In recent years, Environmental, Social and Governance (ESG) investing has continued to grow, particularly for women. But a new dimension is starting to capture attention: the growing power of women-led companies.
Women in leadership aren’t just a social milestone - they’re shaping up to be a compelling investment story.
Female entrepreneurship is on the rise
As of 2025, women are estimated to make up around 40% of business owners worldwide, marking a shift towards more inclusive leadership across industries. Yet, despite this progress, women-led businesses remain significantly underfunded.
Only around 2% of global venture capital funding goes to women-led companies. This isn’t just about gender equality - it’s a missed opportunity.
Research shows that female founders can generate returns up to 35% higher than male founders. For individual investors, this opens the door to a promising and often overlooked space.
The overlooked ‘S’ in ESG
ESG investing often focuses on the Environmental (‘E’) and Governance (‘G’) aspects. But the Social (‘S’) pillar is where diversity, equity and inclusion come into play.
Gender diversity in leadership is one of the clearest measures of a company’s commitment to the ‘S’. Data collected by GOV.UK and the Institute of Directors has made gender representation in leadership more transparent - and more important.
Companies led by women, or with women in senior roles, tend to have:
a clearer focus on long-term sustainability.
These are among the qualities that ESG-minded investors increasingly look for.
Gender diversity drives stronger performance
Having gender diversity in leadership isn’t just ethical - it’s financially sound. According to McKinsey & Company, companies with more women in executive roles are 25% more likely to achieve above-average profitability.
A similar study from Credit Suisse found that companies with at least one woman on the board outperformed their peers in share price growth over six years.
This stronger performance is often linked to:
better decision-making driven by diverse perspectives;
leaders who prioritise sustainable and inclusive growth; and
more transparent and responsible business practices.
Women-led companies perform better on ESG metrics
Research from MSCI ESG found that companies with greater female representation at board level scored higher across ESG measures.
Here’s how women-led companies typically perform:
Environmental - more focus on sustainability, from cutting emissions to circular supply chains.
Social - stronger commitments to inclusion, fair pay and employee wellbeing.
Governance - higher levels of transparency and accountability.
These leadership behaviours create a ripple effect that benefits employees, investors and communities alike.
The investment opportunity ahead
Women are still underrepresented at the top. Just 10% of Fortune 500 companies are led by women. But for investors, that imbalance presents an opportunity for impact.
Several funds now focus on gender-diverse leadership, such as the SHE ETF and the Impact Shares YWCA Women’s Empowerment ETF. Investing in these companies allows investors to:
back a growing ESG trend;
help close the leadership gender gap; and
align their money with both performance and purpose.
What about pensions?
For those looking to support gender equality and long-term growth through their pension, here are some simple ways to start.
Consider an ESG-aligned pension plan - look for plans that actively include gender diversity and inclusion in their investment criteria. These funds often favour companies with diverse leadership and sustainable practices.
Review your provider’s transparency - find out where your pension is invested and how your provider measures diversity across their portfolios. Understanding this can help you make more informed choices.
Advocate for change - use your influence to encourage your provider to prioritise investments in women-led or gender-diverse companies. Consumer demand plays a powerful role in shaping how capital is allocated.
Maria is a Freelance Editor and Writer who previously worked as Global Editor at Female Invest. Her writing focuses on gender equality in finance and has featured in Harper’s Bazaar, The Telegraph, inews, Metro, Glamour and more.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
