Practical analysis for investment professionals
22 December 2020

The COVID Catapult: Four Trends Upending the Status Quo for Women

Women have been making progress for years, but at a glacial pace. Year after year, I see the same old bleak numbers: The more or less stagnant percentages of women in senior management, women on boards, women in finance, women in tech, women in investing. The list goes on, and while not all of these metrics have changed in meaningful ways post-pandemic, many of them have.

COVID-19 has been a catalyst and change accelerator in many areas, and while its burdens have fallen disproportionately on women, the pandemic’s effects have not been entirely negative. Indeed, across four key spaces, COVID-19 has catapulted women into dramatically better situations:

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1. Corporate Diversity Mandates

The Status Quo

“In the last two years, more than 60 companies went public in the US and Europe without a diverse board member.” — David Solomon, CEO, Goldman Sachs

This is a rather alarming statistic. But Solomon continued:

“Consider this: since 2016, US companies that have gone public with at least one female board director outperformed companies that do not, one year post-IPO. But in addition to the real commercial benefits, it’s clear that changing the stereotypes associated with corporate decision-making will have many positive effects for society as a whole.”

Which is why Solomon announced that as of 1 July 2020, Goldman will only take US and European companies public if there is “at least one diverse board candidate, with a focus on women.” And starting in 2021, Goldman will raise this target to two diverse candidates.

The COVID Catapult

The October 2020 “Diversity Disclosure Practices” report from Osler, Hoskin & Harcourt provides an extensive overview of global corporate diversity practices. The authors find that the pandemic has inspired an increase in social awareness that has served as a much-need tailwind for the case for diverse organizations:

“Among the many profound changes ushered in by the COVID-19 pandemic has been a renewed focus on social issues. Most of the world entered various stages of lockdown, dividing humanity from one another to slow the inexorable advance of an especially virulent disease. Yet the challenges of isolation and, on the flipside, the sense of purpose that enabled us to take responsible collective action to protect the lives of those most vulnerable, also created an opportunity for change. Ignited by public outrage over the killing of George Floyd by police, and fueled by many examples of the mistreatment of minorities, there has been a strong drive to address the impediments, both express and hidden, to the advancement of underrepresented communities to leadership positions in organizations.”

NASDAQ is also putting its money where its mouth is: It filed a proposal with the US Securities and Exchange Commission (SEC) on 1 December 2020 to adopt new listing rules related to board diversity and disclosure. According to the press release:

“If approved by the SEC, the new listing rules would require all companies listed on Nasdaq’s U.S. exchange to publicly disclose consistent, transparent diversity statistics regarding their board of directors. Additionally, the rules would require most Nasdaq-listed companies to have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an underrepresented minority1 or LGBTQ+.”

As Anthony Romero, the executive director of the American Civil Liberties Union (ACLU), observed, “By pushing its listed companies to address racial and gender equity in corporate boards, Nasdaq is heeding the call of the moment.”

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2. Gender Lens Funds

The Status Quo

Broadly speaking, gender lens investing includes many classifications all centered around the advancement of women: in finance, in leadership, and in products and services (and companies) that help improve women’s lives.

I first learned about gender lens investing when I interviewed Dr. Joy Anderson, the founder and president of the Criterion Institute. I quoted her in my 2015 Rich Thinking® white paper “The Future of Women and Finance”:

“In the future, what if we could ‘go long’ on women’s economic participation? Historically, the financial industry has developed without many women involved and in turn women’s rights studies didn’t spend time on looking at finance as a tool for social change. We need to move from counting to valuing. How does gender analysis matter in financial analysis? This creates a whole new set of possibilities. What if understanding gender better made you a better analyst? We will see a revaluing of gender and a transformation of the existing perspective on the importance of diversity — it takes time to build a market.”

And building the gender lens market is taking some time. For example , Pitchbook reports that less than 3% of global venture capital (VC) went to women founders. And according to “The 2020 European VC Female Founders Dashboard”:

“Venture capital funding overall has surged in recent years, but the numbers haven’t leapt forward for female founders at the same pace. Last year, companies founded solely by women garnered just 1.1% of the total capital invested in venture-backed startups in Europe.”

The COVID Catapult

The number of gender lens funds is growing significantly. The Project Sage 3.0 report from Catalyst at Large and the Wharton Social Impact Initiative (WSII) counted 138 funds investing capital through a gender lens, a nearly 59% increase from the 87 funds in Project Sage 2.0 in 2019, and an 138% increase from the 58 funds in the initial Project Sage report in 2017.

“One could argue that there has never been a time where impact was such a universal priority,” co-authors Sandi M. Hunt and Suzanne Biegel write. “From global health to racial equity, from protests to investing, people are calling for and making change.”

The geographical diversity of gender lens funds is moving in the right direction, according to Hunt and Biegel:

“In the original 2017 Project Sage, approximately 80% of reported investments were U.S.-focused. Now, Project Sage 3.0 showed that 38.1% reported North America as their investment target geography (this does not include the global funds). This demonstrates an increase in the diversity of targeted investment geography, with significant focus on regions including Asia, sub-Saharan Africa, and Latin America.”

There is also something of a silver lining within that gloomy Pitchbook stat about firms with women-only founders attracting just 1.1% of VC funds in Europe last year:

“The first three quarters of 2020 marked the first time since 2008 that female-only founded companies secured more than 2% of total European venture capital. Annual percentages have hovered between 0.8% and 1.7% over the past decade.”

But remarkably, the total for 2019 was surpassed in just the third quarter of 2020.

