French PE steps up gender diversity goals and monitoring

Harriet Matthews
26 March 2020

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France Invest's new gender parity charter aims to commit the industry, including its investors and portfolio companies, to concrete gender equality monitoring, promotion and goals. Harriet Matthews examines the initiative and its aims

French private equity association France Invest launched its gender-parity charter at IPEM in January this year, with the aim of bolstering the drive for equality in the industry and ensuring progress does not stagnate.

The charter is open to members of the trade body and, as of 9 March 2020, it had been signed by 261 organisations, with increasing numbers of market players committing to ensuring gender parity in their firm and, in the case of GPs, their portfolio companies.

The charter outlines 30 goals and commitments, some of which pertain to sponsors and their portfolio companies, while others are directed at LP signatories.

LP signatories, specified as insurers, pension funds, savings funds, family offices and institutional investors, have a number of specific commitments they must adhere to. First, they must monitor the gender composition of sponsors in whose funds they invest, including the seniority level of their positions. They must also track the number and proportion of women on the investment teams of these firms, presenting this data to France Invest, either as a specific report or as part of a yearly environmental, social and governance report.

The GP signatories must ensure that women occupy 25% of positions responsible for investment committee decisions by 2030, and 30% by 2035. Signatories must also ensure that women make up 40% of their investment teams overall by 2030. GPs must also offer flexible working hours, address wage inequality, and combat gender stereotypes and everyday sexism by introducing unconscious-bias training for managers, as well as addressing firms' policies on sexual harassment.

On the VC side, sponsors must also make sure that 25% of the startups they finance are founded, co-founded or managed by women by 2025. This must rise to 30% by 2030 and 50% by 2050. This goal is in line with those of VC funding equality initiative Sista, which introduced its own manifesto in October 2019. Sista aims to reduce gender funding inequalities in the digital sector, committing its signatories to keeping track of the number of female-led companies in their portfolios, adopting more inclusive recruitment and investment practices, and promoting good practice within the industry via initiatives such as startup labs. France Invest has introduced its own gender-equality charter in partnership with Sista.

Breaking the glass ceiling
As for portfolio companies, the charter commits sponsors to several measures, including ensuring that 30% of the management teams in businesses with more than 500 employees are made up of women by 2030.

The latest statistics from France Invest's gender diversity report, published in November 2019, provide a starting point for GPs and LPs in achieving the charter's goals. The number of women in GP investment teams increased from 16% to 25% over the past 10 years.

A study by France Invest in partnership with the Boston Consulting Group published in March aimed to shed light on the representation of women in the management and governance of sponsor-backed companies, compared with non-private-equity-funded companies in the French economy. The study, based on 5,000 portfolio companies, revealed that women make up 7% of CEO or equivalent top positions in private-equity-backed companies, compared with 15% for other companies in France (according to National Institute of Statistics and Economic Studies).

The same report found that the presence of women in top positions across all companies did not correspond to their increased presence throughout the companies surveyed. In companies with a male CEO, women made up 30% of senior positions; in companies with a female CEO, 31% of senior positions were held by women. Of the management positions that women do hold, the study found that women tend to occupy similar roles: 55% of women occupy the position of either marketing director or HR director.

Although the industry and its related portfolio companies have a significant way to go, a data-driven approach, combined with public commitments and accountability, means that French private equity is making positive efforts to address the issue of gender equality.