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Sustainability Matters

2 Options for Gender-Lens Investing

Investing in these diversified portfolios of quality companies can signal support for more women in corporate leadership positions.

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Even though women make up more than half of the U.S. workforce, they remain significantly underrepresented on corporate boards and in the ranks of corporate executives. Just 5% of S&P 500 companies are headed by a female CEO, 20% of board seats are held by women, and 25% of executive and senior level managers are women, according to Catalyst, a nonprofit that works to accelerate progress for women in business. A 2016 Government Accountability Office report on women directors of companies in the S&P 1500 found that women account for just 16% of corporate board members and estimated that, if women started joining boards as often as men today, it would take another 40 years for women to reach parity on corporate boards.[i]

These numbers by themselves are sufficient to conclude that companies need to move faster to place more women in management and leadership positions. This, in turn, would likely speed progress on gender-related workplace issues, such as pay equality, career-pathing, diversity, and work-life balance. More broadly, research suggests that gender diversity can improve decision-making. According to Columbia Business School professor Katherine W. Phillips, socially diverse groups are more innovative because their members’ different backgrounds bring new information to the table and because “simply interacting with individuals who are different forces group members to prepare better, to anticipate alternative viewpoints and to expect that reaching consensus will take effort.”[ii]

Jon Hale does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.