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3. Women in Tech

The Status Quo

“Historically, there are too few women in tech (about 25% in the US, and 22% in Sweden), and the number is growing less than half a percent annually.”Erica Pretorius and Duncan Stewart, CFA, Deloitte Canada

Sexual harassment in the workplace has often sabotaged women in tech. Stewart and Pretorius point out:

According to a survey conducted in February and March of 2020 (recent, but reflecting pre-pandemic experiences) sexual harassment of women in tech is still a severe issue. Half of women (48%) reported experiencing harassment of various kinds.”

But guess what?

“The top four locations of harassment (sexual, but other kinds of harassment too) in the survey were all in the physical world, rather than the virtual world.”

The COVID Catapult

The work from home (WFH) arrangement is one of the biggest pandemic-driven global phenomenons. It has its pros and cons, but for many women. that additional flexibility around work is a good thing. Ericsson vice president Jenny Lindqvist believes that WFH could lead to transformative change for women in tech:

“Could the wider acceptance and adoption of remote working get more women to build a career in technology? Whilst it doesn’t eradicate the barriers between women and the sector, it might be, at the very least, a step in the right direction. For women previously struggling to access more senior roles in ICT due to commitments at home, perhaps greater working flexibility could be exactly what they need.”

Deloitte’s annual survey of Technology Fast 50 CEOs found the COVID-19 pandemic was the greatest challenge facing Canadian businesses in 2020. But there were some extraordinarily positive statistics for women. These included:

  • Women made up more than 41% of applicants to Fast50 jobs this year. In 2019, they were only 16%.
  • 37% of companies reported at least 41% of new hires are women this year. Last year, it was only 21%.
  • 44% of companies said 31% of their 2020 leaders are women. That’s up from the 31% of companies who said this last year.
  • 86% of respondents believe inclusion in the workplace is among the top three strategic drivers of company success. That’s a 6 percentage point improvement from 2019.

I interviewed Canadian CEOs about the effects of COVID-19 while writing a research report for Echelon Wealth Partners. In line with Deloitte’s findings, nearly 90% of my interview subjects said they believe diversity and inclusion is important to their companies. In fact, 31% said their companies had actually shifted their policies around diversity and inclusion as a direct result of the social movements in the United States. And over half of those companies are in the tech and health sciences sectors.

We don’t yet have enough hard post-pandemic data about the current status of women in tech, but I agree with Stewart and Pretorius’s hypothesis:

“If work from home makes the industry less female unfriendly around work life balance and harassment, retention will improve. And if applications and hiring go up in response to social movements, we will see gains across all parts of the pipeline at the same time . . . which will translate into double digit gains in applications, hires and leaders.”

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4. Women Investors

The Status Quo

Historically, about 60% of US men invested in stocks compared with only 40% of women. But this 20 percentage point gap has shrunk considerably. According to a 2019 Gallup survey, updated to include data from the very early days of the pandemic in March/April 2020: From 2001 to 2008, 65% of men and 59% of women owned stocks for a six-point gap. Following the global financial crisis (GFC), from 2009 to 2017, the gap narrowed to four points as 56% of men and 52% of women were investing in equities. In the past couple of years, the gap has widened back to six percentage points with 58% of men and 52% of women owning stocks. (Although a poll of this size would have a measurement error of plus or minus 3%, so the changes in the various surveys may not be meaningful.)

The COVID Catapult

We don’t yet have more recent Gallup data, however, there is a compelling post-pandemic trend in place that aligns with my own predictions around the rising popularity of online investing for women and the impact this will have on closing the retail investing gap.

In “The Equality Equation: Three Reasons why the Gender Investing Gap is Closing,” from May 2019, I discussed the idea that all financial institutions were becoming more and more interested in technologies that accelerate our ability to understand women’s investment behaviors. In “She’s the Boss of Her Money: Four Trends in Women’s Online Investing,” from April 2020, I focused on the momentum behind different fintech forums that appeal to women around the world.

Women are signing up to investment platforms at faster rates than men, the Financial Times reported this month: “The lockdown period has reduced spending, increased savings and expanded the amount of time women have to think about financial planning.”

Some examples from the article:

  • The do-it-yourself trading platform EToro increased its cohort of new woman investors since 1 January 2020 by 366%. The number of men by comparison has only risen 248%.
  • The UK-based digital wealth manager Nutmeg increased its new customer sign-ups by almost one third in 2020. Women had made up 36% of its investors, but this year they represent 40%.
  • The European investment platform Bux saw the number of women signing up to its share trading app BuxZero grow by 600% year to date, compared to 400% growth for men.
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The Bottom Line

Most of us will be glad to say goodbye to annus horribilis 2020. But the news hasn’t been universally bad. So let’s take time out to celebrate these four COVID catapults and the progress women have made.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images / Francesco Carta fotografo

About the Author(s)
Barbara Stewart, CFA

Barbara Stewart is a chartered financial analyst (CFA) with 30 years of investment industry experience; five years as a foreign currency trader, more than two decades as a portfolio manager for high net worth entrepreneurs, and during the past six years, as an interview-driven researcher for multiple global financial institutions. She is a keynote speaker for CFA societies, banks, stock exchanges, and industry conferences globally, and she is a columnist for CFA Institute, Canadian Family Offices, and Canadian Money Saver. She is on the Advisory Board for Kensington Capital Partners and also is the Ambassador for the Kensington Women’s Forum. Fourteen years ago, Stewart saw a need to challenge outdated financial industry stereotypes and share positive messages about women and money. Today, she is recognized worldwide as one of the leading researchers in women and finance. Rich Thinking® global research papers quote smart women and men of all ages, professions, and countries, and are released annually on International Women’s Day, 8 March. To find out more about her research, visit Barbara Stewart.

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