Why the Global Economy Needs Investment in Women

The following oped by U.S. Ambassador-at-Large for Global Women’s Issues Melanne Verveer and Kim Azzarelli, president of the Women in the World Foundation, was published by Newsweek on January 30. There are no republication restrictions for use.

Businesses are starting to understand what development experts have long known: investing in women pays dividends. Women are more likely than men to put their income back into their communities, driving illiteracy and mortality rates down and GDP up.

Now a corporate revolution is at hand, one that is moving beyond philanthropy, making women partners in business at all levels. This was an important theme at the World Economic Forum in Davos last week, which hosted a plenary session entitled “Women as the Way Forward” on the potential impact of women on the global economy. On Feb. 1, some of the most powerful companies in the United States (Accenture, Coca-Cola, Ernst and Young, Goldman Sachs, and others) are signing on to a worldwide campaign to bring women into the economic mainstream. The Third Billion Campaign is being launched by La Pietra Coalition — an alliance including corporations, governments, and nonprofits — to enable 1 billion women to become members of the global economy by 2025. The campaign’s title comes from the notion that over the next decade, the impact of women will be at least as significant as that of China’s and India’s respective 1-billion-plus populations.

Bringing women into businesses creates what Michael Porter and Mark Kramer of Harvard Business School call “shared value” — it helps companies while helping communities too. Consumer-product businesses have quickly understood the benefits — for instance, bypassing retail and hiring women to build person-to-person distribution channels for everything from cosmetics to beverages. More recently, companies have found it especially effective when the purchaser needs to be educated on the product being sold, be it a mobile sonogram machine, an energy lantern, or a cookstove. Women can also be the best innovators of the products they use and sell, sometimes transforming their communities with something as small as the knowledge of the optimal use of a household’s single electric light.

The rewards are clear. Avon, for example, gives more than 6 million women in more than 100 countries the opportunity to start their own businesses; these entrepreneurs serve as Avon’s main sales force, resulting in more than $10 billion in revenue. Similarly Unilever has invested in 45,000 underprivileged Indian entrepreneurs, mostly women, in more than 100,000 villages through microfinance and training — a strategy that accounts for 5 percent of the company’s total revenue in India. Recently, Walmart has pledged to source more than $20 billion from women-owned companies in the United States alone, and Coca-Cola announced a program, 5 By 20, to support 5 million women entrepreneurs globally by 2020. The benefits of women in upper management have also been shown: a recent Catalyst survey found a strong correlation between gender diversity in the leadership ranks of a business and that business’s economic performance.

“There is no doubt,” Secretary of State Hillary Clinton has said, “that the increasing numbers of women in the economy … has helped fuel significant growth everywhere. And economies that are making the shift more effectively and rapidly are dramatically outperforming those that have not.”

(Melanne Verveer is U.S ambassador for global women’s issues. Kim Azzarelli is president of the Women in the World Foundation and the 2012 recipient of the NY State Bar Association Ruth G. Schapiro Award.)