IWD 2024: Inclusion in structured finance

Diversity is a cornerstone of the practice of securitisation, but the same cannot be said for the make-up of securitisation practices worldwide. To mark 2024’s International Women’s Day, Claudia Lewis highlights the need to acknowledge the often-overlooked intersectional challenges many women face on top of those of gender.

The theme of this year’s International Women’s Day celebration, ‘Inspiring Inclusion’, highlights the need for greater consideration for the intersectional issues affecting women and further increasing the barriers to enter, to stay and to rise within the structured finance industry. Without addressing other struggles and discrimination based on race, disability, LGBTQ+ identities and neurodiversity, then not all women are included. Although diversity is a cornerstone of the practice of securitisation, the same cannot be said for the make-up of securitisation practices worldwide. 

“In securitisation, the most important thing is diversification – not just in your portfolio. But having diversification among your colleagues too can only be a positive thing for business,” states Naomi Prasad, director at Pemberton Capital Advisors.

The job of diversifying the workplace for now relies heavily on the proactive efforts of women within the industry in supporting and advocating for women. Often this lies on the shoulders of the most senior professionals, whose rank has historically not always borne the most inclusivity-minded female bosses.

Women within structured finance have long been advocating for the inclusion of women within the industry. This advocacy includes participation through formally organised groups such as the 1999-founded Women in Structured Finance, the 30% Club set up in 2010 to improve the representation of women on boards across different industries, and the SFA’s Women in Securitisation group which began in 2014 and focuses on development, advancement and retention.

While progress has been made through formal policies for inclusion, such as mentorship programmes and hiring quotas, informal allyship and advocacy remain a crucial component in improving inclusion and helping women to succeed and climb the securitisation ladder.

Progress: where are the women?
Despite accounting for a 51% majority of the world’s population, women continue to represent an overall minority of the structured finance workforce. Tamara Box, partner at Reed Smith and founding member of Women in Structured Finance and the 30% Club, highlights the ongoing disparity: “The playing fields are being levelled – but they’re not level yet.”

In 2010, when the 30% Club was founded, only 9% of the FTSE board members were women. Now, women account for 43%.

While more women hold senior positions than ever before, women remain minority-holders of senior leadership positions globally – including in structured finance. “It’s really hard to tell how much improvement there has actually been,” says Juan Grana, md and senior portfolio manager at Chorus Capital. “Sometimes it feels like there has been progress - and while there is, of course, more effort to show the successes and give visibility to women who have climbed the ranks, the data is not conclusive.”

Indeed, assessing just how far the structured finance industry has come in terms of gender diversity is challenging, as there remains little data and visibility into the progress across different market segments and roles. “One thing you should think about when you’re looking at statistics is: are you seeing women doing well in the most sought-after roles, which have historically been in male-dominated areas?” asks Grana.

The increasing presence of women across the industry as a whole is not a sufficient measure of progress. At Chorus Capital, women make up 33% of the company overall, including 30% of the investment team – which is a noteworthy achievement versus industry standards, especially for a boutique asset management firm. Pushing for gender diversity required challenging gender norms – not only seeing more women in traditionally male professions, but also seeing more men in roles traditionally dominated by women, such as HR or sales.

“On the buy-side, when you look at investment firms, it’s about women in senior investment jobs. I think that’s how you can really tell which firms are doing well,” states Grana. “That’s an important measure of progress and change.”

Given the influence of investors, keeping up to speed with diversity and ESG could be relatively easier for them than major banks and corporations relying on outdated, company-wide policies. However, no efforts to compile data have yet been made to prove these suspicions. 

Importance of women: relative value
Although statistical evidence may be lacking, it is hard to deny in the cold light of day the absence of women in the securitisation workplaces across the globe. Nevertheless, the issue of gender diversity is not just an issue for women within structured finance, but a fundamental concern for the success of businesses. 

Diversity has been proven to be a benefit to operating in this industry, as studies have found that without women, a given team or company is less successful. “We need the cognitive diversity,” argues Box.

