KLD Research & Analytics launched a North America Women Investment Index (NAWI) last Thursday that includes 216 U.S. and Canadian firms in various sectors that rank highly on promoting gender equality. Who made it into the index?

The top 10 include Bank of Montreal, New York Times Co., General Mills, Bank of Nova Scotia, Xerox Corp., SSgA, ATT, Estee Lauder, Quest Diagnostics and Sun Life Financial, says Karin Chamberlain, index manager for Boston-based KLD.

Companies were chosen from the FTSE All-World Developed Index, she says, and were ranked based on four indicators:
Board representation, which considered the number of women on the board of directors;
Workplace representation, which looked at the number of women in principal senior-line positions-including CEO, CFO and anyone responsible for 25% or more of revenue-and the percentage of women managers;
Programs and policies, which looked at mentoring programs, diversity committees and benefits offered that support women, such as maternity and paternity leave, child care and flexible work schedules;
Controversies, which looked at lawsuits or allegations related to discrimination, harassment or hostile work environments.

KLD and Portsmouth, N.H.-based Pax World worked together on constructing the index as well as four more that are part of a gender investment series being developed for International Finance Corp., a member of The World Bank. Pax World has been a leader in promoting gender as an investment concept-the idea that companies that empower women perform better financially over the long run-and already owns the Pax World Women's Equity Fund, which it bought in October 2007.

The first phase of the IFC project included choosing the companies that would be included in the five indexes, which all will be launched by the end of April, Chamberlain says. The North America index, as well as the Asia Pacific Women Investment Index (APWI) and the Europe Women Investment Index (EWI), are subindexes of the Global Women Investment Index (GWI). The fifth index is the Global 100 Women Investment Index (GWI100), representing the 100 top companies for women worldwide. The second phase of the project would be for IFC to fund the calculation of the indexes, which could then be licensed to a company as the basis of an index fund, she added.

Joe Keefe, Pax World's president and CEO, notes his company plans to launch three or four ETFs based on FTSE/KLD sustainability indexes later this year and one of those ETFs may be based on one of the new gender indexes. "We believe a suite of sustainability ETFs will have appeal to institutional investors but also to investment advisors," he says. All of Pax World's funds currently are actively managed, and Keefe says he believes "a suite of passively based ETFs would be the next logical place to go."  However, he couldn't commit to a specific date on when the ETFs would be launched, especially in light of the global financial crisis, which is placing tremendous challenges on most companies.

The sectors represented in the North America women's index include basic materials, consumer goods, consumer services, energy, financials, health care, industrials, technology, telecommunications and utilities. No more than 50% of the market cap of any sector is represented in the index, Chamberlain notes. The result was that sectors with fewer large players ended up with more companies in the index.

One interesting finding was the companies who made it into the gender indexes generally had good overall performance on environmental, social and governance (ESG) criteria, Chamberlain adds. Sounds like a possible correlation, don't you think?

Dorothy Hinchcliff is editor of FA online and FA green, as well as managing editor of Financial Advisor magazine. She has spent more than 15 years as an editor and reporter covering personal finance and other business issues.