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The cost of irrational prejudice
I focus on finance because it has such a huge impact on the economy as a whole. The investment and credit mediated by the financial industry allows businesses to grow, new ventures to be explored, and economies to thrive.
But those in charge of allocating capital belong to a culture that, simply put, values women less than men. The cost of this irrational bias can be measured in dollars and cents, and it holds back not only women but everyone in general.
Research shows substantial evidence of discrimination by banks against women entrepreneurs. Female entrepreneurs are less likely to be approved for financing than male-led businesses, pay an average of 0.5 percentage points more in interest, and receive less funding.
This is despite a wealth of data showing that women-led companies are a safer option. A Boston Consulting Group study found that female-led startups raise less than half of the funding of venture capital companies founded by men, yet generate more than twice as much revenue.
But where the gender gap becomes a chasm is when it comes to funding startups. In 2022, women-founded businesses in the U.S. received just 2.1% of the total capital invested in venture-backed startups.
The same is true in Europe, where a 2018 study found that more than 90 percent of European investments in technology startups went to all-male ventures. Technology is supposed to build our future. Does it really make sense to entrust our future to only half of our population?
It is time to end sexism in the financial industry and save the financial industry itself.
IMF research shows that gender disparities in leadership are impacting bank stability. In other words, banks with more female directors have higher capital buffers, fewer non-performing loans, and are more resilient to stress.
Build a strong and collaborative network
To be at the forefront of the change we want to see, we need strong networks that support women professionals in their careers (not just in finance). We also need to educate male managers and HR teams to identify and correct their own biases.
This is critical to ensuring that the pipeline of female talent does not die mid-career. Too many women in the financial industry are now abandoning their careers in their prime years, frustrated by a lack of advancement opportunities and a huge pay gap compared to men.
Progressive legislation can be effective in reducing the discrimination women face in advancement opportunities and pay due to having children. But legislating against more subtle forms of discrimination, such as toxic work cultures and male-only networking events, is more difficult.
To combat this toxic culture and sexism in all its dimensions, the United Nations Global Compact (UNGC), the world’s largest corporate sustainability initiative with over 20,000 global members, launched the Investing in Women platform. I’m raising it.
The purpose of this network is to share promising practices to achieve equal representation of all levels of management and leadership in finance. We explore where finance can support gender equality across issues and industries, from procurement and supply chains to women entrepreneurs fighting climate change.
Imagine what could be achieved if we could make finance, banking and investing gender neutral.
Women’s work may never end, but if more women are decision-makers in finance and receive a fair share of funding, at least women’s work will be funded on a par with men’s. , your chances of getting paid may be higher.
This article is published with permission from the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, covering humanitarian news, climate change, resilience, women’s rights, human trafficking and property rights.visit https://www.context.news/.
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