Women bring invaluable perspectives to decision-making processes, particularly when it comes to assessing risk and ESG considerations. Studies have proven that firms led by women perform better and pose less of a credit risk – generating a lower probably of default. Women within structured finance have anecdotally acknowledged that women often have superior leadership styles to men: instead of taking autonomous approaches to traditional male leaders, women lead by example, they coach and they delegate.

This shouldn’t be surprising, given widely-held misconceptions of women’s capabilities. A prominent example being the universal belief that women are terrible drivers, yet the insurance premiums for women are significantly lower than those for men.

However, discussions around gender are becoming even more critical, as attitudes towards women’s rights are regressing with the rise of alt-right misogyny. According to one study from KCL and Ipsos, 53% of men believe gender diversity has progressed enough. Not only do a reported third of women agree, but 20% of Brits believe feminism has gone too far and now consider men to be discriminated against.

The World Economic Forum confirmed that advances in gender equality have significantly slowed, re-estimating that gender parity will not be reached for another 131 years, given current rates of progress. “It’s disheartening to look back on my 30 years of efforts towards gender balance and inclusion, only to see the pendulum swing back to the dark ages. This is no time for complacency,” warns Box. “Our industry needs the skills and insights that women bring to leadership roles, and it is the responsibility of each and every one of us to work harder to make that happen.”

The culture within structured finance has changed dramatically over the years. The financial services industry was notorious for harbouring sexism under the control of the ‘old boys club’, but Box founded Women in Structured Finance with the purpose of providing a network for women and to get them to realise they do not have to ingratiate themselves with the patriarchal, old boys network that dominated.

Nevertheless, improvements in attitudes towards gender diversity and inclusion are far from universal, and reportedly vary massively between structured finance workplaces worldwide. Many women in the sector note inclusion of women and minority groups to be far better in the US and Europe, and offices in the Asia Pacific region to be among the worst.

While everyday sexism prevails in most co-ed workplaces worldwide, defining and policing workplace cultures for misogyny remains difficult, making it challenging for young women to break in and foster workplace relationships from the offset. Making meaningful changes to toxic cultures within structured finance requires more women in leadership positions. Once-praised efforts to ensure one woman sat on a board is no longer enough: at least three women are needed on a board to see the full economic benefit of diversity.

“The challenge remains in the numbers,” argues Box. Although women have infiltrated every corner and field within structured finance – and risen to the top – the mission is now to support women in following in these footsteps.

“Part of the problem in getting women into senior roles is a self-perpetuating one: the fewer women we see in leadership, the less likely it is that women will get promoted to those senior positions. You cannot be what you cannot see,” says Box.  

She continues: “The answer, of course, is simple: if you want more women in leadership, you have to put more women in leadership. Seeking out and promoting high-potential, capable women will go a long way towards creating the all-important role models for junior associates. And don’t tell me you can’t find them; they’re all over your organisation and others. You have to look beyond the industry stereotypes if you want to see tomorrow’s leaders.” 

Retention: don’t ask, don’t tell
While there appears to be no issue in recruiting women into the industry, there continues to be a significant drop in numbers when it comes to both the retention and promotion of senior women within structured finance. Banks’ graduate programmes are reportedly routinely seeing women accounting for more than 50% of their intake.

Poor retention rates among more senior female professionals in highly competitive industries like structured finance is often mistakenly pinned on sexist misunderstanding instead of data-driven insights. “It’s not just about women wanting to start families,” explains Box. 

Departing high-pressure jobs for new careers is quite the common phenomenon - although societal expectations often confine men to high-flying careers, while women are allowed to be more multi-faceted. Not only do women continue to take on more unpaid labour within the workplace, but they shoulder the brunt of the caring responsibilities in their personal lives too.

Women in their 40s are disproportionately affected as they battle the care-gap – caring for young children, as well as elderly relatives. Not only is this all a recipe for burnout, but it also takes a significant toll on women’s career trajectories – as, for the so-called ‘sandwich generation’, caring responsibilities collide with key years for career progression within structured finance. The pandemic exacerbated this issue, as more women than men left the workplace – many of whom did so to tend to these caring responsibilities. 

Measures to improve the burden on working parents are often promoted as being female-forward, despite an equal need for childcare by both mothers and fathers. However, parental leave policies, flexible working agendas and in-house creches do in fact improve female staff retention.

