Gender Lens Investing in Practice: Lessons from 16 Years in Emerging Markets
Since the launch of the 2X Challenge in 2018, the evidence supporting the business case for gender-lens investing has strengthened significantly, with growing research showing that gender diversity in leadership is associated with stronger financial performance.
Yet in practice, many fund managers continue to treat gender as a reporting requirement rather than a driver of value.
The question we hear most often from peers is not why — the financial case is settled — but how. How does gender lens investing actually work in practice, across a portfolio of 150+ companies spanning Asia, Africa, Latin America, and Eastern Europe?
This post shares what we have learned at Sarona Asset Management over 16 years of impact-first investing — what works, what does not, and what remains unresolved.
Sarona and 2X Global teams at a 2X Investor Meet-Up in Toronto, Canada.
What gender lens investing looks like in practice at Sarona
A gender lens is embedded in our Social and Environmental Management System (SEMS) and runs through every stage of the investment process.
At the deal alert stage, every pipeline opportunity is scored on gender inclusion — whether the fund manager deliberately targets women-owned or women-led businesses, employs women, serves women as customers or through supply chains.
During due diligence, we conduct a gender-disaggregated review against the 2X Criteria, including consideration of workforce composition, executive and board representation, gender pay equity, and gender-specific workplace policies. We also assess what we call "gender awareness" — whether a fund manager understands gender dynamics in their market and has built that into how they operate. A fund manager that has never thought about why women leave their workforce after two years is a different risk than one that has a retention programme in place.
Active ownership (post investment). Gender is built into value creation plans. We track ESG KPIs including leadership diversity and DEI policies across all funds and portfolio companies. Each fund manager receives an annual benchmarking report with tailored recommendations. Where gaps exist — and they often do — we work with fund managers to develop gender action plans. In some cases, we include specific, time-bound gender provisions in side letters and LPAs, with an expectation of improvement within 12–18 months.
Seven lessons from Sarona that investment industry can take away today
Drawing on field experience across both the Sarona Global Growth Markets (SGGM) and Australian Development Investments (ADI) portfolios, here is what we have found to be most actionable:
1. Start at origination, not post-investment. Gender analysis conducted during screening and due diligence is significantly more cost-effective and more likely to drive lasting change than retrospective remediation. Early identification of gender gaps means they can be written into investment terms and technical assistance (TA) programs from the start.
2.2X alignment is strengthened through peer and investor engagement. Sarona has also observed that collaboration among investors can help fund managers move from informal support for gender inclusion toward more structured 2X alignment. In some cases, co-investor discussions and shared due diligence processes encouraged managers to introduce gender indicators, improve workforce tracking, or consider gender representation more systematically at the portfolio level.
3. Governance is the foundation. Companies that conduct gender assessments without formal improvement plans — clear ownership, board oversight, measurable KPIs, scheduled reviews — rarely make progress. The 2X Criteria update (published in 2024) makes Governance & Accountability codified for a reason: intention without structure does not produce results.
4. Workforce numbers are not enough. Our portfolio has strong workforce-level representation: 40% of employees across portfolio companies are women but only 17% of board seats are held by women. This "pyramid effect" is systemic, not company specific. Solving it requires active pipeline investment: observer roles, mentorship programs, promotion criteria that value non-traditional pathways, and external recruitment that widens the candidate pool.
5. Use legal agreements as levers. Voluntary commitments often fail to translate into action. Diversity covenants in LPAs, gender improvement commitments in side letters, and portfolio-level gender targets at exit are powerful accountability tools. They signal seriousness and create shared accountability between LP and fund manager.
6. Benchmarking drives improvement. Showing fund managers how they compare to peers on areas like board representation, investment committee diversity, or gender policies is often more effective than sharing abstract standards. Seeing where they stand compared to their peers creates motivation to improve.
7. Technical assistance is the bridge between compliance and transformation. More women in leadership, better products for women customers, and fairer hiring practices — often requires hands-on technical support. TA works best when it starts early in the investment process, is developed together with the investee, and is supported with enough resources, including gender advisors, practical action plans, and systems to track progress.
What is still hard
We want to be honest about what remains unresolved.
The investment committee gap is our most significant challenge. At 17% women on ICs across our fund managers — compared to a global average of just 12% in PE/VC — we outperform the market but still fall short of the minimum 2X Criteria thresholds. This matters disproportionately: ICs make capital allocation decisions, and evidence consistently shows that gender-diverse decision-making teams generate better risk-adjusted returns. Changing IC composition requires structural effort: widening talent pools, challenging the narrow "PE track record" filter, and as an LP, being willing to use the hard levers of policy and TA to push for change.
Gender data quality across the portfolio is still uneven. Most fund managers collect some gender-related data, but approaches at the portfolio company level are not yet consistent. Without comparable data, it becomes difficult to benchmark performance, identify leaders, or understand where improvement is needed. This is an area where the 2X community can play an important role by supporting fund managers that do not yet have strong internal systems.
Finally, gender considerations in supply chains and products and services remain underdeveloped across our portfolio. Only 1% of our portfolio companies report that more than half of their suppliers are women-owned. Strengthening products and services that drive positive outcomes for women and support greater gender equity remains an emerging area of impact, and one that the updated 2X Criteria increasingly emphasises.
A call to investors and the 2X community
The updated 2X Criteria raise the bar for the industry in important ways. Stronger Governance & Accountability requirements, clearer expectations around long-term portfolio alignment, and explicit provisions on GBVH help move gender lens investing from intention to implementation.
But meaningful change will depend on how investors apply these standards in practice. This requires more than compliance. It requires peer learning, shared tools, honest conversations about what is not working, and continued investment in field-building efforts. Investors, LPs, and fund managers all have a role to play in strengthening data systems, supporting technical assistance, and ensuring that gender considerations are embedded throughout investment processes and portfolio management.
Sarona Asset Management is a 2X Global member managing USD $341M in assets across emerging markets. Sarona is a global pioneer in impact investing, is dedicated to generating competitive financial returns alongside positive social and environmental outcomes. The full white paper, "The 2X Criteria Alignment at Sarona," is available at saronafund.com.
