While the marketplace has seen a number of studies that show the advantages of incorporating a gender lens approach in public companies, private market data has been much more limited.

A new report from Calvert Impact Capital looks at the connection between gender and financial performance from a private market perspective.

“There is growing evidence and collective understanding that gender equity is good for investment, good for businesses, good for society. However, this understanding has not translated into widespread action in the investment world,” the report states.

According to the report, part of this lack of action is because the business case for incorporating gender in investment decisions needs to be strengthened from a private markets perspective.

Previous research — such as MSCI’s 2015 report The Tipping Point: Women on Boards and Financial Performance or the Credit Suisse 2016 report The CS Gender 3000: The Reward for Change — has mostly comes from public markets and doesn’t resonate as strongly outside of them, according to the report.

“In the private markets in which we operate, investors and businesses alike don’t see themselves presented in the [prior] research,” the report states. “Gender considerations primarily remain in the social impact category, and are not seen as a critical element of investment performance or business strategy, unless that strategy includes an explicit goal of targeting women.”

The new report from Calvert — titled “Just Good Investing: Why gender matters to your portfolio and what you can do about it” — includes an analysis of Calvert Impact Capital’s portfolio over 11 years and representing 160-plus borrowers and a cumulative $23 billion in assets that explores the link between gender diversity and financial performance.

The report notes that this an analysis of a real investment portfolio. The data sample is longitudinal and diverse in terms of geography, size and sector and includes both direct investments in companies and indirect investments in funds and financial intermediaries.

Calvert Impact Capital’s portfolio analysis revealed that, on average, companies in the data sample with the highest percentage of women in leadership and board positions outperformed those with the least.

On average, over 11 years, companies with higher percentages of women in leadership positions and on boards outperform companies with the lowest percentage of women in these positions as measured by return on sales (ROS), return on assets (ROA) and return on equity (ROE).

For example, companies in the top quartile regarding women in leadership positions had 18% ROS compared with negative 1.9% ROS for the companies in the bottom quartile.

Similarly, the analysis also found companies in the top quartile regarding women in board positions had 3.7% ROA compared with 1.5% ROA for those in the bottom quartile.

In addition, companies saw 8.5% ROE if they were in the top quartile regarding women in leadership positions or 8.6% ROE if they were in the top quartile for women in board positions. This is higher than the 4.4% ROE for companies in the bottom quartile regarding women in leadership positions or 6.8% ROE for companies in the bottom quartile regarding board positions.

The results suggest that the percentage of women in leadership positions is especially important to financial performance.

“The markets we operate in and the types of organizations we invest in are different than many of the previously published reports, but our findings are similar: You risk leaving money on the table if you don’t consider gender,” the report states.

The quantitative study focused on examining women in senior management and governance positions, but Calvert Impact Capital emphasizes that gender’s impact is not limited to these areas.

According to Calvert Impact Capital President and CEO Jenn Pryce, gender-lens investing can often be misunderstood as investing only in businesses led by women.

“Considering gender in the investment process is fundamental to every investor, not just those that have an explicit goal of getting capital to women leaders,” she said in a statement. “The report shows that gender should be considered holistically in a company’s investment decisions. Gender isn’t something you can keep in a silo; it’s a dynamic that is at work across an entire portfolio, whether acknowledged or not. And most investors don’t. A gender-lens can deepen your understanding of potential investees by highlighting risk and opportunity that you might otherwise miss.”

— Check out Sallie Krawcheck Slams the ‘Man-tocracies’ of Wall Street on ThinkAdvisor.