Q&A with Emmeline Liu and Ruth Gao of Calvert Impact Capital

Emmeline Liu and Ruth Gao are the General Counsel and Associate General Counsel, respectively, of Calvert Impact Capital, Inc., an impact investing nonprofit that delivers access to capital markets to over 100 borrowers operating in 107 countries around the world. Calvert Impact Capital has been a pioneer and leader in gender lens investing, which is fully integrated into its impact investing theses. We recently spoke with Emmeline and Ruth about their career paths as women in law and impact investing, and Calvert’s investment strategy on gender equity.

Q: You’ve both dedicated your careers to empowering underserved communities, including women and girls around the world. How did you end up as lawyers in impact investing, and was this always an area that you were passionate about?

RG: I have always wanted to work with marginalized communities. I studied business in college, where I formulated that I wanted to be able to support entrepreneurs in their ideas to better the world. I ended up pursuing a law degree to obtain a set of skills that would be helpful in this area, which after graduation led me to a corporate practice at a law firm. I started in private equity investments and equity capital markets, and eventually focused on fund formation and the raising of private equity funds. After six years practicing in BigLaw, I pivoted to a fellowship at NYU in order to gain my footing in impact investing. That’s how I ended up as a lawyer at Calvert, where I’m able to combine my passion for empowering entrepreneurs with my corporate legal skillset as a funds lawyer.

EL: I was definitely not as directed as Ruth. Like a lot of people with a PoliSci degree out of college, I wasn’t completely sure what I wanted to do. I went to law school almost on a whim after taking a pre-law class. During law school I participated in the Juvenile Justice clinic, and the summer after my first year, I worked on death penalty appeals in Texas. But those experiences, while moving, also firmly cemented my desire to become a transaction attorney and never do legal research again. After graduation, I worked in BigLaw for 10 years as a finance and restructuring attorney. While I was there, I did a lot of pro bono work. As a transactional attorney, it can be hard to find pro bono clients that lend themselves directly to your skillset, but I encourage everyone to do pro bono as a way to develop your interests and expertise. It was through pro bono work that I first came in contact with Calvert, and I ended up doing quite a few projects for them, including during my maternity leave, which is how I built a strong relationship with Calvert and ultimately ended up here.

Q: It’s been well documented that the pandemic has had a disproportionate impact on women and children. How has this come up in your work over the past year?

EL: The pandemic has exposed and exacerbated the weaknesses and inequalities in our system, both along gender and racial lines. For over 25 years, Calvert has worked to reduce those inequalities and has consistently been a leader in investing with an equity or gender lens, and we have sought opportunities to reach out to underserved communities during COVID-19 as well. One example is that we’ve arranged five separate small business COVID recovery funds serving small businesses in 18 states and Washington D.C.

In the disbursement of Paycheck Protection Program loans overall, the majority of funding went to businesses that already had connections to the existing financial system. The recovery funds we arranged have instead connected with historically unreached communities—including women and people of color in low- and moderate-income communities—by going through Community Development Financial Institutions (CDFIs), who have mandates to serve these communities, but have traditionally been underfunded and under-resourced. We’ve raised more than $200 million of institutional capital and over 1700 loans have been funded, 65% of which have gone to women or BIPOC owners, and 90% of which have gone to businesses with 10 or fewer employees.

Q: Could you tell us about the gender lens investing work that Calvert does?

EL: Gender equity has always been a core part of our mission, and we formed an explicit gender lens strategy over a decade ago. In 2018, we published a report, Just Good Investing,which has a quantitative analysis of our portfolio over the preceding 11 years, examining the relationship between financial performance and gender diversity. The report also provides tools and guidance for investors looking to incorporate gender into their own investment strategies. The report demonstrated that there was a strong relationship between gender diversity in leadership positions and financial performance, and it presented the business case for incorporating gender into investments.

We followed this up with a project with the International Transactions Clinic at NYU Law School this past year, which addressed the issue of how to invest with a gender lens. We reached out to 20 different organizations, including development finance institutions (DFIs) and private impact investors around the world, and compiled a summary of our findings on how impact investors incorporated gender into their legal documentation. It was interesting to see not only what the organizations incorporated, but also how and when they didn’t incorporate certain things. For example, as gender lens investing continues to develop, investors don’t want to inadvertently cause harm by imposing strict top-down obligations on their borrower through harsh covenants.

