3 min read
It seemed fairly obvious to us at Wardhaven that companies with better gender diversity would perform better, and the impact would likely be greatest starting at the top. As a rule of thumb, over half of all customers are women, so if you want to understand your market, you’d better have an organisation that reflects that fact. It’s a subject that interested us as we felt, as active investors, we might be able to enhance returns from a better understanding of the issue.
As we started to engage with business leaders in Vietnam, consensus seemed to be that there wasn’t a problem. Perhaps because the most repeated comment was “some of Vietnam’s biggest companies are led by women, look at VinaMilk, Phu Nhuan Jewelry, VietJet and REE.” But we didn’t have decent insight into the broader public market space and needed to look deeper.
Led by the wonderful COVID-19 university refugee, Sherry Nguyen, and our colleague Lan Anh Nguyen, we’ve spent a year analysing gender balance and corporate performance of listed companies in Vietnam. The only real gender data widely available is for Board and key leadership positions, so that’s where we started. The gender balance numbers were disappointing, with women representing approximately 17% of Board seats and 19.8% of key leadership positions (2020), albeit with a slowly improving trend over the past five years, and a wake-up call for the need for a more proactive approach from a whole range of stakeholders.
What was particularly encouraging was our analysis supported the conviction that public companies with better gender balance tend to perform better. A market cap weighted portfolio of the largest companies with above average gender balance delivered sales and profits growth over the 2016-20 period in excess of the VNI, Vietnam’s main equity market index. Though we need to expand the depth and scope of the study, we felt the findings were sufficiently convincing to alert corporates to the importance of getting this right, and as investors, we believe that the data will be value accretive to our investment process.
What also interested us was how companies with better gender balance got there. It is easy for a male, foreign, investment manager to overlook the scale of what’s involved! But a great deal is expected of Vietnamese women, both running households, often with several generations, bringing up children and full-time work. Listening to Madam Dung, the Chairwoman of Phu Nhuan Jewellery, speak at a conference we recently organised with AmCham, titled “The Business Benefits of Gender Equity in Vietnam”, it was clear that she and her colleagues had invested considerable effort over many years to achieve the excellent levels of gender equality throughout their organisation, with a wide range of policies implemented to enable women to excel at work while fulfilling all the other tasks that are expected of them. Phu Nhuan Jewellery is a portfolio company of the Wardhaven Vietnam Fund and an investment we hope to hold for years to come.
I am convinced that business leaders that don’t invest resources and energy into improving gender balance are failing to maximise the value of their organisations or future proofing them. The same duty rests with us investors. There is much to be done, and organisations in Vietnam need guidance and first-hand experience to help them move forward with this important journey of achieving gender balance in the workplace.