challenges

Most of the portfolio company entrepreneurs were aware of gender bias and discrimination that limit employment opportunities for women, restrict women's access to technical skills, reduce women's negotiation power, and limit women's access to financing. While many expressed interest in tracking gender metrics, only two entrepreneurs responded that they currently did so. Some entrepreneurs revealed that they contended with ‘machismo’ among their employees, and that in order to increase employment opportunities for women, they would need to first raise awareness about gender bias and the need for greater gender inclusion among their male employees. A few entrepreneurs expressed doubt that gender data would add value for their business. Of those that expressed doubt, one entrepreneur felt that gender ‘ha[d] not been an issue to date’ while another said that they had ‘never faced problems related to gender’. A third entrepreneur felt that their social enterprise's focus on disability was ‘more important’ than gender.

For entrepreneurs interested in tracking gender, many cited budget constraints as a common barrier to collecting gender metrics. The majority felt that additional training and capacity building are needed from the public sector, non-profit organizations, or other private sector partners for supporting their adoption of gender inclusive practices.

Table 9 shows the portfolio company entrepreneurs survey responses related to the existence of sexual harassment policies or informal practices and workplace safety policies. The survey results are disaggregated by the gender composition of the entrepreneurial team, enterprise business model, and by country location. Very few entrepreneurs indicated that their enterprise had a formal sexual harassment policy. The response patterns varied in terms of gender composition of the entrepreneurial team and country location. While the only female-led enterprise surveyed did not have a sexual harassment policy, forty percent of the male-led enterprises and fourteen percent of the mixed gender teams-led enterprises had sexual harassment policies. In terms of country location, none of the enterprises in Poland had a formal sexual harassment policy, twenty-five percent of the enterprises located in Peru and half of the enterprises located in Brazil had sexual harassment policies.

Table 9. Results of survey with company entrepreneurs (N = 14).

Category		Has an SH policy (percent)	Protects against SH (percent)	Has a workplace safety policy (percent)
Gender composition of entrepreneur team (N = 14)	Mixed gender team-led (N = 8)	14% (N = 1)	57% (N = 4)	57% (N = 4)
	Male-led (N = 5)	40% (N = 2)	67% (N = 4)	80% (N = 4)
	Female-led (N = 1)	0% (N = 0)	100% (N = 1)	100% (N = 1)
Business model (N = 14)	Employment creation (N = 8)	13% (N = 1)	75% (N = 6)	75% (N = 6)
	Job Placement (N = 3)	33% (N = 1)	67% (N = 2)	67% (N = 2)
	Supplier (N = 3)	33% (N = 1)	33% (N = 1)	33% (N = 1)
Country Location (N = 14)	Brazil (N = 4)	50% (N = 2)	50% (N = 2)	75% (N = 3)
	Peru (N = 4)	25% (N = 1)	25% (N = 1)	25% (N = 1)
	Poland (N = 6)	0% (N = 0)	100% (N = 6)	83% (N = 5)

Key: SH = Sexual harassment.

The response patterns also varied in terms of enterprises informally protecting their employees from sexual harassment. While the majority of entrepreneurs agreed that their enterprises protected their employees, beneficiaries or suppliers from sexual harassment, less than half of the enterprises using a supplier business model or enterprises located in Peru responded affirmatively to this question.

The entrepreneurs were also asked if their enterprises had formal workplace health and safety policies. More than half of mixed gender-led and male-led enterprises and the one female-led enterprise agreed that they had a formal workplace health and safety policy; this was also the case for businesses that engaged in employment creation and job placement models. In terms of country location, all the entrepreneurs with enterprises located in Poland and three-quarters of the enterprises located in Brazil agreed that they had formal workplace health and safety policies while only one entrepreneur located in Peru had this policy in place.

Although these results are descriptive and not statistically significant, they provide insights into possible areas for future research. These results suggest that factors such as business models and geographic location and to a lesser extent gender composition of the entrepreneurial team may influence the existence or adoption of sexual harassment or workplace safety policies in SGBs.