Instead we saw that there is a huge emphasis on relationships. When investors focus on developing their relationship with the borrower, they can encourage the borrower to either think about gender or reframe what they are currently doing in gender terms. At Calvert we don’t think of gender as one limited class of assets, but instead as a lens through which we view and collect data on all our investments. A gender lens should be applied to everything, and we engage in conversations with our borrowers about what they are doing or could be doing to move the needle on gender equity. Having these conversations is key because it signals to borrowers that investors really care about the issue.

Q: Tell us about your own experiences as women in an impact investing environment. What kind of gender dynamics have you witnessed in the workplace?

EL: Calvert is a women-led organization: our President and CEO is a woman, and the majority of our senior management team and staff are women. It was one of the first times I worked at a place where I would be in a room with senior management, and almost every conversation was with a majority female team. Whether it’s because we are women led, or perhaps because we’re focused on gender issues in our work, we do take an inclusive approach to gender equity throughout the organization.

For example, we make sure that issues like parental leave, childcare and work-life balance are not seen purely as women’s issues, but instead as human issues. There is an expectation that both men and women will take parental leave, and there is a high level of transparency and empowerment for employees to make time for family. Relatedly, I would describe the leadership styles I’ve observed from the management at Calvert to be inclusive rather than traditional or hierarchical. There’s the expectation that, in a room, everybody’s viewpoint matters.

RG: When I started at Calvert, I walked into an environment where everyone had already bought into this inclusive style of leadership. For example, the pandemic hasn’t been an easy time for most people, and with all of us being remote, there aren’t as many opportunities to just check in on one another. A couple of our staff were talking and decided to create a space where we can address hard-to-discuss topics like race, gender and inequality on a regular basis. This new initiative was encouraged from the top down; Calvert’s culture is to encourage exploration and ownership for everyone at the organization.

Q: What’s next for Calvert in terms of gender lens investing and gender equity projects?

RG: When it comes to our portfolio, we believe that every loan—including climate investments and renewable energy—has tremendous impact on women and communities. We will continue to incorporate a gender lens when assessing every single loan in our portfolio, and gender is always a consideration in portfolio reviews and diligence.

EL: We are a founding signatory to the Operating Principles for Impact Management, spearheaded at IFC, which has done great work setting standards around impact measurement and management. Next we are looking to develop resources around establishing standards, increasing transparency, understanding what others are doing and having a standardized set of metrics and terms for what gender should look like when it’s codified in legal documentation. Calvert will also continue to publish resources and insights on gender lens investing, so our website continues to be an ongoing resource on this front.

Q: How can organizations and everyday investors get involved in gender lens investing?

RG: For organizations looking to incorporate a gender lens, I would say that it begins with recognizing that gender equity and investing with a gender lens is a spectrum that goes from no awareness to awareness to proactive steps to correcting injustices. Real change requires buy-in throughout the entire organization, but the key is to just get started, even with small changes. There are costs to making those changes and we don’t want to rush our borrowers, but it shouldn’t be distilled down to just ticking a box. Instead, we see gender lens investing as a form of awareness that will trickle down throughout a whole organization from the investors, through to borrowers, through that organization, and finally to end users and the community. In short, gender lens investing is a spectrum, a journey, it’s a continuous process.

EL: If you think along a continuum, we can liken this to measuring profitability. You wouldn’t say that any company doesn’t care about its financials, or that they’re either profitable or not profitable and end there. Instead, the goal is to move from less profitable to more profitable. For gender lens investing, the goal can be to move from a one to a three, which is equally as impactful as investing in someone that is already a nine. This process is key to investing in gender. Simply asking questions and starting the conversation can be what begins to move the needle.

RG: Agreed. And for individuals interested in participating in gender lens investing, there are opportunities to do so in the market right now. Calvert’s mission statement is founded on providing accessibility to impact investing to the everyday investor, which we are achieving through our Community Investment Note. Since 1995, we have mobilized over $2 billion into financial intermediaries, projects and funds that finance high-impact organizations. For both individuals and organizations interested in learning more about gender lens investing, our Just Good Investing gender report and our recent Gender Lens Investing: Legal Perspectives report are great places to start.

Julia Chen is an associate in Debevoise’s New York office.

Comments? Suggestions? We’d love to hear from you. Send us an email at women@debevoise.com.