Home Economics & PolicyComment Arab listed Companies: A New Emphasis on ESG Investing Through a Gender-Based Lens

Arab listed Companies: A New Emphasis on ESG Investing Through a Gender-Based Lens

by Zeina Zeidan

In the recent decade, Arab-listed companies have been aiming to achieve the correct implication of gender-lens investing (GLI) by tackling significant and vast opportunities on the rise. So, what do we mean when talking about GLI from a socially responsible perspective? Let’s start by introducing the most common and communicated definition and necessity of GLI. Some would describe it as a strategy to consider gender-based factors across the investment process. This can translate into a plethora of opportunities, from investing in women-led enterprises to investing in those that already possess policies on gender equality, reaching products that bolster the lives of many women and girls. GLI has to be considered today as a new building block in the Middle Eastern realm of investing and social entrepreneurship, bringing us back to my understanding that GLI must be regarded as exclusive rather than inclusive.

For instance, taking into consideration the Lebanese Woman Angel Fund (LWAF) that advocates to serve and encourage successful women entrepreneurs, while also investing in female-led or female-co-founded enterprises. In, parallel, it further sets out to “turn angel investing into an asset class for businesswomen.” But with these two ambitions, LWAF took great care in defining qualified start-ups as those with female participation in more than the narrow definition of 100 percent female-owned and operated.

When addressing GLI and related broader investment approaches such as socially responsible investing (SRI), environmental, social, and governance (ESG) investing, and impact investing, one can come across several meanings and definitions. Yet, are those measures relevant in the Arab world? Many factors are evaluated when launching GLI and ESG investing as a means to incorporate and increase success and relevance of female-led enterprises in the Arab world. This brings us back to the importance of diversification on the effectiveness of ESG and GLI.

Diversification and GLI

Whenever investing comes to mind, the notions of wealth and attitude are brought to the forefront. When addressing wealth, people usually link the type and amount of assets they own to everyday terminologies such as “net worth,” “disposable income,” and economic comfort.

On the other hand, investing has another factor linked to attitude. Most wealth managers, fund managers, or even private bankers while dealing with high net worth clients, examine the type of attitude to be used while managing that same specific wealth: Aggressive, defensive, or a balanced approach?”

It’s pretty optimal to combine those two key factors regardless of the region implemented. That’s where wealth experts usually bring forward the necessity of including diversification to manage and increase one’s wealth. Diversification is the art of investing your wealth. Here is the distinction. Similarly, in gender lens investing, the question is not about diversification of financial assets but diversity. Bringing this back to our main topic, most, if not all, MENA-based firms are striving to enhance their wealth while reaping the benefits of a balanced approach through diversification. In the realm of Arab-listed companies, much can be done from a managerial perspective, for female inclusion on board level, senior management level, employee policies level, and examination of supply chain and product compliance with gender equality standards.  These measures will inevitably boost an entity’s diversification and lead  to wealth expansion.

A broader look at ESG

On another note, ESG investing does not revolve around the old theory that individual investment choices in their aggregate will be naturally conducive to economic growth, or – saying it more pointedly – that the pursuit of private interests will generally lead to public benefits. This is to say that socially responsible investing, including ESG investing and GLI, is another and perhaps the most decisive step from shareholder capitalism to stakeholder capitalism. Looking at this from our Arab world perspective, investors and employers across the MENA region have an opportunity to enhance SRI, GLI, and ESG investing and accelerate women’s inclusive participation in the economy. GLI has a strong record of success in solidifying woman’s presence in the workforce while contributing to business and wealth growth.

Under paradigms of all forms of social and impact investing, diversity and inclusion of human capital are, in economic terms, substituting for diversification and optimization of financial assets that have been the ultima ratio of wealth management. But very significantly, the traditional approach of diversification in investment and the approach of responsible investment are both based of wealth preservation and wealth generation. SRI is enlightened investment altruism, profitable to the investor with risk as acceptable as, or better than, the risks of conventional portfolio strategies.  

In this sense, ESG investing is a mindset for future-proof investments. The World Inequality Report of 2021 (released last December by the World Inequality Lab) indicates that the female share of global labour income in the early 2020s is about 35 percent, which marks a five percentage point increase from 30 percent in the early 1990s, one whole generation ago.  Such indicators evaluate how woman’s inclusiveness in the workplace can have drastic global changes and implications, which is why we should ralley behind these applications in our MENA region.

Researchers state that in the Middle East and North Africa region, the female income share was 15 percent in 2019. Only 15. It measured about ten percentage points below population-weighed female income share in Asia (excluding China) and less than half of what was achieved in other regions. Whatever way one looks at it, MENA was the lowest of all areas in terms of women’s share hold in national income statistics. It is an empty spot on the fair income distribution world map. So, how can we overcome these challenges presented?

Managing the Challenging

As discussed and proved by numerical evidence, the MENA region lags behind compared to other surrounding regions, but that doesn’t stop it from managing all the presented challenges to succeed. To do so, Arab-listed companies in specific, depending on their nature of business, can elevate and uplift the progression of woman diversity through various applications. Investing in the dignified economic empowerment of women can drive progress while providing greater opportunities for investors and organizations who look to contribute to sustainable development goals. From a business perspective, applying gender-based investing focuses on the necessity of family businesses – where female succession and ownership issues must be addressed – as well as entrepreneurship –where investments are still globally imbalanced – which favours male networks of investors and entrepreneurs. In other words, giving women the chances and opportunities they deserve, regardless of the pressure embedded by the surrounding Arab culture.

Moreover, restructuring how most of these firms operate is a key and essential factor moving forward. Investing in structural changes that lead to more gender-equitable recruitment, retention, and promotion in the workplace; providing financial support to advance more sustainable economic development models through women empowerment and dignified access to financial tools.

Future of GLI

The real challenge behind the new wave of gender-based factors and socially responsible investing is identifying the barriers that hinder its progression and prosperity in the MENA region. Arab-listed companies have a great chance of becoming renowned globally due to women’s robust capabilities and skills by eliminating all imbalances and unequal measures will boost economic growth and firm wealth. Supposing that GLI and impact funds continue to grow in prominence and general acceptance because of their good returns. In that case, we, without a doubt, will see outstanding consulting and advisory opportunities for GLI specialists in the MENA region, unlike the current and ongoing scenery, where very few listed companies are applying inclusive policies on several levels of the organization. Women’s roles in the top layers of the financial industry in MENA will increase, from board to managerial to professional positions. With fairer remuneration packages, we will be able to see an increase in high-level career opportunities opening up for highly qualified, ambitious, and socially enterprising women in the top layers listed corporations, but also in SOE management, as well as in family businesses seeking equity from local capital markets, and more contributions of entrepreneurial disruptors to the national economy. When given the right tools and prospects, women and girls, whether at an educational, financial, or even a managerial level, can succeed immensely. So, now is the time to start and implement the change for equitable competency and qualification!

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Zeina Zeidan


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