20-04-2020 · Insight

How a better gender balance boosts profits

Gender equality not only makes for a better workforce – it can be shown to enhance returns, a unique study shows.

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RobecoSAM researchers measured the contribution of women in the workplace as part of analysis of a dataset of over 20,720 observations collected through the SAM Corporate Sustainability Assessment from 2013-2018.

The SAM CSA is an annual assessment which uses a scoring methodology to assess the environmental, social and governance (ESG) characteristics of the companies taking part. Gender equality is measured using a variety of metrics, beyond counting the number of women who serve on the company’s board.

On the face of it, the results were only mildly encouraging at first. An increase in gender diversity on corporate boards was a positive finding, but the increase at management level was minimal, rising from 24% in 2013 to 26% in 2018. Furthermore, data for the total workforce over the same time period shows little change.

But then drilling down into the data using regression analysis, the research looked at the presence of women at different corporate levels, and the link with firm fundamentals. Dividing the data into quantiles enabled confirmation of the link between financial performance at every level: corporate board, management and total workforce.

Significantly the results showed that more a positive relationship with a company’s profitability occurs when it has more than 20% of women on the board, more than 30.2% of women in management, and more than 44.7% of women in the total workforce.


Female representation at different levels by sector in 2018. Source: Robeco, SAM Corporate Sustainability Assessment (CSA), 2019

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Critical mass of women

“Profitability and risk therefore improve with gender diversity,” says Junwei Hafner-Cai, portfolio manager of the RobecoSAM Global Gender Diversity Impact Equities fund. “This suggests that a critical mass of women at each level would have a positive effect on organizational dynamics.”

“Often, improving gender balance in corporates focuses on the lack of women holding board seats. However, the regression analysis also illustrated a positive link between a higher percentage of women in management positions and a firm’s profitability, returns, and earnings volatility – all characteristics of its quality and health of operations.”

Higher female participation is also linked to better earnings stability, which is an essential ingredient in longer-term sustainability, the research shows. It found that ‘top tier’ companies with more than 30.2% of female managers exhibited lower earnings volatility than ‘bottom tier’ companies across all regions.


‘Critical mass’ of women at each level for impact on organizational performance. Source: Robeco CSA, 2019

Candidates for the fund

RobecoSAM uses data from the CSA, along with other sources, to determine whether companies have female representation or policies that are progressive enough to warrant inclusion in the gender equality fund.

“As gender issues become more material for companies, they become a potentially valuable indicator for investors,” Hafner-Cai says. “RobecoSAM looks beyond women at board level to conduct a more holistic assessment of workplace equality.”

“This includes fair and transparent remuneration practices to reduce the salary gap, flexible workplace practices, childcare support, parental leave beyond the statutory requirement, talent retention, various levels of workforce diversity and employee engagement trends.”

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Important information

This information is for informational purposes only and should not be construed as an offer to sell or an invitation to buy any securities or products, nor as investment advice or recommendation. The contents of this document have not been reviewed by the Monetary Authority of Singapore (“MAS”). Robeco Singapore Private Limited holds a capital markets services license for fund management issued by the MAS and is subject to certain clientele restrictions under such license. An investment will involve a high degree of risk, and you should consider carefully whether an investment is suitable for you.