American women hold 65 per cent of the nation's wealth, according to Fortune magazine's assessment in 2000, yet working women are still a disadvantaged minority in the corporate world. Now socially responsible mutual funds are trying to turn that resource into power for women's advancement toward equality.
The concept of socially responsible investment (SRI) has been gaining ground since the 1980s, when investors successfully pressured their companies to stop investing in South Africa under apartheid. Since then, a cluster of SRI mutual funds, like Calvert, Domini, Parnassus and others, have sprung up as popular mechanisms for investors to choose stocks in companies whose policies they approve of by providing investors with ratings according to standards of their choice. Thus, investors may choose to buy stocks in companies that do not produce weapons or sell tobacco or damage the environment.

Despite admonitions from Wall Street - that investments based on company best practices may not be sound - SRI has proven to be profitable as well as ethical.
Not until 1993, however, did a fund emerge that made women its top priority. The Women's Equity Fund "invests in public companies that advance the social and economic status of women in the workplace". The fund was started by two friends, Linda Pei and Leslie Christian - both experienced investment managers - who sought a way to make a difference in the lives of women after Christian saw that women in abusive relationships failed to free themselves for lack of economic independence.

The Fund invests in companies that promote women to top executive positions, have a high percentage of women directors on their boards, provide career development opportunities and mentoring for women employees, use women-owned companies as vendors, present positive images of women and generally do not have discriminatory policies against women. Ninety per cent of the investors are women, and the 10 per cent that is male is highly supportive. According to Pei, "Men see the benefit for their daughters and wives."

Without referring to the huge investment power of America's wealthiest women, Pei says, "Women have a lot of power but we are not using it. Statistics say things are better. The percentage of women on company boards averages 15 per cent. But that's nothing. We believe that if women worked together, we could really make a difference."

But would all women choose to invest in the same things?

Pei believes women do share certain priorities. "One of the things that motivates us is to create a better environment for our children. In the developing world, mothers work very hard to see that their daughters can go to school. This concern for the children is less compelling for men. That's what makes us different. We need to be present when negotiating for world peace and other important issues because we bring that perspective to the table to address what is really important."

Pei, who also assists micro-lending projects for women in Asia, strongly believes that the free market is the best arena for making change, "because it's very, very efficient". "Governments are just too slow, and their administrations change frequently." But in the market, "Investors can dictate to the company. We have a right to tell the company what matters to us." She cites British Petroleum's growing investment in alternative energy as one case where free market pressure has encouraged sustainability.

Although a strong fund - highly rated by Standard and Poor, the world's foremost provider of business ratings - Women's Equity Fund is still a relatively small mutual fund, with 5,000 investors.

Calvert, the biggest family of funds in the SRI world, now has more than 400,000 investors with over US$12 billion in assets. According to Senior Vice-President Geoffrey Ashton, Calvert has clout because "we can aggregate all the shareholders and say we represent x-number of shares in this company and they will pay attention to us."

Now, Calvert is taking up the women's cause. In 2004, Calvert (which has a woman chief executive officer) took the innovative step of launching its 'Women's Principles' - a global code of corporate conduct to empower, advance and invest in women worldwide. The code calls for all the good things women require: pay equity; women's health and safety, including reproductive health; freedom from harassment and violence in the workplace; and an end to gender-based discrimination in communities. Like Women's Equity, Calvert calls for more women on corporate boards. And not just token women, says Ashton. Companies need to proactively seek women candidates.

Unfortunately, the principles will not be used as a screen for selecting stocks. It is a "tool", says Ashton, to encourage companies to do the right thing. Thus far, two companies have endorsed the principles publicly, Dell Computers and Starbucks. Cisco and The Gap have also expressed support. However, on the Gap Inc website, there is no mention of women's rights, not even in the Social Responsibility section.

Amy Augustine, Social Research Analyst for Calvert, looks at how companies perform in seven key areas of responsibility. She was a member of the team that composed the Women's Principles. "We work to get the message out that this is a tool companies can use to improve their businesses."

Calvert's business-oriented approach emphasizes that women are an "under-utilized asset" whose inclusion makes sense for business. "I do think that when companies become more aware of women as an asset, they will improve the treatment of women and invest in them," Augustine says. "Many people see women as the caretakers of the world. How we treat women is how we are treating the world."

Calvert collaborated with UNIFEM on the development of the Principles. It has also tied up with Verite, an independent, non-profit social auditing and research organization, to monitor their implementation. It remains to be seen whether the Women's Principles will have a defining influence on the treatment of women in the corporate world.

Asked what Calvert expects to see three to five years down the line, Augustine really couldn't say. "I do know that we are very committed to taking the next step - to push companies to implement the Principles." If good image is an accurate indicator of policy, a company's stated endorsement of the Women's Principles will alert the public, especially women investors, that this corporation has begun to care about women.

It can't happen too soon.