Companies with Gender Diversity Make Better Investments - Ideas for Leaders
Idea #875

Companies with Gender Diversity Make Better Investments

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Photo by Magda Ehlers on Pexels
Photo by Magda Ehlers on Pexels


Gender diversity is not only a question of equality and fairness. A global study shows the link between gender diversity and greater financial returns for investors.


The poor numbers relating to gender diversity that is, the significant underrepresentation of women in positions of leadership in business are well known. Gender diversity is not just a question of numbers, however: companies with greater parity between men and women are likely to be more economically successful than companies where men dominate, according to a study from BlackRock.

The study is primarily based on data from the MSCI Index, complemented by BlackRock’s calculations and occasionally other sources, including Bloomberg and Worldscope. The MSCI Index covers more than 1500 large and mid-cap companies in 23 developed countries.

Parity is key, the study shows. Overrepresentation by women found in companies in certain sectors, such as health care, financials, and real estate is no better than overrepresentation by men. The performance results of parity companies were higher than the results of the lowest diversity companies and highest diversity companies (those with, respectively, an average of 16% and 60% of women in their workforce). These trends remained consistent in “apples-to-apples” of companies in the same industry or from the same country.

Drilling down into specific roles and positions, the data shows, using return on assets as the metric for performance, that companies achieving gender parity in key revenue-producing, engineering, and top-paying roles outperformed their industry and national counterparts by an average of 29% between 2013 and 2022.

Economic performance also improves when the representation of women in middle management roles reflects the representation of women in the overall workforce. From 2014 to 2022, the risk-adjustment monthly returns for these companies were 36 basis points higher than companies with an underrepresentation of women in the middle management ranks.

Greater gender diversity of women at the senior levels had a similar positive impact on performance, based on BlackRock calculations. Overweighting companies with greater diversity in their executive ranks led to an improvement in portfolio performance by an astonishing 72 basis points over four years.

Less dramatic but still telling results occurred when focusing specifically on CEOs. Between 2014 and 2022 companies with female CEOs had higher returns on assets than companies with male CEOs.

Hedge funds and start-ups founded or managed by women were equally successful over 16 years, women-owned hedge funds outperformed average hedge funds by 10.5%, for example.

Even women-friendly cultures can make a difference. Overweighting companies with higher average maternity leave, for example, improved a portfolio’s performance by 1.07 percentage points over between 2018 and 2022.

Unfortunately, the data shows a decrease in gender diversity with each level of seniority. Just 33% of middle managers, 29% of senior managers, and 18% of executives are women, according to the MSCI figures. A paltry 6% of CEOs are women. Only in entry-level jobs are women’s representation and men’s representation nearly equal.

Women also continue to be overly represented in clerical and administrative roles, while underrepresented in specialized roles such as STEM roles (only 27% of IT positions are held by women) and engineering roles (23%).


This study adds to the volume of research and performance data emphasizing the benefits of greater gender diversity in the workforce notably at more senior levels. Some progress has been achieved in the past 20 years. Data from 2000 to 2021 shows a 19% increase in women in managerial positions, a 14% increase in women technicians, and a less impressive but at least improving women representation among service workers (6%) and professionals (5%).

The study also reveals the potential for more investor pressure on companies to diversify their workforce and leadership. Increased disclosure of diversity numbers only 32% of companies in the 2000 MSCI Index revealed their women’s representation compared to 80% in 2021 will also help spur companies to improve gender diversity.

The best motivation for significantly improving gender diversity in a company, however, is the consistently documented link to success as measured in multiple ways from employee satisfaction and retention (the study data also shows less turnover for companies with high women representation at the senior levels) to investor returns. Investing in women is indeed a good investment for many reasons.



Sandra Lawson’s profile at LinkedIn

Jessica Huang’s profile at BlackRock

Tanja Boskovic’s profile at LinkedIn

Manling Li’s profile at LinkedIn

Ewelina Zurowska’s profile at LinkedIn


Faerlie Wilson’s profile at LinkedIn


Lifting Financial Performance by Investing in Women. Sandra Lawson, Jessica Huang, Tanja Boskovic, Manning Li, Ewelina Zurowska, Faerlie Wilson. BlackRock report (November 2023).

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Idea conceived

January 16, 2024

Idea posted

Feb 2024
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