Examine gender gaps and opportunities to create value through the integration of a gender lens to increase revenues, improve operational efficiency, retain talent or increase bottom line.

Structure in a ratchet that adjusts entry share price (or discount on entry share price for convertible notes) if gender KPIs/milestones are met.

Link the GP’s carry to gender outcomes.

GPs/LPs: Consider a reduced hurdle rate tied to gender KPIs/milestones, an increased management fee or separate cost coverage / TA to enable investments in gender-smart practices.

Agree on gender-smart reporting requirements based on sex-disaggregated data and measuring progress against gender KPIs and milestones.

Make updates on gender-smart activities, KPIs and milestones part of the regular Board or LPAC meeting agenda.

Codify gender KPIs and milestones, and integrate incentives and levers (“carrots and sticks”) into legal agreements and investment documentation (akin to how ESG has been mainstreamed). Alternatively, consider non-binding agreements in the form of a memorandum of understanding (MOU) or ask the investee (or fund manager) to make a pledge to achieve certain gender outcomes.

Explicitly incorporate a zero-tolerance stance against any form of discrimination against women in the legal agreement or relevant annexes such as the Responsible Investing Codes, ideally making reference to compliance with the UN Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW), which provides explicit contractual obligations for investees to adhere to equal pay and benefits, fair recruitment and promotion processes, and gender equity during individual or collective dismissal.

Incorporate safeguarding clauses prohibiting sexual harassment and gender-based violence and harassment (GBVH), including specific investor rights to exit from, or, be excused from follow-on investments in the event of a serious incident. (ILO C190 on Violence and Harassment Convention, 2019 can be used as a reference.)

Require the establishment of a GBVH risk management system within a reasonable timeframe (12-18 months) including a grievance mechanism in local languages that is actually used in practice and has best-practice response mechanisms (See guidance: Addressing Gender-Based Violence and Harassment: Emerging Good Practice for the Private Sector)

Require immediate reporting to the investor following any allegations of sexual harassment, GBVH, or other safeguarding issues affecting women and girls, such as modern slavery or child exploitation and abuse in accordance with the established GBVH risk management system.

Incorporate a gender action plan into your standard value creation plan, such as a 100-day plan with specific actions to achieve gender KPIs/milestones as well as a longer-term action plan over 12-24 months. Tie milestones to conditions precedent and conditions subsequent to investment within a specific time period. (For guidance: Designing a GLI Action Plan)

Embed gender-smart objectives in the company’s mission, purpose and values that will outlive changes in ownership, and intentionally create a culture of gender equality and JEDI (justice, equity, diversity & inclusion) (See JEDI investing toolkit)

Implement gender-smart practices into the company’s operations and policies to unlock the value of female economy, focus on gender impact along the 2X criteria (ownership, leadership, employment, supply chain, customers/markets, product design), structurally build gender-smart practices into the business so they are part of the DNA and hard to unwind. Put gender-smart policies in the highest possible hierarchy of policies so they can only be changed with e.g. Board or sub-committee approval. For some, consideration of B-Corp certification with a strong gender lens might be a good option to embed gender impact long-term and send a strong signal to the market, attracting aligned investors.

Make the entire HR framework from recruiting to promotion and compensation gender-smart.

Embed gender-smart and sex-disaggregated data in management systems to enable gender-smart decision-making, steering towards gender outcomes, monitoring of progress (See A Fund Manager’s Guide to Gender-Smart Investing and SEAF Gender Equality Scorecard) Measure the cost of GBVH to quantify the value of a best-in-class GBVH management system.

Explore ways to link gender-smart outcomes to Management Incentive Plan. Tie employee stock ownership plan (ESOPs), company bonus pool, and - in case of debt – interest rate rebate to gender KPIs / milestones. Establish pre-agreed terms for follow-on rounds tied to the achievement of gender-smart milestones; Similarly an LP may tie the likelihood of investing in the GP’s subsequent fund based on gender KPIs/milestones achieved in the present fund.

Calculate the return on investment for gender outcomes with a link to commercial KPIs. By doing so demonstrate to potential buyers that:

the company’s commitment and performance on gender equality measures is a downside protection and is a value driver that can potentially contribute to increased valuation.

the company’s performance on gender equality measures is a premium asset.

the institutionalisation of gender commitments across the company’s operations and culture (gender-smart systems, processes, people and practices) will continue to perform and deliver value.

Prepare gender analysis and reports proactively to demonstrate to potential buyers how gender-smart practices are a value-add. Ideally link the gender-smart impact memo to financial performance.

Ask buyer to continue the gender action plan if outcomes haven’t been fully achieved or encourage buyer to create a new gender action plan as part of their value creation plan for the company to further improve and stay or become best-in-class on gender.