Regarding staff gender balance, survey data indicated that the entrepreneurs hired women for jobs that require less advanced skills and did not track wage disparities between female and male employees. Although two entrepreneurs responded that women occupy more than or an equal number of management positions as men. For the majority of entrepreneurs, gender differences between female and male wages were ‘unclear’. Two company entrepreneurs responded that men earn higher wages than women.

While the response patterns for both company entrepreneurs and employees typically aligned in the surveys, in some cases, employee responses contradicted those of their company's entrepreneur regarding the existence of sexual harassment policies. For example, in the two cases where company entrepreneurs confirmed the existence of a formal policy for sexual harassment, the employees were not aware of it. This finding suggests that the existence of policies alone may not be not sufficient: employees, beneficiaries and suppliers need to be aware of their rights and how to enact their rights if needed without repercussions.

In general, there was little difference between the responses given by male or female employees. For example, both male and female employees from seven portfolio companies responded affirmatively that their company protected them from sexual harassment. However, in one company, more female than male employees indicated that they did not feel protected from sexual harassment in the workplace.

During the FGD, female participants agreed that there had not been any discussion of sexual harassment in their company, but that a formal sexual harassment policy would be beneficial to protect employees, especially as the company grows in size.

5.2. A GLI definition and gender inclusive measurement tools tailored for NESsT's portfolio companies

NESsT's portfolio companies use three types of business models: employment creation, employment placement, and supplier-based business models. These different business models measure the impact of gender inclusion at different levels of engagement within the company. For example, employment creation companies have direct engagement with their employees through a formal contract, while training and placement companies have both a direct relationship with their employees and an indirect engagement, and a responsibility for placing their trainees with companies that practice gender inclusion. Supplier business models have a direct relationship with their employees and, in some cases, a direct and formal relationship with major suppliers. In other cases, the relationship with suppliers is less direct or formalized, especially when suppliers are part of a larger association or cooperative and are small-scale sources of goods or materials.

NESsT designed its GLI strategy to collect metrics and data that allow for validation and alignment of the GLI strategy's contribution with NESsT's four investment goals: Gender equality; Dignified employment; Poverty alleviation; and, Business performance. NESsT operationalized its definition of GLI to address the characteristics of its diverse portfolio of SGBs:

Gender Lens Investing (GLI) for NESsT means directing investments to enterprises employing women and supplying from women, that specifically seek to treat them equally with men. This means that these enterprises work to eliminate gender biases in their hiring practices, pay equitable income and provide the same professional development opportunities and level of job security to women as men. In addition, this means that these enterprises seek to create workplaces that focus on gender inclusion and address the specific needs of women employees, i.e. sexual, harassment policy, workplace safety, anti-discrimination and others. In addition, these enterprises seek to increase the number of women managers in their companies and women owners in their supply chains.

In return, NESsT will support these companies to become equitable and gender inclusive and will move beyond simply quantifying the inclusion of women, toward measuring progress brought about through qualitative and transformative change. This change will focus on shifting gender norms so that they are no longer reinforcing existing gender stereotypes and labour segregation patterns These activities will also contribute to making the business case for bringing a gender lens to impact investing. NESsT will capture and assess the intersectionalities of gender (such as ethnicity and sexual identity) to help its portfolio companies to understand the interconnected nature of these.⁴

Upon completion of the pilot phase, NESsT utilized the results described above to finalize the inclusion of a set of standard GLI metrics for its Performance Management Tool (PMT).⁵ NESsT included a selection of indicators from GIIN, based on the IRIS+ tool standards to measure impact. Table 10 shows the 24 gender indicators and additional 11 indicators included in NESsT's PMT survey. A complete list of the 35 questions used in the PMT are provided in Annex 1.

Table 10. NESsT's portfolio performance management tool indicators.

