Event Report: Mainstreaming Gender Lens Investing in Northeast Asia

The following is an English translation of an original Japanese article issued in November 2021. 

Gender Lens Investing (GLI), which evaluates potential value and risk while consciously incorporating a gender perspective into investment decisions, is gaining traction around the world as a ‘smart investment technique.’ Even investors who are not familiar with impact investing are starting to explore the potential of GLI. On the other hand, GLI is relatively underdeveloped in the Northeast Asia region. 

On November 10, 2021 Ms. Ayaka Matsuno, Director of the Gender Investment and Innovation Program at the Sasakawa Peace Foundation, participated as a panelist in the “Northeast Asia Social Investment Summit 2021,” organized by Asian Venture Philanthropy Network (AVPN). This session covered the present state of GLIs in both public and private markets in the Northeast Asia along with good practices for GLI entry. 

In addition to Ms. Matsuno, the discussion included Mr. Sammi Wong, an incubator and investor in startups in Hong Kong and the Greater Bay Area and the Founding Member and Leader of Hong Kong Science and Technology Parks Ventures (HKSTP Ventures); Mr. Takuro Kimura, Founding Board Member of Women of the World Endowment (WoWE); and Ms. Wonhee Kim, Senior Researcher at Merry Year Social Company (MYSC), a social innovation consulting, acceleration and impact investing firm in South Korea. The discussion was moderated by Ms. Natalie Au of the AVPN Gender Platform. 

Ms. Au began by asking Ms. Matsuno about the status of GLI in Northeast Asia. Ms. Matsuno began by introducing the SPF and its implementation of the Asian Women Impact Fund (AWIF). She explained how the GLI has been the focus of attention since 2017, citing specific developments of the 2X Challenge, a women's finance initiative by the G7 development finance institutions, and Japan's Government Pension Investment Fund (GPIF), the world's largest pension organization,  as well as at Japan International Cooperation Agency(JICA). In addition, referring to the “Gender Lens Investing Landscape : East and Southeast Asia”(Chinese and Japanese versions are also available) released by the SPF in July 2020, she explained that GLI is not only active in North America and Europe, but the Asian market, with an overall value of approximately $1.3 billion, is the second largest public market in the world ($485 million) and the third largest private market ($815 million). She also pointed out that eight out of ten GLI products in Asian public market are located in Japan as a result of the late Prime Minister Abe’s Womenomics policy, which has inspired a number of GLI products. 

Ms. Au then asked Mr. Kimura to explain WoWE’s business model. Mr. Kimura began by underlining that WoWE views women as actors and change agents, rather than just beneficiaries, and that the organization addresses GLI from an intersectionality viewpoint, merging gender with socially relevant concerns like climate change, health, and education. 
 

Further, he explained that WoWE is focusing on the bond market, which is still small but growing compared to the overall financial market. WoWE is working with other key stakeholders to identify opportunities for gender-focused bond products. WoWE is also coordinating with the University of Pennsylvania to develop an impact scoring methodology. Mr. Kimura believes that potential to issue bonds relevant to specific social issues and gender exists in Northeast Asia. He thinks that the introduction of such a scoring technique will promote product development. 

Ms. Au then asked Ms. Kim how the Korean startup ecosystem is incorporating a gender lens. Ms. Kim noted that women are significantly undervalued in the Korean startup ecosystem, with 26.8% of women founders and only 7% of women venture capitalists. While women's businesses raised $331.3 million in 2020, this represents only 8% of total investment. Two-thirds of the investment went to one specific e-commerce platform, one of the Unicorn Startups, according to Ms. Kim. Many people see this situation as a problem. The term “Gender Lens” has been used in Korea since 2017 and social sector organizations have put together acceleration programs for female entrepreneurs. Even though Yellow Dog, an impact venture capital firm, has launched the Empower Fund, each movement is isolated and has yet to have a collective impact, said Ms. Kim. 

