For Canadians interested in sustainability and the principles of responsible investing, it’s time to get more women in leadership roles, but also to back their ventures.
Research suggests female entrepreneurs and C-suite executives drive above-average financial results, as well as performance around environmental, social and governance (ESG) measures. But they remain under-represented and often underfunded.
“The fact that in Canada only 4 per cent of Canadian CEOs identify as women suggests that we’re missing a great deal of talent on the way up,” says Tanya van Biesen, managing partner of board and CEO Succession Canada Practice for Korn Ferry, the organizational consulting firm.
That’s a drawback for responsible investors who want to put their money into companies that demonstrate diversity in action, throughout their workplaces and at the board and C-suite levels. It’s not just about investor values but about solid returns.
One study from S&P Global researchers examined the performance of firms that have made female appointments to their CEO and CFO positions. It found companies with female CFOs are more profitable, as are firms with high gender diversity on their boards. Firms with female CEOs and CFOs have also produced superior stock-price performance compared with the market average.
Another research review from the International Finance Corporation reported that a higher proportion of women on boards and in senior management was connected to better overall company performance and enhanced ESG standards.
What could account for that?
Korn Ferry conducted a study on what makes female CEOs different. It said the defining traits include courage, risk-taking, resilience, agility and managing ambiguity. More than two-thirds of the women interviewed said they were motivated by a sense of purpose and their belief that their companies could have a positive impact on their communities, employees and the world around them.
“The difference we’ve seen in the study is that women are much more likely to engage the power of the full team earlier and longer, because it’s in their nature to be in that collaborative mode,” says Tierney Remick, vice-chairman and co-leader of Korn Ferry’s Global Board and CEO Practice.
Van Biesen reframes the language around these traits, often referred to as “soft skills.” She calls them “power skills,” and says they should be in demand for the next generation of leaders.
Gender gap in getting capital
Supporting more women in leadership positions has become a recent target for the Scotiabank Women Initiative (SWI). The latest pillar of the program looks at mentoring and coaching women to get them into more of the country’s boardrooms.
“We know that there’s a direct correlation between a company’s performance and diversity at the board, whether it’s diversity of thought, experiences or gender,” says Sloane Muldoon, senior vice-president of retail performance at Scotiabank and co-chair of the Scotiabank Women Initiative.
The SWI also aims to get $10-billion of capital into the hands of women-led businesses by 2025, up from the initial commitment of $3-billion made in 2018.
“There’s a real gender gap in getting capital as well as venture capital,” Ms. Muldoon says. “Yet $150-billion is contributed to the Canadian economy by women-owned businesses, and they employ over 1.5 million people.”
For venture capitalists and responsible investors alike, backing more female leaders can be a move to reduce business risk.
Michelle McBane, managing director at StandUp Ventures, a Toronto-based venture capital firm that works mainly with women-led technology firms, believes that these companies are excellent bets. She says they tend to think outside the box, recruit great talent and serve bigger markets.
That’s one reason why women are helping other women access capital. According to a report by All Raise and PitchBook, female partners in venture capital are more than twice as likely to invest in startups that are led or founded by a woman.
“There’s a collective that wants to lift the whole community up,” Ms. McBane says.