Category	Gender indicators	Non-gender indicators
1. Governance	Founder/Owners Board members Senior management Permanent employees	None
2. Training	Excluded people trained	None
3. Employment	Excluded people permanently employed New excluded people permanently employed Excluded people employed with contracts	None
4. Placement	Excluded people placed Excluded people placed with contracts	None
5. Suppliers	Excluded people suppliers New excluded people suppliers Excluded people suppliers with contracts	Cooperatives, Associations or Communities Volume purchased Price Differentials
6. Day Workers	Day-workers Day-workers with contracts	None
7. Wages	Wages, managers and technical positions Wages placement Payments suppliers Payments day-workers	None
8. Diversity	Youth, elderly, people with disabilities, ethnic, migrants, LGBTQ	None
9. Other Impact	None	Other excluded people impacted
10. Financial	None	Revenues Profits Other investors
11. Environment	None	Responsible products Green tech Green tool
12. Gender	Gender Policy (Sexual Harassment) Work safety Policy Anti-discrimination Policy	None
13. Sector Building	None	Events and Articles
Total Indicators:	24	11

Key: Gender Indicators require responses using sex-disaggregated data. Non-Gender Indicators do not require responses using sex-disaggregated data.

After several iterations of team and portfolio company feedback, the revised PMT was rolled out across NESsT's portfolio of 19 companies in 2020.

5.3. Cost effectiveness of integrating GLI practices

NESsT provides enterprise assistance that costs approximately three working days per month to each of the enterprises in its portfolio to support GLI integration. Additional time is required (approximately one half to a full day per portfolio company) to support the development of gender specific monitoring indicators, internal company awareness building around gender inclusion/equity, and/or development and implementation of policies on sexual harassment, bullying, discrimination and workplace safety.

For each portfolio company entrepreneur, NESsT staff estimate a half day of effort is needed to implement data tracking and overall gender inclusion modules (i.e. implicit bias, hiring practices, career tracks, leadership, policies, inclusive language, etc.). If the SGB is implementing a more elaborate gender inclusive training module or specific empowerment programme, the SGB entrepreneur teams would need to increase the time spent on gender lens inclusion by one to five days per month.⁶

5.4. Baseline data collection

The PMT gender indicators were used to collect baseline data from NESsT's 19 portfolio companies in 2020. The data collected revealed both positive portfolio characteristics and challenges. According to the PMT results, sixty-three percent of enterprises had at least half of all leadership positions filled by women. The PMT results allowed for NESsT to calculate gender wage equality: All the enterprises engaged in employment placement reported wage equity (100%) between female and male employees, 92% and 69% of men's wages were earned by women in the supplier and employment creation models respectively.

In terms of policies, although less than half of all enterprises (42%) reported having a sexual harassment and anti-discrimination policies in 2020, this was a substantial increase from the 2019 entrepreneur survey where only twenty-one percent of entrepreneurs reported having a sexual harassment policy. Anecdotally, most entrepreneurs remarked that reporting on the PMT gender indicators was helpful for identifying areas that needed attention and improvement in their business operations to increase gender equal practices.

5.5. Increasing NESsT's staff commitment to gender inclusive policies and practices

To assess changes to its internal gender balance, NESsT committed to tracking the diversity of its staff, board members, and investment committee members through its annual staff survey and developing strategies for gender balance in its board and investment committee. NESsT also asked its staff to review and sign its sexual harassment and anti-discrimination policies upon being hired and annually thereafter. NESsT continues to prioritize inclusive hiring practices and gender equity among its staff and is committed to elevating more women to its Board of Directors and Investment Committee. In 2021, NESsT began refining its internal systems to ensure gender balance is achieved and maintained and drafted a Diversity, Equity, and Inclusion policy, under the leadership of a newly established Gender Working Group. NESsT plans to adopt this policy in 2022.

With regard to its portfolio, NESsT had set ambitious goals for 2020 to create training webinars for SGBs to internalize and adopt more inclusive practices and to introduce templates for workplace sexual harassment, anti-discrimination, and safety policies. Unfortunately, due to COVID-19, its portfolio of SGBs was unable to dedicate time to participate in these types of capacity building activities.

