investing in gender equality - esg gender equ… · greater female representation in the workplace...
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This document is for the exclusive use of investors acting on their own account and categorised either as “eligible counterparties” or “professional clients” within the meaning of markets in financial instruments directive 2004/39/ce
Take a stand for women in the workforce with the Solactive Equileap Global Gender Equality index
Investing in Gender Equality
Embrace ESG April 2018
We believe there is a real opportunity to make an impact
Doing justice to gender equality 3
Understanding the opportunity 4
How the Solactive index works 5
The role of Equileap 6
A look under the hood 7
Take a stand with our ETF 9
Knowing your risk 10
The Solactive Equileap Global Gender Equality index
Achieving gender equality is a path to better well-being for families and communities, while at the same time encouraging productivity and economic growth. Directing capital towards those companies that manage their gender balance effectively is not only a means to promote equality, but should also be a source of incremental returns over time.
In spite of its importance, gender equality remains under the radar for many investors, with few ESG screens incorporating it into their analysis. As a result, the ‘gender dividend’ is not fully reflected in market pricing and investment strategies.
As companies face increasing pressure from society and regulators to address their gender balance across their organisations, we believe there is a real opportunity to harness a developing story, and make an impact.
Doing justice to gender equality
The world is finally waking up to the social and economic benefits of gender equality
Did you know?According to the G20 Green Finance Study Group, Gender Equality is one of the Top 3 UN Sustainable Development Goals which global investors are currently focusing on, along with Climate Action, and Affordable and Clean Energy.
François Millet Head of ETF and Index Product Development
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The Solactive Equileap Global Gender Equality index
Did you know?
Research suggests that gender-diverse companies are 15% more likely to financially outperform4.
There are clear social and economic reasons to prioritise companies managing gender equality effectively. Investing in companies promoting gender equality can accelerate this change.
1 Source: Bloomberg, daily data from 30/09/2011 to 29/09/2017. Past performance is not a reliable indicator of future results.2 UN Women, Economic Empowerment (http://www.unwomen.org/en/what-we-do/economic-empowerment/facts-and-figures) 3 The McKinsey Global Institute Report, The Power of Parity 4 Source: McKinsey analysis, January 2015
Understanding the opportunity
PerformanceInvestors can do well by doing good. There is evidence that companies promoting gender equality among their workforce and senior management team have outpaced their peers. Over the last six years, the Solactive Equileap Global Gender Equality index has outperformed the MSCI World Index by 10.7%.1 The dispersion is likely to become wider as regulators encourage greater transparency.
Good citizenship Encouraging gender equality has tangible benefits for society: increasing the share of household income controlled by women changes spending in ways that benefit children, while increasing educational attainment for women reduces child mortality.2
Promoting long-term economic growthGreater female representation in the workplace is beneficial for the long-term growth of the economy. Up to $28 trillion could be added to global GDP by 2025 if full gender equality is achieved in the workforce.3
Promoting greater equalityDirecting capital to those companies with an enlightened approach to gender relations encourages wider adoption of these values. As transparency increases, those companies with a poor record will increasingly find themselves on the wrong side of regulation and investor sentiment.
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The Solactive Equileap Global Gender Equality index was designed by Equileap, an independent gender equality research organisation. It aims to identify those companies that are strongest among their global peers in promoting gender equality.
Index designThe index comprises 150 companies, ranked by their Equileap Gender Equality Score. In assigning its scores, Equileap screens over 3,000 global companies from 23 countries on 19 criteria to measure their progress towards gender equality. This score prioritises those companies with gender balance in leadership & workforce, equal compensation & work life balance, policies promoting gender equality, and commitment to transparency and accountability.
Information is drawn from public sources and researched by the Sustainable Finance Group at Maastricht University. The companies in the index have all shown a significant commitment to gender equality in the way they conduct
their business.
Diversified and investibleCompanies are equal weighted, ensuring no premium is given for size. There is also a limit on the weighting to US companies, and a cap of 10% for other countries. No one industry represents more than 25% of the index. Size and liquidity filters are also applied, with a US$2bn market capitalization and a minimum US$5m average daily traded volume.
EthicalAn ethical screen is applied, excluding companies involved in weapons, gambling and tobacco, and those on the Norwegian Ethics Council list. Companies involved in gender-related legal cases are also excluded.
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How the Solactive index works
Gender balance in leadership and workforce
Equal compensation & work life balance
Policies promoting gender equality
Commitment to transparency and accountability
The Solactive Equileap Global Gender Equality index
Equileap is an independent gender equality research organisation that aims to accelerate progress towards gender equality in the workplace, using the power of investments, grants and knowledge.
Equileap strives to cut the 217 years the World Economic Forum estimates it will take for equality to be achieved at present rates of change. Improving equal opportunities
promises to take millions of women and their families out of poverty and move the world closer to achieving the UN’s Sustainable Development Goals by 2030.
The role of Equileap
How the Equileap gender scores are calculated
Category Equileap criteria Factors measured Weight
Gender balance in leadership and workforce
Non-executive board What is the percentage split of males/females on the board of directors?
40% of total score
Executives What is the male/female percentage split of executives?
Senior management What is the percentage split of males/females in senior management?
Workforce What is the percentage split of males/females in the total work-force?
Promotion & career development opportunities
What is the ratio of each gender in management compared to ratio of each gender in the workforce?
Equal compensation and work life balance
Fair remuneration Is there a commitment to ensure payment of fair wages to all employees?
30% of total score
Equal pay Is there a commitment to provide comparable wages, hours, and benefits for all employees? How big is the gender pay gap, and is there a strategy to close it?
Parental leave Are paid leave programmes for child care available to both men and women?
