Gender lens investing — the practice of choosing investments that take gender into account, specifically those that promote women’s issues and female leadership — is gaining momentum. “There’s a lot of activity, from publicly traded securities to high impact investing,” says Joseph Keefe, CEO of Pax World Funds, its investment adviser Pax World Management as well as majority owned subsidiary Pax Ellevate Management. “We do a lot of it.”

In 2014, Pax launched the first mutual fund that invests in highly rated companies with a track record of advancing women, the Pax Ellevate Global Women’s Index Fund. The fund tracks the Pax Global Women’s Leadership Index, which is a market cap-weighted index of companies worldwide with good records of gender diversity on their boards and management ranks.

Since 2014, the amount of assets under management in publicly listed debt and equity with a gender lens mandate has risen more than five-fold to $561 million, according to Veris Wealth Partners, an investment advisory firm specializing in impact investing with a focus on environmental, social and governance issues. Several gender-equality indexes or securities have also appeared, including State Street Global Advisors’ Gender Diversity Index and ETF (Ticker: SHE), Bloomberg’s Financial Services Gender-Equality Index, MSCI’s  World Women’s Leadership Index, and Thomson Reuters’ Diversity and Inclusion Index.

Moreover, the number of private equity and venture capital firms making investments with a gender lens has mushroomed. Women Effect, an information hub to promote gender lens investing now based at Wharton, is tracking some 30 to 40 venture funds alone, says Suzanne Biegel, founder of Women Effect, and an investor, founder, and advisor for numerous other organizations focusing on impact and gender lens investing. Still, gender lens investing is far from mainstream. “It’s still tiny,” says Biegel.

Gaining Momentum, But Still Small

Gender lens investing falls into three main categories: investments in companies with significant numbers of women on their boards or in executive positions; firms with exemplary policies, such as strong family-leave programs, pay equity, an inclusive culture, and a talent pipeline in which women are well-represented; and businesses that produce products or services that improve the lives of women and girls. GLI investments may also fit into more than one of these categories, for example a company may both make products that improve the lives of women and be run by women.

Since 2014, the amount of assets under management with a gender focus has risen more than five-fold to $561 million.

The rising trend of gender lens investing can be traced to 2009, when the term was coined by think tank Criterion Institute and other collaborators, although the concept has been around much longer. Still, many people on Wall Street haven’t heard about it. “If you go to an investment manager and say you want to invest in ways to improve the lives of women and girls, the investment manager is likely to look at you as if you’re nuts, or tell you they have no idea how to do it,” says Katherine Klein, vice dean of the Wharton Social Impact Initiative. “Gender lens investing is more like where environmental investing was 15 years ago.”

At the same time, the challenges it aims to address remain formidable. As Biegel points out, while a few hundred women-led businesses will get capital from these first venture funds, there are still tens of thousands of others in need of capital who will not get it. “There’s plenty of women’s leadership product, but it’s a drop in the bucket in the demand for capital,” Biegel says. Only about 10% of women entrepreneurs globally have access to the capital they need to expand their businesses, according to the International Finance Corporation (IFC). An IFC-McKinsey study noted that women face a credit gap of approximately $320 billion.

Meanwhile, despite efforts at increasing the number of women on company boards, the needle has not moved much. Among MSCI World Index firms, women held 18.1% of all directorships as of August 2015, up from 15.9% a year earlier, according to MSCI ESG Research. In the U.S., women held 19.1% of directorships among companies in the index, up from 17.9%. At this pace, women will not constitute 30% of board seats in publicly held companies until 2027, according to MSCI Research.

Further, women in the U.S. earn 80 cents for every dollar men do, according to the Institute for Women’s Policy Research, while only 29 of S&P 500 companies have female CEOs, as pointed out by female-advocacy group Catalyst. Many companies still are not family friendly — the U.S. and Papua New Guinea are the only two countries without federally mandated paid maternity leave. In many developing countries, women continue to be denied access to education, the right to own property, and innumerable other necessary conditions for their empowerment.

Accelerating Gender Lens Investing

So, how does gender lens investing reach the scale necessary to improve the lives of women and girls? Several trends underway point to its favor, including the growing share of wealth going to women globally as they become significant earners in their own right as well as through inheritance.

Indeed, women are expected to control more than $72 trillion of global wealth by 2020, up 80% from about $40 trillion in 2016, according to the Boston Consulting Group. Moreover, millennials, who more than any previous generation are committed to using their wealth for social good, are poised to inherit trillions of dollars from their baby boomer parents. Millennial and generation Xers will control more than half of investable assets, or some $30 trillion, by 2020, according to PwC.

“Gender lens investing is more like where environmental investing was 15 years ago.”— Katherine Klein

Such a view is part of a broader secular shift. It moves away from the well-known notion held by Nobel laureate economist Milton Friedman that the corporations’ responsibility is to make as much money for shareholders as possible, to a view that markets and businesses are expected to be part of solutions, says Keefe.

