On March 9, Pax World Management launched the Global Women Investment Index (GWI) as part of its gender investment index series. Pax, creator of the first SRI mutual fund in 1971, is working with KLD Indexes to develop and maintain the GWI. The new series, which is sponsored by the World Bank Group’s International Finance Corporation, seeks to measure and compare corporate performance regarding gender relations in the workplace.

Pax believes that the GWI will demonstrate that gender equality is an important indicator of effective management.

“Competitiveness can be achieved more readily by companies that recognize the talent of the entire workforce,” said Julie Gorte, Pax Senior Vice President for Sustainable Investing. ”There are still too many in finance who doubt that gender empowerment has any effect on performance, but the evidence suggests there could be a premium for those companies that best advance women as leaders.”

Karin Chamberlain, KLD Index Manager for the GWI project, said that the new index “will quantify the financial impact of gender-related corporate practices and provide opportunities to invest in the leading companies in this area.”

The Construction of the Global Women Investment Index

KLD has designed the GWI to provide exposure to large and mid cap companies that take affirmative steps to attract, retain, and promote women and to advance gender equality.

The GWI’s eligible universe includes companies listed in the FTSE All-World Developed Index series. To select GWI constituents, KLD tracks corporate performance according to four major indicators: Board Representation, Workplace Representation, Programs and Policies, and Controversies.

Board Representation – How many members of the corporation’s board are women, and how does the company compare to sector and regional peers?

Workplace Representation – What percentage of senior line executives, non-line executives, and managers are women?

Programs and Policies – KLD constructs this metric from data on corporate commitment to mentoring, leadership development, alternative work schedules, and benefits for mothers, fathers, and children.

Controversies – This metric accounts for gender relations problems at each company, including lawsuits and incidents related to discrimination, harassment, or a hostile work environment.

Next Steps for the GWI

The complete GWI series will include an index of the top 100 global performers, plus regional sub-indexes for Europe, North America, and the Asia Pacific region. KLD has completed development for the North American Women Investment index (NAWI) and can calculate and maintain other sub-indexes to meet client demand.

Considered as a whole, the GWI indicators could become a core environmental, social and governance (ESG) metric, believes KLD’s Karin Chamberlain.

“We’ve found that companies where women can excel also tend to be strong ESG performers,” explains Ms. Chamberlain. “We believe that better workplace gender relations may come to be seen as a competitive asset for the best-run global corporations.”

For more info on the Global Women Index, see Investment News and Dorothy Hinchcliff’s blog at Financial Advisor Green.