On these policies, Grana states: “All you’re trying to achieve is to make up for how society is unfair on women – while it’s not the employer making the world unfair, employers need to reflect the world that we live in.”

Enforcing policies universally for both men and women could not only change attitudes, but is also essential for preventing discrimination against women using flexible working. Removing the ‘decision-making’ for a boss in allowing a working mother to work from home, for instance, means that when promotions come up, this isn’t viewed as a negative.

“Being able to take advantage of flexible working without having to give explanations is one example,” observes Grana. “This policy would have a disproportionate beneficial impact on women - by just removing the stigma of taking up flexible working.”

The same goes for policies supporting women with oftentimes debilitating reproductive health conditions, including PCOS and endometriosis – which are said to impact 10% of women during childbearing years. Although just a handful of major corporations have implemented menstrual leave policies worldwide so far, such policies strive to negate discrimination against women with gender-specific health conditions that impact their ability to work. 

Very little has shifted culturally in terms of the roles of men and women as carers, however, as the question of having a career or a family is one still only asked by women. Therefore, until true gender parity is reached, the question is less one asking if women can ‘have it all’ and instead a question of how workplaces can support women while they are expected to do it all.  

Hiring targets: the quota question
Quotas are often adopted as a formalised means of ensuring workplaces strive to build teams which are representative of the world around them. However, feelings remain mixed on both the effectiveness of diversity hiring targets and their effect on how women perceive their own worth in the workplace.

“I dislike quotas,” says Prasad. “Imposter syndrome is such a common struggle among women and, if you add in the question of if you are only there to make up the numbers, it’s terrible from a confidence perspective.” 

She continues: “And it only reasserts the male suspicion that a woman only has a job because she is a woman – not because of merit.”

However, despite imperfect usage of quotas in the past, more women are beginning to consider them a powerful tool for enforcing thoughtfulness and overcoming subconscious biases. “Hiring is a key part of what we do, and hiring great people is so important in this industry. So, if you aren’t taking out these biases in the hiring process, you cannot be doing a great job for your firm,” argues Grana.

Although quotas rarely strive for 50% of candidates in interviews being women, it’s still normally limited to just one. Indeed, for a lot of women including in structured finance, it has been a common experience to get to a final-round of interviews for a job to only find out you were included to meet diversity requirements for each interview stage.

“Once you’ve tried everything else, quotas start to look good,” states Box. “Quotas are not the opposite of choosing an applicant on merit. If meeting a quota encourages organisations to look at the widest possible range of qualified candidates, then it is a good thing for everyone, isn’t it?”

She continues: “Striving for gender parity does not mean lowering standards; high standards of talent, potential and expertise exist all around us. We just need to look beyond tradition to see them.”

Of course, skills-based hiring and anonymising CVs are considered fairer means of hiring on ‘merit’ rather than using quotas. However, with no single definition for ‘merit’ or a perfect meritocratic system, there is the risk in hiring processes of simply looking backwards, recreating and seeking standards from the past rather than looking forwards.

“Gender is just too blunt an instrument,” states Prasad. “If you’re going to use quotas, you need to look beyond gender to things like social background, race, sexuality and disability too. And even then, asking personal questions in the application process brings up the issue of how relevant these aspects are to having the skills required for a job.”

Sponsorship versus mentorship: keeping it casual?
Efforts to support women in structured finance span from more formal mentorship programmes, forums and quotas, to more informal allyship seen through both mentorship and sponsorship. Sponsorship is considered more important in advancing women’s careers than mentorship, by actively promoting and advocating for junior colleagues, as well as providing opportunities for advancement – and thus it requires strong allyship across the top of the hierarchy at companies.

“Mentorship is not as powerful as sponsorship – part of the reason I think often women don’t advance in the same way as men in the workplace is that there isn’t someone looking out for them. Someone more senior who recognises and nurtures their talent,” suggests Grana.

Indeed, for many senior women in securitisation, progressing in their careers is not simply down to hard work but instead luck – the luck of having proactive support through sponsorship. And more often than not, mentorship and sponsorship are reliant on the support of senior women within the industry.