Shifting the topic to Hong Kong, Ms. Au asked Mr. Wong about GLI in HKSTP Ventures and the status of GLI in the Hong Kong startup ecosystem. Mr. Wong began by saying that HKSTP Ventures manages two funds and an early-stage fund, investing in seed to Series A and growth stage funds in several areas of deep tech, including life sciences, healthcare, semiconductors, and robotics. According to Mr. Wong, approximately half of his team consists of female investment specialists. His organization has invested in at least four women-led businesses, providing a welcoming environment for female entrepreneurs. On the other hand, he explained that while the number of women entrepreneurs in Hong Kong is growing, the current atmosphere makes it difficult to effectively advocate for a gender perspective and greater diversity as an ecosystem builder and investor. Therefore, rather than including a gender lens in their portfolio, HKSTP Ventures promote capacity building for female entrepreneurs and managers. 

In the next question, Ms. Au asked each of the speakers for best practices that would help them get started with GLI. 

Ms. Matsuno introduced the Gender Lens Investment (GLI) Fellowship Program, which is being implemented this year in collaboration with AVPN and Investing in Women, an initiative of the Australian government. She stated that while the first round of the program will end in December 2021, a second round is scheduled for the next year. In addition, she introduced the biennial “Gender Smart Investing Summit,” which provides an opportunity for investors and GLI focused funds to meet. Similarly, the “Capital Connect” program, which is part of the summit. This program provides an opportunity to bring together investors and GLI focused funds. 

She further mentioned that some funds started to consider paying attention to inter-sectionality of variety of social issues and gender issues. It means that addressing gender inequality does not necessarily be the main objective of a fund. Rather, it can be a secondary objective. Those funds widen their scopes to include funding that focus on gender perspectives in the context of climate change and other social challenges that overlap with other issues. Additionally, Ms. Matsuno said that the GLI is just one tool to help the foundation to achieve its goal of bringing about positive outcomes to women and girls in Asia. 

Ms. Au then mentioned that WoWE is bringing together data collectors, index creators, financial product developers, asset managers, and others to develop GLI financial products. She inquired about Kimura's recommendations for joint development of GLI products in public markets. She also sought for advice for investors who wish to incorporate a gender perspective in their public market portfolios.  Mr. Kimura talked about a prototyping session conducted by WoWE together with UN Women in 2019. The session was attended by the World Bank, Equileap (a gender-focused data agency), financial institutions, and other ecosystem players. This session clarified how the bond market is lacking a gender-focused sovereign bond rating. This realization led him to work with the University of Pennsylvania on a study to establish an independent index or gender bond or social bond KPI(Key Performance Indicators). He suggested that this method of collaborating with many actors to generate ideas and solutions could be considered an excellent practice for GLI implementation. His advice to investors was to think about gender from an integrated and inclusive perspective. 

Ms. Au then asked Mr. Wong about the types of stakeholders he has worked with in Hong Kong. Mr. Wong said that he has worked with variety of actors, including researchers, governments, entrepreneurs, and venture capitalists for advice and support. In addition, Hong Kong's Innovation and Technology Committee currently has a female chair. HKSTP Ventures' investment in four female entrepreneurs, which is a tailwind for the GLI, demonstrates that the number of women entrepreneurs in Asia is growing, he said. Mr. Wong also mentioned that the number of prominent female investors is on the rise, and that these positive developments inspire him to collaborate with a variety of stakeholders, emphasizing his optimism for GLI's future growth. 

Finally, Ms. Au broached the subject of the Korean market, inquiring Ms. Kim about MYSC's GLI efforts and relevant case studies.  Ms. Kim first stated that MYSC is not just an investor, but a "system maker." She noted that it is necessary to change the perspective of accelerators, incubators, and other intermediary organizations that design funding programs, and that is why MYSC is developing programs to help intermediary organizations incorporate gender perspective into their respective projects. She finds it problematic that the investment process to date has relied heavily on the judgment and priorities of investors. She is aiming to ensure that all investment procedures are gender-sensitive by educating evaluators and investors about the gender perspective. Finally, Ms. Au asked if the most innovative approach would be to examine one's own gender perspective and make small changes from the inside, such as forming a gender committee within the company, surveying stakeholders, and organizing group talks. 

At the end of the Q&A session, Ms. Au posed several questions about GLI’s future developments in Northeast Asia, as well as about GLI indicators and evaluation tools.  GLI has potential to be a powerful tool for not only channeling funds toward gender equality and women's empowerment, but also for assisting investors in recognizing potential value and risk, and making smarter investment decisions. The Sasakawa Peace Foundation will continue to share our learning gained by practicing GLI so that many investors would support and apply a gender lens to their investment practices  in Northeast Asia.