Gender-Smart Investing Journeys: Diane Isenberg, Ceniarth

Diane Isenberg is the Founder of Ceniarth, a single family office focused on impact-first investments that benefit marginalised communities globally. Diane founded the office, which stewards ~$400M in impact-first capital across both fund investments and direct enterprise lending, in 2013. Ceniarth is based in London with staff in the UK and the US.

What were the major turning points in your personal story that motivated you to consider gender in your investment decisions?

I pursued a Masters in Public Health at the University of Michigan that led me to a job in family planning and Maternal Child Health care in Bangladesh. My time in Bangladesh was spent amongst populations that had little or no access to what I view as basic human rights: food, shelter, healthcare, clean water, sanitation, energy, education and work. Many of the beliefs that now underpin our work at Ceniarth on rural livelihoods were forged from these early, personal experiences. 

Similarly it is difficult to disentangle my personal experience from our gender focus. Our mission to address rural livelihoods is synonymous with investing in women. Women as customers, entrepreneurs, service-providers, advocates, and decision-makers.  Deploying capital successfully means internalising the challenges that women face daily – obstructed access to financial services, perilous journeys to retrieve clean water or firewood for heat and energy, and limited availability of quality, women-centered healthcare services.  Despite the hardships that women face in these regions, they are at the heart of these places and any funder hoping to make a lasting difference must have a gender lens to their work.

What were the needs and constraints you considered when crafting your gender strategy?

We define our strategy, including its gender-focused components, as impact-first to differentiate it from more conventional, double bottom line impact investing. It is our strong, evidence-based belief that, in the marginalised areas we work, there are tradeoffs between impact and return. Consequently, our focus is primarily on opportunities that would not attract market-rate seeking capital. Our biggest constraint has been the human capital capacity to source, diligence, and monitor the portfolio.

I am proud that many in the sector look to Ceniarth now as an example for how one can build a sophisticated, impact-first office, but it has taken more than seven years to get here. When we began, finding the best impact-first and gender-focused investments was not easy and our early experiments were opportunistic, based on building trusted networks.

We realised that we would have to build our own capacity.  We have seen few advisory firms focused on our interest areas - at least not yet. The lack of impact-first advisors is understandable in a field where most still desire impact investments that yield market-rate returns. 

How have you formalised your commitment to gender-smart investing within the organisation?

Perhaps the biggest step is to begin explicitly labelling all of the things that we were already doing focused on gender. Up [until 2019], we had not gone out of our way to speak about ourselves as gender lens investors. Part of this initial hesitation was that the integration of gender into our strategy is, to me, completely obvious.  Because of that, I was initially skeptical of using these industry labels. I have softened on this over time though and have come to realise that identifying our strategy as gender lens, or any other lens, is an important signalling mechanism. In a noisy field, it can be very useful for attracting more capital to critical opportunities. 

“identifying our strategy as gender lens, or any other lens, is an important signalling mechanism. In a noisy field, it can be very useful for attracting more capital to critical opportunities. ”

Is there a designated team that focuses on gender?

As gender is an integrated component of our strategy, we do not have a designated team. That said, we are a staff of 12 with 9 women and 3 men.  I am very proud of this and it is not a coincidence. The financial services field is incredibly misogynistic; I could easily fill an entire interview with stories. 

What have been the major moments of learning and insight?

One of the most important insights is that many of the places where the world’s poorest and most vulnerable women live are also some of the most conservative. These places are not going to change overnight and impact investors need to have a pragmatic view as to what can be reasonably accomplished.

Unfortunately, many in the gender lens movement tend to take a western-centric view of what gender equality needs to look like in order for them to invest. If one takes a rigid, dogmatic view, they will continue to allocate money to “easier” gender lens opportunities – investing in primarily western companies with female leadership and board membership. It is going to take a long time for gender dynamics to shift in more traditional places and we should not let the perfect be the enemy of the good.

The gender framework for poorer women in emerging markets will have to look different. Just as there is finally an acknowledgement that patient capital is required, so too do we need to take a more patient, nuanced, and longer-term view on gender. 

How are you measuring progress? 

Like many in the field, we track a variety of financial and impact indicators for both funds and enterprises in our portfolio and use them as a basis for both initial investment and renewal decisions. Given our emphasis on maximising impact while preserving capital, the ability to recycle our money over time is itself a primary metric of success. In addition, we are increasingly integrating specific gender lens questions and metrics into our process, specifically those championed by the 2X Initiative.  

“Unfortunately, many in the gender lens movement tend to take a western-centric view of what gender equality needs to look like in order for them to invest. If one takes a rigid, dogmatic view, they will continue to allocate money to “easier” gender lens opportunities – investing in primarily western companies with female leadership”

That said, the most unique aspect of our approach to measuring progress is our engagement with 60 Decibels, an impact measurement and customer insights firm spun out of Acumen in 2019. As an investor, far from the lived experiences of the beneficiaries that we want to serve, I can think of no better way of judging our progress than by regularly asking those we serve whether they are experiencing progress.