The more informal approaches require proactivity in recognising potential and can be as simple as volunteering to write a junior colleague’s 360-degree review. Actively considering the advancement and the futures of women as colleagues is essential to negate unconscious biases towards women in the workplace, as promotions are not viewed as being as inevitable or as automatic for women as they are for men.

“It’s important that you are proactive about it. So, if senior women see someone with potential or talent or that may be in the wrong spot, go and talk to them. This is not a zero-sum game. Telling someone that they are brilliant doesn’t detract from you in any way,” says Prasad.

Historically, calling upon women to support other women has proven to be a challenge, due to the very real fears of there being limited opportunities for women across organisational hierarchies – especially at the top. “I’m a big believer in the ‘lift as you rise’ philosophy - and I know many successful women who both advocate and practice this approach,” explains Box. “Yes, we have seen some who have ‘closed the door’ behind them, but many of those were a product of a particular place or time. For example, in organisations that have chosen to see diversity as a ‘one and done’ idea, the competition for the ‘one’ role can be fierce, resulting in women who are afraid to support other women for fear of losing out when only one will be chosen.”

She continues: “The problem is reduced when diversity becomes a business opportunity, not a numbers exercise. We’ve seen the value that women add to our industry; as more of us participate, more benefits accrue to all of us. There’s no reason to close the door on anyone.”

This mindset is shifting, as many senior women who credit sponsorship for their own successes are now going to touching lengths of advocating for women on their own teams, within their own companies and even externally. “Volunteer to promote people and just recognise people – it doesn’t have to be a formal scheme,” urges Prasad. “I interviewed a woman who wasn’t right for the role we were hiring for, but she had so much potential. I stayed in touch, offered to help her with CVs, cover letters and helped put her in the right direction. It can be that simple, and it’s incredibly rewarding when you see people blossom.”

The more senior women become, the less formal sponsorship and mentorship gets – and often, this is when sponsorship is most essential for progressing a woman’s career. However, with men still sitting in the majority of the most senior positions - and most mentoring schemes being non-gender based - they also have an essential part to play in supporting and promoting high-potential women.

“Male allyship is critical not because male guidance is inherently more valuable, but because it offers the opportunity to show egalitarianism and respect for contributions regardless of gender. It’s how men ‘walk the walk’ and not just ‘talk the talk’ with regard to diversity and inclusion. As men and women take that walk together, we create role models that have the power to change unconscious bias and realise the potential that comes with achieving gender equality in the workplace,” says Box.

Yet men remain somewhat stuck between a rock and a hard place when it comes to serving as allies for women in the workplace, as they run the risk of relationships with junior colleagues being misconstrued as favouritism or, at worst, predatory behaviour or sexual harassment. Conversely, given the historic abuses of power by men in senior positions, there is still a real risk for women in their places of work. Therefore, formalising such schemes could be an important step for making it safe for women to receive support in progressing in their careers from more senior colleagues.

For many men who reportedly still find it difficult to speak up on behalf of women and their inclusion across the spectrum of intersectional issues, Grana warns: “That sort of level of discomfort is pretty light compared to what a lot of women and other less-represented groups have to go through.”

Not only are forums for gender diversity becoming more common and better attended, men are increasingly showing up to support in these spaces. However, Grana suggests that welcoming men into safe spaces for women in structured finance should be done to help women be heard and for men to gain greater awareness of the issues faced by women colleagues, not to have men speak for them.

“We need to think about how men can be part of the solution – they don’t have to be the solution, and they probably won’t be. But men should be there to listen, engage and support,” says Grana.

The structured finance industry has been criticised for falling behind in embracing all things progressive – whether it’s digitisation, ESG or indeed diversity. However, much like these other markers of progress, diversity holds the potential to create more opportunity within the market.  

This year, International Women’s Day serves as an important reminder of the long way structured finance still has to go in order to secure inclusion for women in the sector. A key part of this lies within acknowledging the often-overlooked intersectional challenges many women face on top of those of gender.

“Gender can perhaps be the greater of the challenges on a numbers basis – but it is so hard to take one away from the other. Some of these things you can mask – you can’t mask race, you can’t mask disability, and you can’t mask gender. So, add things onto gender and it increases the barriers,” Box concludes.

Claudia Lewis