In response to this situation, NESsT pivoted to working more closely with its internal staff on its new gender lens focus. To increase buy-in from country-level staff, NESsT initiated discussions centred on why it had developed a gender lens, and what it hoped to achieve as a result. For these discussions, staff from country-level teams were divided into small four-member groups that were tasked to discuss a specific topic, such as NESsT's GLI definition, and report back to the larger group. This iterative and semi-structured format allowed staff to shift from their work roles as ‘analysts’ and ‘advisors’ to reflecting and questioning their own understanding of gender-related issues. A number of staff members commented that this approach expanded their understanding of the social and business case for gender equity and inclusion across the portfolio, beyond their sectoral and/or vulnerable group focus.

In addition, NESsT prioritized sharing its experiences with the greater social impact investing community. NESsT's staff organized and led panels and webinars on gender inclusion at major conferences and events including the Aspen Network of Development Entrepreneurs (ANDE) annual conference, the annual Social Capital Markets (SOCAP) conference, and the European Venture Philanthropy Association (EVPA) conference. NESsT also shared the process of developing a GLI framework through a seven-part online blog series disseminated widely among impact investors.⁷

Building on the steps taken in 2020, in 2021, NESsT has been proactively working to create a series of gender educational modules that it is first sharing with its portfolio management team, and then with its portfolio enterprises. These educational modules include interactive learning exercises, videos, reflective questions and templates, that entrepreneurs can use to improve the gender equity and inclusion on the following topics: the what, why and how of GLI; gender bias and inclusive language; gender in human resources; gender in supply chains; and, gender policies.

6. Key lessons

The findings and early pilot results from the NESsT case study provide insights into the adoption of GLI strategies and metrics from the perspective of impact investors and SGBs. For researchers and practitioners alike, it is critical to employ a feminist approach to address gender barriers and increase the visibility of women's experiences and needs.

Identifying and aligning incentives for different groups of stakeholders is critical for GLI strategies to achieve sustainable approaches. Motivational incentives, such as highlighting the productivity gains of a gender diverse workforce, may also influence positive behavioural shifts that could lead to institutional change for investors, entrepreneurs, and employees. In this way, impact investors and the companies they fund may positively contribute to reducing gender restrictive social norms and practices.

6.1. Specific insights

The institutional context influences gender inclusive practices. For example, national legislation that prohibits workplace sexual harassment provides a strong legal precedent for the adoption of formal business policies against sexual harassment. At the same time, informal social norms and cultural practices often change more slowly and can interfere with the implementation of such formal laws. Impact investors can play an important role in supporting behavioural change that facilitates gender inclusive practices and policies within their portfolio companies and their own internal practices.

GLI definitions are evolving to better articulate GLI strategies and outcomes for specific activities. The broadening categories included in GLI definitions demonstrate a growing understanding of the benefits of tailoring gender analyses to meet the needs of specific contexts. GLI definitions also reflect the key motivations that influence different types of investors and stakeholders to adopt a GLI approach.

It may be beneficial for impact investors to adopt GLI definitions that are reflective of the specific business model characteristics of target companies. The adoption of a GLI strategy can be facilitated by emphasizing the specific benefits or incentives for gender inclusion such as the social justice case, the business case, and/or the case for SGBs. As the NESsT research showed, it is important to survey both portfolio company owners and their employees (suppliers, employee placements and/or distributors) on gender inclusive policies and practices to understand their experiences, opinions, and levels of awareness. Potential discrepancies in staff awareness of a policy, for example, suggests that the existence of a policy alone is not enough to contribute to a safe and equal workplace, as employees must be aware of their rights in the workplace and should feel confident to act upon their rights as well.

