Social Change through Indexing: A Gender Diversity Index

Thematic indexes that capture themes ranging from lowering carbon emissions to corporate governance have expanded in recent years and have received increasing interest from investors. Gender equality, however, has received relatively little treatment to date, even though evidence shows that firms with higher rates of female participation at the senior manager level have delivered higher return on equity, better corporate governance, and, in some cases, higher returns. Inspired by a need to address gender inequity in the workplace through Environmental, Social, and Governance investing, we researched the viability of creating an index that captures gender diversity. Here, we present our findings on gender diversity characteristics for U.S. large-cap companies and propose a rules-based portfolio construction framework for a gender diversity index.