The wealth management house addresses the thorny issue of gender inequality and how private wealth can be deployed to set things right.
This article, by Juerg Zeltner, who is president of UBS Wealth Management, explores how the gender-lens wealth approach can help individuals mobilise their private wealth towards achieving sustainable development goals, or SDGs. It’s expected that there will be $224 trillion of private wealth globally by 2020, so the redirection of even a tiny fraction of this could make a huge difference. This process is taking place amid growing appetite for impact investing. In the case of UBS, that firm has pledged to direct $5 billion over the next five years. The editors of this news service are pleased to share these insights with readers and invite responses. This publication doesn’t necessarily endorse all views of guest contributors. To respond, email firstname.lastname@example.org
It could take the rest of this century for the gender gap to close. That’s not acceptable. It’s one of the major issues of our times, but we have a long way to go. Although there’s been progress, there continue to be stark disparities – socially, financially and politically. Achieving gender equality and female empowerment is the fifth of the United Nations' 17 Sustainable Development Goals (SDGs) for 2030. But according to a recent report by the World Economic Forum (WEF), it’s likely to take decades before women hold the same power as men in the labour force.
The numbers speak for themselves. According to WEF, women still only experience 59 per cent of the global economic opportunities that are available to men. The economic benefits we would see from more women in the workplace are enormous. According to a 2016 McKinsey study, an incredible $12 trillion could be added to the world economy over the next decade if we can get more women into work.
We need to unlock this potential, but we can’t do that without bridging a large funding gap. According to the Brookings Institution we need $5-7 trillion a year to fund the SDG goals. At the moment we only have a tenth of that amount. And what’s even more troubling is that only a small fraction, just 2.6%, went to causes related to gender equality between 2000 and 2013, according to AidData.
So what can we do? Private wealth isn’t getting to where it needs to be and that needs to change. It’s expected there will be $224 trillion of private wealth in the world by 2020, so a little shift can have a huge impact. To move closer to achieving SDG 5’s goals, we need to get more private wealth moving along the right channels. As outlined in our recent white paper Gender-Lens Wealth, we think gender-lens wealth is the solution. To support our recommendations, we’re partnering with UN Women to create a Gender-Lens Investing Institute.
Through gender-lens wealth we can strengthen connections between stakeholders, connect investors with philanthropic and investment opportunities, and help them increase their real-world impact. Through these networks we can tackle the lack of transparency around funding requirements and create a global infrastructure. If we’re to reach the UN’s 2030 target for SDG 5, this support and coordination will be invaluable.
In practice there are five main strands of gender-lens wealth – policy, business, investing, giving and education. But, instead of just focusing on these areas individually we need to go one step further than we have before.
Wealthy individuals can help on SDG 5 most directly through investing and philanthropy. A good starting point is for investors is to focus their investment portfolios towards companies with more senior female managers. More and more, we’re seeing a link between companies who have more gender-diversified boards and good performance. When women hold a fifth or more of leadership positions, profits are higher than those of peers with a less diversified workforce. Numbers show that between 2011 and 2015, firms with strong female leadership outperformed the MSCI World Equity Index by around two percentage points each year.
There’s also a growing appetite for investment that does good and does well. So the second way to help is to grow the total pool of impact investing opportunities available. And we can see a clear gap for the over-arching approach of gender-lens wealth to make the most of this opportunity. We’ve committed to direct at least $5 billion in client money over the next five years towards impact investing. If wealth managers can more effectively connect social-impact oriented investors with investment opportunities that demonstrate the real-world impact they’re looking for, there will be huge benefits for both investors and sustainability goals. For example, through the UBS Optimus Foundation, we provided investment for the world’s first Development Impact Bond which is helping to educate girls in marginalised regions of India. Just one of the ways we’re helping connect clients to issues that matter to them.
We know that women are particularly open to this impact investing. Yet, despite that, analysis by Boston Consulting Group shows that wealth managers aren’t making the most of this. Only 2.2 per cent treat their female clients as a distinct group with specific interests. Targeting wealthy females who are attracted to these investments makes sense for them and for SDG 5. To help change financial services, UBS has launched UBS Unique: a five-year global programme to better serve female clients and increase one million women's financial confidence by 2021.
The final way is connecting philanthropy better to SDG 5 goals. Three key areas which can really impact women’s lives in a meaningful way are maternity provisions, reducing unpaid domestic work, and increasing women’s participation in STEM education. We found that only a fifth of millionaires involved in philanthropy in the U.S feel it’s highly effective. By connecting stakeholders and sharing information, we can become more transparent, more innovative, and ultimately help clients make the most of their wealth. To help foster this thinking, in 2014 we launched the Global Philanthropists Community in 2014 – a network for the world’s wealthy.
Using private wealth will make a real difference. But it’s not enough for individuals to act alone. Gender-lens wealth and the power of shared information and a systematic approach is what will ultimately move us closer to achieving the SDG 5 goals by 2030.