Working with existing mixed gender or male owned SGBs that have not previously focused on gender issues necessitates an incremental, step-by-step approach to facilitate gender inclusion. The motivations and capacities for adopting gender inclusive practices vary. Interviewing portfolio entrepreneurs can help to identify specific areas of needed support and capacities to adopt GLI strategies.

The case of NESsT further illustrates that the majority of the entrepreneurs surveyed were enthusiastic about NESsT's decision to adopt a GLI framework. In some cases, portfolio company entrepreneurs acknowledged that they needed to increase the number of women in management but recognized that they did not know how to go about doing this and needed NESsT's support. There were also several portfolio company entrepreneurs who felt that gender inclusion was not as relevant for their enterprises since their business model targeted employing young men, but they were open to including a gender lens in their impact goals.

Finally, very few of the entrepreneurs had adopted gender policies, but most were receptive to developing and incorporating such policies. Regardless of the entrepreneurial team's gender composition, most NESsT portfolio company entrepreneurs indicated that they needed support in integrating GLI practices.

NESsT's example further illustrates the importance for impact investors to ‘walk the talk’ by incorporating GLI practices in their own internal operations. For NESsT, this led to a better understanding of what practices needing modification or change to align with the GLI practices adopted by their portfolio companies. In addition, organizing informal discussion groups on GLI with country staff teams facilitated and strengthened their personal commitment to supporting GLI in portfolio companies.

For NESsT, the initial costs in terms of increased time and effort for portfolio managers and entrepreneurs to incorporate GLI indicators were higher than expected. However, once the indicators were adopted, the costs were reduced and found to be at a reasonable and sustainable level.

7. Conclusion and recommendations

Formal and informal institutions exert gendered impacts that have intensified gender disparities during the COVID-19 pandemic. GLI strategies serve as a mechanism through which impact investing firms can catalyze behavioural change in shifting informal norms and practices to support gender diverse and inclusive strategies for employees, entrepreneurs and suppliers. The case study reported here presented examples of how NESsT, a small impact investment firm, integrated a gender lens strategy in its existing portfolio of social enterprises. These portfolio companies were located in different countries, used different business models and were led primarily by mixed-gender or male-led teams. As the NESsT case illustrates, the process of adopting GLI strategies necessitates raising awareness and incorporating feedback from key stakeholders at the fund level and amongst NESsT's internal staff. The analysis presented in this paper leads to the following five recommendations for impact investment firms:

1. Tailor and utilize GLI indicators from existing standardized measures to meet the characteristics of SGBs. More firms and companies tracking GLI indicators among SGBs will build a stronger evidence base for GLI using comparative data.

2. Adopt an incremental approach to introducing new GLI indicators, combined with capacity building for SGBs for collecting/analysing gender data and for implementing, acting upon, and understanding gender focused practices and policies within the company.

3. Ensure internal staff buy-in and commitment to integrate GLI strategies. Incorporating a GLI strategy takes time and effort. Data and examples emphasizing one or more of the key motivations for GLI (the social justice case; the business case; and, the case for SGBs) can help facilitate this process.

4. Modify the GLI approach to meet the specific needs of portfolio companies. NESsT is responding to the needs of its portfolio companies by developing a nine-module series to support portfolio enterprises in closing gender gaps, adopting more inclusive and equitable hiring, training, rewarding, workplace and procurement practices and policies. From 2021 to 2022. NESsT is particularly focused on supporting gender inclusion in portfolio enterprises that do not have any women board members or in their management teams, and those that have inequitable wages for women employees and suppliers.

5. Collect supplemental data to better understand where additional services or support are required for individuals with intersecting identities, who may face additional constraints and may need tailored support as part of an effective GLI strategy. NESsT is continuing to incorporate gender inclusive practices in its internal organizational operations and plans to address intersectionalities at both the organizational and enterprise levels.

This paper presented the results of a pilot study on GLI strategy adoption for one investment firm and its portfolio companies. While these results highlight the ways in which investment firms can support portfolio companies in adopting GLI strategies, they are largely descriptive. Additional research with a larger sample of funds and companies in a range of geographies is required to better understand the nuances, challenges, and opportunities for investment firms and portfolio companies to adopt, implement, and benefit from GLI strategies.

