New research says companies with greater gender diversity produce better returns for their investors.
Financial services firm Morgan Stanley looked at 1600 companies around the world to see how they ranked for factors like pay parity and having more women in senior management and board roles.
It found the more gender-diverse companies produced better investment returns and those returns were also less volatile.
For its research Morgan Stanley considered five factors: the percentage of women in senior roles, pay rates, work-life benefits, leave and diversity policies.
The stocks of companies that ranked high for gender diversity performed better. They had higher profitability and their profits did not vary as much.
Morgan Stanley adjusted the results to account for company size, the industry the company operated in and the amount of risk the companies were taking to get their returns.
Morgan Stanley's report does not say whether the companies are performing better because they treat women fairly, or if successful companies are more interested in achieving gender diversity.
But the research is part of a wider body of work that has shown companies with better gender diversity do perform better.
Morgan Stanley is convinced by the results. It is now offering clients the option of investing in companies based on gender diversity as well as more traditional investment measures.
If the approach works you can expect that other investment firms will do the same. That will put the onus on less diverse companies to lift their game. Otherwise they will risk losing investors to companies that are considered to be more diverse.
Morgan Stanley says it has already seen strong demand from clients to specifically invest in gender diverse companies. It is similar to the growing demand many investment firms are seeing for more socially responsible investments.
Newshub.
