Recently, EMpower’s President & CEO Cynthia Steele spoke with Lilian Wang, Research Director (Impact & Engagement) at Arisaig Partners and a Trustee of Arisaig Partners Foundation —an early and consistent supporter of our participatory work with girls in India. They spoke about Arisaig’s forward-thinking approach, prioritising gender, and more.
I am struck by how progressive Arisaig's philanthropic approach is: you're making multi-year commitments, and you have a trust-based approach. I'm interested to know how this came to be. Because it takes many mature philanthropies a long time to get to that place.
For our sake, it was quite natural to take this kind of approach. Our approach to philanthropy is, perhaps unsurprisingly, reflective of how we make our investments. As an asset manager, Arisaig has been around since 1997, and the way that we invest is to find businesses that we believe will deliver the kind of returns that we want over a very long-term period, which actually means over decades. For all our companies, for example, we value them using a 20-year discounted cash flow model as a standard.
Through our experience of investing in emerging markets over these nearly 30 years, we understand that the leaders of these businesses value us as shareholders because we do stick around for a while. We're not going to be on their backs about small dips in share price or the next quarterly earnings, because for us, it's about the long-term trajectory. If we can see that is still positive, then we stay as shareholders so they can focus on things that matter for that long term, rather than constantly thinking about just the next quarter. Given that the trustees of our Foundation are employees of Arisaig, it was natural that we apply the same kind of thinking to the way that we give grants.
We want to have a real impact through our grants and we know that takes time. It just seemed logical to us that if an organisation doesn't have to spend as much time constantly worrying about finding new grantee partners because it knows it can rely on long-term partnerships, then it can focus more on actually making an impact. It's also more meaningful for us to know that we've been with them along the journey, rather than just having this transactional, one-off relationship. And, of course, working with partners that we hope to be able to stay with for the long-term means we have to trust them. And it's the same as for a company that we would invest in for the long-term.
Another way that Arisaig is really on the leading edge is with respect to your principles and views about gender equity and gender equality. You're an anchor funder of our Gender Fund in India. How did this become a priority for the company?
Gender equality, again, from an investment perspective—Arisaig's core business—is a really important issue for us and in the emerging markets where we invest. These countries can't continue to have the kind of growth they've experienced over the last couple of decades if they don't start including women more in their economies. Particularly in India, where we have the greatest exposure in terms of our investments, significant gender inequality persists and even worsened during COVID—which is why we have a focus within Arisaig Foundation on India. Gender equality is such a multifaceted issue, and it's important to tackle it from every angle that we can.
For the Foundation, all our funding is channeled solely towards gender equality causes in India. We're supporting a range of projects, of course, including all of EMpower’s great programs with girls and youth. We also support organisations that are working on menstrual hygiene education and trying to tackle cultural taboos, providing microloans to women, and also getting women who have previously dropped out of school an education so that they can receive a high school certificate.
From an investment perspective, there's lots of evidence linking diversity to improved corporate performance. We think it's particularly relevant for the types of companies we invest in. We invest a lot in consumer companies, and often it's women who are the ones that are making purchasing decisions with respect to the type of products that these companies make.
Also, what we learn from working with charities through our Foundation can also cross into how we engage with our companies.
Are there other things that you think others—peers, funders such as EMpower—could be doing to move the needle and get more women into STEM leadership?
In India currently, female labour force participation is one of the lowest in the world. I think it's around 23-24%. When speaking to the management of the companies we invest in, they tell us that when it comes to improving diversity, particularly in sectors such as technology, a big challenge is that the talent pool is not there. So it's not necessarily that there's not an intention or there's not an awareness that diversity is low. In their view, it's hard to find candidates that are suitably qualified for the role that are female.
This isn't unique to India. We've also heard this from companies that we invest in in Argentina and in China. For us, I think there is still more that can be done there. I don't think necessarily that the companies have tried every route available just based on the situation as it stands. It does suggest that there need to be interventions at a younger age to encourage more girls to go into STEM subjects and then stay in those areas. This is where an organisation like EMpower, that works with youth, comes in. Corporates can do more in certain areas but working directly with youth is unlikely to be something that they're going to do. Again, with the private sector, generally we're not likely to work directly at that stage with youth.
The diversity levels are not as low at more junior ranks within a company, but their female employees simply don't come back after having children. This happens everywhere but it's particularly acute in India, where the cultural norms still often dictate that even a highly educated woman who may have a postgraduate education is still expected by the family to be at home to look after the children. Tackling cultural taboos is not something that a corporate is likely to engage directly in so there's an important role for nonprofits alongside public policy in that area as well.
It's such a multifaceted issue and is evolving as society evolves. We really like EMpower’s approach of actually listening to the girls themselves and what they need, rather than kind of assuming we know what's good for them or what will make a difference for them. My understanding is at the moment, there's a focus you've heard from the girls in India that the digital divide is an issue that's really important to them. With AI, if someone who's marginalised in terms of their ability to access or understand technology, it’s just going to exponentially increase their disadvantages in terms of being able to work in the future.
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