Acknowledgements

This project was supported by the Aspen Network of Development Entrepreneurs (ANDE), a program of the Aspen Institute with the aid of a grant from the International Development Research Centre (IDRC), Ottawa, Canada. The views expressed herein do not necessarily represent those of ANDE nor IDRC or its Board of Governors.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Unlike microenterprises, which typically start and remain small, small and growing businesses (SGBs) are designed to grow. They may launch with only a few employees, but with the right support, they can scale to employ hundreds and deliver critical goods and services to communities in need (ANDE 2016).

2 In 2021, NESsT's total number of funded portfolio companies increased to 47, located in six countries: Brazil, Chile, Colombia, Peru, Poland and Romania.

3 In determining the percentage of women owners, two enterprises were excluded since they were not founded by individuals but by legal entities.

4 Sourced from internal NESsT documents. NESsT's GLI definition is also presented in Aidis, Etchart, and Truzzi (2020).

5 NESsT's Performance Management Tool (PMT) includes 35 indicators measuring the number and quality of jobs, and overall social and environmental impact of its portfolio companies. These flagship metrics are gathered on a quarterly and annual basis from the portfolio companies, but were not sex disaggregated. As a result, critical issues related to gender inclusion and company performance were not systematically captured or measured.

6 Some examples include: An enterprise in Colombia received an investment from NESsT to start a scholarship Fund that will support low income women to participate in the enterprise's IT Boot Camp. The women who graduate from the programme are likely to earn four times the minimum wage as a starting salary. In Poland, an enterprise received support from NESsT to develop scholarship funding for women who have aged out of foster care to access their IT training. An enterprise in Chile is creating a training program aimed at increasing the participation of women in leadership in their cooperative of 1000 families that grow lupin seeds. This enterprise is also assessing how to increase the visibility and recognition of women working in this value chain. In Peru, an enterprise is focused on training and bringing more women into their supply chain of artisanal fishers.

7 NESsT's ‘How to’ GLI strategy email series: https://www.nesst.org/supporting-gender-inclusive-practices-for-small-and-growing-businesses

1

NESsT's portfolio performance management tool (PMT)

Annual report 2020–2021

Notes:

• Most PMT indicators require gender disaggregated responses. The few cases where gender disaggregated data is not required are marked with an asterisk (*)

• Many indicators mention ‘excluded people’ which refers to minorities, i.e. people previously excluded who were engaged by the social enterprise. Examples include: low income youth, low income women, people from low income communities, people who previously were in an informal job or making minimum wage or less than minimum wage, people with disabilities, people from indigenous/native/ethnic/immigrant communities who face additional barriers to a dignified income or single parent households.

  1. Governance

     • Indicator 1: Founders/Owners: Number of the organization's founders who are male/female/excluded and retain an active role in the company at the end of the reporting period.

     • Indicator 2: Board: Number of female/male/excluded members of the organization's board of directors or other governing body at the end of the reporting period

     • Indicator 3: Senior Managers: Number of paid full-time female/male/excluded management employees (managers) at the organization at the end of the reporting period.

     • Indicator 4: Permanent Employees: Number of male/female/excluded, non-excluded permanently employed by the organization at the end of the reporting period. This is the sum of all the paid full-time and part-time employees.

     Attention: starting from this part of the Report, all indicators will be based on minorities – people previously excluded – who were ‘attended’ by your social enterprise

  2. Training

     • Indicator 5: Excluded People Trained: Number of female/males who were previously excluded and were trained by the organization at the end of the reporting period.

  3. Employment

     • Indicator 6: Excluded People Permanently Employed: Number of female/male permanent employed by the organization who belong to minority or previously excluded groups at the end of the reporting period.