Flexible work options Are flexible working hours and locations available to all employees?
Policies promoting gender equality
Training & career development Is access to training and career development equal for men and women?
20% of total score
Recruitment strategy Is there an equal opportunity policy to ensure gender diversity?
Freedom from violence, abuse and sexual harassment
Is there an anti-sexual harassement, anti-bullying and/or anti-violence policy?
Safety at work Is there an employee health and safety policy?
Human rights Are all employees entitled to participate in legal, civic and political affairs?
Social supply chain Are initiatives in place to reduce the social risks in its supply chain (e.g. trafficking, labour exploitation…etc)
Supplier diversity Is there a commitment to ensure diversity in the supply chain?
Employee protection Are employees protected by a whistle-blower policy?
Commitment to transparency and accountability
Commitment to Women’s Empowerment
Is the company a signatory to the UN’s Women’s Empowerment Principles? 10% of
total scoreAudit Has the company been awarded an independent gender audit certificate by an Equileap recognised body?
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So who are these 150 companies at the forefront of gender equality?
Australia, the Scandinavian region, France and the UK are home to some of the more progressive companies on this theme, while the US and Japan have some catching up to do.
A look under the hood
Top 10 constituents of the Solactive Equileap Global Gender Equality index
Company name Country of domicile Equileap rank Equileap score
L’Oreal France 1 22
Pearson United Kingdom 2 22
National Australia Bank Australia 3 22
Sodexo France 4 22
Telia Company Sweden 6 22
Westpac Australia 7 21
SEB Sweden 8 21
Elisa Oyj Finland 9 21
Diageo United Kingdom 10 21
Marks & Spencer United Kingdom 11 20
Focus on the top stock: L’Oreal
Gender Balance in Leadership &
Workforce
Equal Compensation &
Work Life Balance
Policies Promoting Gender Equality
Commitment, Transparency & Accountability
Total score for L’Oreal
Source for all data: Equileap, as at beginning of September 2017 (prior to re-balance)
11 4 6 1 22
The Solactive Equileap Global Gender Equality index
Country over/underweights vs. MSCI World Sector over/underweights vs. MSCI World
What you need to know about the index 5 year index performance vs. MSCI World
Performance recap
7.5%
5.5%
5.3%
4.8%
1.0%
-0.3%
-2.0%
-3.6%
-8.7%
-10.8%
-15% -10% -5% 0% 5% 10%
Australia
Nordics
United Kingdom
France
Germany
Netherlands
Switzerland
Canada
Japan
United States
5.8%
4.3%
2.2%
1.3%
1.2%
0.9%
-0.9%
-1.9%
-2.2%
-2.4%
-8.2%
-10.0% -6.0% -2.0% 2.0% 6.0%
Telecommunication Services
Utilities
Real Estate
Financials
Consumer Discretionary
Materials
Energy
Health Care
Industrials
Consumer Staples
Information Technology
90
100
110
120
130
140
150
160
170
180
190
2012 2013 2014 2015 2016 2017
Solactive Equileap Global Gender Equality NTR Index
MSCI World NTR Index
Index details
Index name Solactive Equileap Global Gender Equality Net Total Return Index
Bloomberg ticker EQUALN
Index currency USD
# holdings 150
Weighting of stocks Equal
Index rebalance Annual
Index nameYTD
cumulative return
1Y annualised
return
3Y annualised
return
5Y annualised
return
Annualised return since date of availability of gender data (30/09/2011)
MSCI World NTR Index
16.0% 18.6% 7.6% 10.9% 12.7%
Solactive Equileap Global Gender Equality NTR Index
16.6% 18.6% 7.4% 12.4% 13.5%
Source: Solactive, Bloomberg, as at end October 2017. Country weights refer to the companies’ country of domicile.
Source: Solactive, Bloomberg, as at end October 2017.
Source for chart and performance data: Bloomberg, as at 29/09/2017. Past performance is not a reliable indicator of future results.
0.20%#1
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Five things to know
1 Source: Lyxor International Asset Management, as at 19/02/2018.2 Source: McKinsey Analysis, January 2015
EmpowermentTake a stand for gender equality
PerformanceGender diverse companies have outperformed2
FirstThe first gender
equality ETFin Europe1
Accomplished Lyxor has a track
record in sustainable ETFs
Low costTotal Expense Ratio
of just 0.20%1
Fund details
ETF name Lyxor Global Gender Equality (DR) UCITS ETF
ETF Bloomberg ticker ELLE FP, ELLE LN, GEND LN’
ISIN LU1691909508
Trading currency USD
Inception date 12 October 2017
Domicile and legal structure Luxembourg SICAV
Replication type Physical
Underlying index name Solactive Equileap Global Gender Equality Net Total Return Index
Income treatment Capitalising
Total Expense Ratio 0.20%1
Europe’s first gender equality ETF1
Part of a comprehensive ESG range including World Water, New Energy and Green Bonds
The only provider in Europe to offer ETFs on 4 of the UN’s Sustainable Development Goals1
Why choose Lyxor?
#1
With Europe’s first Gender Equality focused ETF, you could do well by doing good.
Our rules-based approach guarantees you’ll only ever be investing in companies at the forefront of change. And with
a management fee of just 0.20%1, taking a stand has rarely been easier.
Take a stand with our ETF
The Solactive Equileap Global Gender Equality index
Knowing your risk It is important for potential investors to evaluate the general risks described below and in the fund prospectus on our website www.lyxoretf.com
Capital at risk ETFs are tracking instruments: Their risk profile is similar to a direct investment in the Underlying index. Investors’ capital is fully at risk and investors may not get back the amount originally invested
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