What standout investments illustrate your gender lens strategy?

Many of our investees had an explicit emphasis on women even before the field began labelling this activity as Gender Lens Investing. For example, we have over $10 million invested with Global Partnerships, a US-based non-profit impact investment firm, in large part because of their women-centered investment initiatives and their thoughtful impact assessment. Our investments in Pro Mujer, a funder of MFIs with a focus on products for women, WaterEquity, a funder of MFIs focused on clean water and sanitation solutions, and Women’s World Banking Capital Partners, a private equity fund focused on capacity building for women-focused MFIs, were all predicated on their explicit focus on women as customers for financial services. 

We are particularly proud of the work that our investee AlphaMundi, a debt fund focused on emerging market SMEs, is doing in offering grant-funded technical assistance to its portfolio companies looking to deepen their work on gender. AlphaMundi, alongside fellow Ceniarth investee Root Capital, has formed the G-SEARCh (Gender Smart Enterprise Assistance Research Coalition) to collectively support each other’s gender lens investing work.  

Finally many of the enterprises in our direct lending portfolio are doing a commendable job addressing the unique needs of women as primary customers and household decision-makers.  Enterprises such as MyAgro in Mali and Senegal, Good Nature Agro in Zambia, and Mountain Hazelnuts in Bhutan all have thoughtful, systematic approaches to integrating gender into their internal and external strategies.

What still needs to change, either within your organisation or in the wider investing ecosystem?

It remains frustrating that the rhetoric of many in the impact investing field does not always match their action. Family offices that should have the autonomy and means to act boldly are often thwarted by financial advisors urging them to not abandon returns-based expectations even in their impact investing work. Similarly, foundations should be natural leaders in using 100% of their assets, both their endowments and philanthropic distributions, to drive impact, but despite good intentions and ambitious press releases, most major foundations are still very conservative in their orientation. It remains confounding how so much capital that purports to be interested in impact is deployed in ways that are not impact-maximising.

What would you like the portfolio to look like in 20 years?

Sadly, I expect that the world will only grow more unequal and volatile in the coming decades as we face a collision of climactic, social, and economic forces. To be a responsive impact-first investor in a dynamic world will require constant scrutiny of what we are doing to make sure that we continue to reach the most marginalised communities in the most efficient manner possible. I do not anticipate that our portfolio will look radically different in 20 years. Many of the names of our investees will change, but our focus on impact-first capital should not.

What would you have done differently when starting out, given your experience?

If I knew back in 2013 what I know now, we would have taken an impact-first approach from day one at Ceniarth.  

My challenge was never what to do, but how. One of things that I did early on was to ask about the range of solutions to rural communities that might be investable and where there were the bottlenecks to capital flows. We experimented with a wide variety of impact investment modalities from more conventional double bottom-line investing to higher risk PRI making from our Foundation. Interestingly, most investors and advisors in the market seemed to suggest that “we could have it all”. 

But that was not what we saw in reality. Companies that were raising large amounts of finance-first investment in sectors such as energy access and financial services were moving up-market. They were not remaining focused on the neediest customers. In addition, as we began to explore sectors such as the CDFI market in the US in persistent poverty regions, we observed that only through grant subsidy, government policy, and low cost capital could solutions truly reach marginalised communities.

“Below market, impact first investing is where one can have deep, meaningful impact.”

We found for us that there was a unique set of high impact funds and enterprises that had  lower risk profiles, but that required a lower cost of capital and more modest returns to investors. This opened up the idea of impact-first capital preservation.

We did not make this shift out of a sense of moral superiority that less returns are better, we did this because we found it to be the right answer to delivering impact capital to the communities that we want to serve. It would have been great and allowed us to invest more if double bottom line really worked in these places, but it does not. Below market, impact first investing is where one can have deep, meaningful impact.

It would have saved us time, money, and energy had we known that from day one.

What 3 pieces of advice would you offer someone just getting started?

Firstly, if you are a female asset owner or senior decision-maker, surround yourself with people – employees and advisors – that empower you. 

Second, do not be afraid to just get started.  Every journey starts with dipping a toe, so don’t assume you need to dive in with a perfect plan to begin.  At this point there are enough other smart investors deploying capital in the field that you just need to find one or two that you trust and can piggyback on. We’re always happy to have potential co-investors – at least those with real capital and decision-making power - shadow us on deals and to participate alongside us, so if your mission areas overlap with us, do feel free to get in touch.

However, don’t confuse this advice to do something with not being discerning. Sadly, I think that the impact investing field has lots of mediocre consultants, advisors, and investors with incentives that may not be aligned with yours, so it’s important to be thoughtful when selecting those people that you are going to trust for that early advice.

Finally, do not assume that impact investing is a silver bullet to all of the world’s problems. The work we do could not exist without grantmakers who fund a variety of wrap-around services to complement our investments. We do what we do because we feel it has a sustainable, recyclable impact and it allows us to get leverage on our dollars. It is certainly not the right tool for every challenge that the world faces. If you have the capacity and desire to deploy grant capital, it is scarce and absolutely critical.