     • Indicator 7: New Excluded People Permanently Employed: Number of NEW female/male employed (from the number reported on Indicator 6 above)

     • Indicator 8: Excluded People Employed With Contracts: Percentage of Contracts among the female/male employed by the organization who belong to minority or previously excluded groups at the end of the reporting period.

  4. Placement

     • Indicator 9: Excluded People Placed:Number of the organization's female/male clients who were placed in part-time, full-time, temporary or permanent jobs during the reporting period. This metric may be particularly relevant to organizations providing clients (example: students) with vocational/technical training or employmen services.

     • Indicator 10: Excluded People Placed With Contracts: Percentage of Contracts amongh the female/male places by the organization who belong to minority or previously excluded groups at the end of the reporting period.

  5. Suppliers

     • Indicator 11: Excluded People Suppliers: Number of female/male suppliers who belong to minority or previously excluded groups and who sold goods or services to the organization during the reporting period. Usually they are members of the Cooperative/Social Enterprise that buys the goods.

     • Indicator 12: New Excluded People Suppliers: Number of NEW female/male suppliers (from the total reported above on Indicator 11) who belong to minority or previously excluded groups and who sold goods or services to the organization during the reporting period. Usually they are members of the Cooperative/Social Enterprise that buys the goods.

     • Indicator 13: Excluded People Suppliers With Contracts: Percentage of Contracts among female/male suppliers that belong to minority or previously excluded groups as of the end of the reporting period.

     • *Indicator 14: Cooperatives, Associations or Communities:

     • *Indicator 15: Volume Purchased

     • *Indicator 16: Price Differentials

  6. Day-Workers

     • Indicator 17: Day-Workers: Number of female/male Day-Workers who belong to minority or previously excluded groups and who sold goods and services to the organization (through a supplier) during the reporting period

     • Indicator 18: Day-Workers With Contracts: Percentage of Contracts among the female/male Day-Workers who belong to minority or previously excluded groups at the end of the reporting period

  7. Wages

     • Indicator 19: Wages, Managers and Technical Positions: Average monthly wages (including bonuses, excluding benefits) paid to female/male managers and technical positions of the organization who belong to minority or previously excluded groups during the reporting period.

     • Indicator 20: Wages Placement: Average monthly wages in local currency (including bonuses, excluding benefits) paid to female/male placed by your organization, who belong to minority or previously excluded groups during the reporting period.

     • Indicator 21: Payments Suppliers: Total payment (local currency) for female/male suppliers who belong to minority or previously excluded groups at the end of the reporting period.

     • Indicator 22: Payments Day-Workers: Average monthly payments (local currency) paid to female/male day-workers of your organization, who belong to minority or previously excluded groups during the reporting period.

  8. Diversity

     • Indicator 24: Youth, Elderly, People With Disabilities, Ethnic, Migrants, LGBT: Number of people who have the profile in the left column that the social enterprise trains, employs, places and/or contracts as suppliers/distributors.

  9. Other Impact

     • *Indicator 25: Other Excluded People Impacted

  10. Financial

      • *Indicator 26–27: Revenues and Profit

      • *Indicator 28: Other Investors

  11. Environment

      • *Indicator 29: Responsible Products

      • *Indicator 30: Green Tech

      • *Indicator 31: Green Tool

  12. Gender

      • Questions 32–34 examine whether the organization has policies in place to monitor, evaluate and ensure/communicate an anti-sexual harassment environment, as well as a workplace safety policy and a anti-discrimination policy.

      • Indicator 32: Gender Policy

      • Sexual Harassment Policy (Y/N)

      • Sexual Harassment Policy Communication (Y/N)

      • Indicator 33: Work Safety

      • Work Safety Policy (Y/N)

      • Work Safety Policy Communication (Y/N)

      • Indicator 34: Anti-Discrimination

      • Anti-Discrimination Policy (Y/N)

      • Anti-Discrimination Policy Communication (Y/N)

  13. Sector Building

      • *Indicator 35: Events and Articles