Many proponents of gender lens investing also cite research that they say shows that businesses with greater proportions of women on their boards and in leadership positions perform better than others. However, academics, including some at Wharton, say the studies that have produced this data are not sufficiently rigorous and that no such link has been established. One possible reason is that the women who ascend to top management do not differ much in their views and values from male executives.

Meanwhile, several headwinds against gender lens investing remain. “Entrenched inequality in cultural, political, and economic institutions are important barriers,” says Keefe of Pax World. Systemic change is difficult and can take a long time. This may explain why some of the most intense activity related to gender lens investing has been in the area of channeling capital to female entrepreneurs. There may be a large number of initiatives with this as their goal because it is possible to devise creative workarounds to institutional barriers in this arena but not in others. Significantly increasing the number of women on boards or in corporate leadership, for example, may only be achievable through wholesale transformation of existing institutions.

One such attempted workaround is being led by Sharon Vosmek, CEO of Astia, a nonprofit dedicated to increasing the funding of women-led ventures. In the world of venture capital, where 95% of the VC partners are white men, about that percentage of available capital goes to the same demographic, Vosmek notes. To her and others intent on getting more capital to women entrepreneurs, the key problem is that most of the networks through which venture capitalists hear about and then vet deals are dominated by white men, and those men, consciously or not, have a deeply ingrained sense of what a successful entrepreneur looks like — themselves.

Sarah Kaplan, professor of strategic management at the Rotman School of Management at the University of Toronto, describes a venture capitalist acquaintance telling her that there’s no pipeline of women-led startups. Kaplan, who is also director of Rotman’s Institute for Gender + the Economy, told him, “Dude, you’re just not looking.”

To improve access to funding by women entrepreneurs, Vosmek created a network with a 50-50 female-male balance of some 5,000 venture capitalists, serial entrepreneurs, angel investors, corporate leaders, bankers, accountants, and others — to review, evaluate, and advise women-led enterprises seeking capital.

Since 2003, more than 60% of the companies that have presented to Astia’s network have been funded. Meanwhile, Astia Angels, a network of qualified investors with access to Astia-qualified companies, have invested $14.8 million since its inception in 2013. Of companies that have received funding having gone through Astia, there have been 30 successful exits and three initial public offerings. Astia Angels just had their first exit in May when Ciel Medical was acquired by Vyaire Medical.

Gayle Jennings O’Byrne and Kathryn Finney, co-founders of Maya Ventures Partners, are trying to create a similar ecosystem for women of color, where the inequality is even more stark: They get a mere 0.2% of available venture capital. Of more than 10,200 VC deals between 2012 and 2014, only 24 were led by black women, according to a study by digitalundivided, an organization aimed at the economic empowerment of black and Latina women entrepreneurs.

To circumvent existing barriers, Maya Ventures has created an accelerator for black women entrepreneurs. Once these women have gone through the accelerator, which provides mentoring, training, and access to a network of other entrepreneurs and investors, Maya Ventures connects the entrepreneurs with traditional VCs, says O’Byrne. Her goal is to get $20 million into the hands of women of color. “To VCs who say we can’t find any good deals, we’ll solve their problems” as well as help raise capital for women of color entrepreneurs, says O’Byrne. Maya is fundraising for its first fund in 2017.

“Dude, you’re just not looking.”–Sarah Kaplan

Vicki Saunders, founder of SheEO, is using crowdfunding to create networks that will generate and channel capital to women. SheEO is organizing hundreds of women to invest in and collectively decide which women entrepreneurs will receive funds, help them with their business plans, and support them through the growth of their businesses. While the initial capital consists of donations, Saunders’ expectation is that subsequent rounds of funding, for which the original investors will be given the right of first refusal, will be invested for profit. So far, SheEO has investors in four regions. Her goal is to expand to 1,000.

While these initiatives aim to get more capital in the hands of women entrepreneurs, others, not convinced that concentrating on funding women-led businesses necessarily produces the societal change they seek, are trying other strategies, including doing research on the question, “What really has impact?”

“I’m disappointed with how few care about impact,” says Ruth Shaber, president of Tara Health Foundation, which both provides grants and invests in companies whose products improve the health and well-being of women and girls. “Most are focused on market returns and use intention and intuition to assume that women’s leadership will have a positive social value.” To address her concerns and investigate the question, Shaber is collaborating with the Wharton Social Impact Initiative and the Center for High Impact Philanthropy at the University of Pennsylvania.

“There’s not one direction” related to the diversity of current initiatives to improve gender lens investing, adds Jackie VanderBrug, managing director at U.S. Trust. The firm introduced its “Women and Girls Equality Strategy” for private wealth clients in 2013, making it one of the earliest such investing strategies available. “We need more experimentation and diversity.”