Last week I spoke with Joe Keefe, Impact Investing leader, and President & CEO of Pax World Funds. We talked about where he sees impact investments driving change, and he shared a recent favorite impact investing success story.
Sonya: What’s the most meaningful impact investing project that you are working on right now?
Joe: The two greatest issues confronting the global community are climate change and gender inequality. And in each instance, there is major economic growth locked up inside them which will be unleashed if we are successful in addressing them. We have funds that address each of these critical global issues and we are helping investors to be part of the change they want to see in the world.
Sonya: Let’s focus in on the gender inequality issue. Can you tell me more about that, and about how impact investing can both help further gender equity while also benefiting shareholders?
Joe: Investors can do something about gender inequality. By looking for companies that advance women, you can identify companies that are making a huge difference. That’s what our Global Women’s Index Fund does and investing in companies that employ more women and do better by women has been proven to be a very successful investment strategy that is growing very popular as well.
Sonya: Your marketing materials state that companies with more women in leadership have higher returns on capital, greater innovation, increased productivity and higher employee retention and satisfaction. Can you give an example of a specific company?
Joe: Sure. At Estée Lauder, 40% of the board is women and 25% of the executive team is women; women are 84% of the workforce and hold more than 50% of VP level positions. Estée Lauder has contributed 36 basis points in relative performance to our fund, which outperformed the MSCI World Index for the prior 3 years. When you invest in Estée Lauder, you’re investing in one of the global leaders in advancing women. And the result of that is better performance.
Another couple of examples are Proctor & Gamble, where 36% of board members and 27% of the senior leadership team are women; and Kellogg, where 42% of the board and 35% of the senior leadership team are women. Both of those companies have contributed to the Global Women’s Index Fund’s out-performance of its benchmark over the past 3 years. By promoting and investing in gender equality, these companies are returning more to investors. That is achieving impact through investments.
Sonya: What interesting project are you working on now?
Joe: We just released two animated videos. One focuses on gender inequality and the other focuses on climate and the environment. They both focus on how investors can weigh in with their dollars and make a difference. I think that kind of digital outreach, that appeals to the end investor about issues that they really care about, is relatively new to the sustainable investing space and it’s something I’m really proud of.
Sonya: How can an advisor or investor find out more and get involved?
Joe: Check out the videos I just mentioned.
Sonya: I'll include them here.
The interview above has been edited for clarity and length.
Joe Keefe Bio
Pax Ellevate Global Women’s Index Fund
Invest Like a Feminist Video
Investing Is Your Super Power Video
Among the companies in the Pax Ellevate Global Women’s Index Fund, women hold 33% of board seats and 27% of executive management positions, compared to global averages of 16% and 16%, respectively. (Sources: “The Tipping Point: Women on Boards and Financial Performance,” MSCI ESG Research, Inc. December 2016. MSCI World Index, Pax Gender Analytics, 2016.)