Gender equality could boost the world GDP to $28T by 2025: BofA

Yahoo Finance's Melody Hahm joined Yahoo Finance Live to discuss Bank of America's report analyzing diversity and inequality at major corporations and how it's impacting the economy.

Video Transcript

ADAM SHAPIRO: Let's get to Melody Hahm because there was a report from Bank of America about full gender equality and what that means. And it is a huge number for GDP here in the United States. Melody.

MELODY HAHM: Yeah, lots of mind-boggling, eye-popping numbers in this report, Adam. For the first time ever, B of A actually published a very robust, comprehensive report, analyzing diversity and inequality at major companies, looking at race, ethnicity, sexuality, immigration, and disability. But I chose to focus in on gender here.

If companies actually embrace true diversity and inclusion, society could potentially come back from COVID even more prosperous than before, that we had seen from such a strong labor market and economy. And that's what the B of A economists are suggesting here.

Full gender equality globally would potentially increase world GDP by up to $28 trillion. That's by 2025. Just for some context, that's about one-third of the entire world GDP in 2019. So if you-- these are a lot of hypothetical estimates and suggestions here.

But it just shows that COVID-19 merely exacerbated a lot of the gender inequality and the gap that we had seen, as women are starting to take more of the lion's share when it comes to housework, when it comes to child care in heterosexual relationships, of course. And we did hear Philly Fed president in the last hour addressing this sort of head on, right? That this is a pervasive problem and a systemic issue.

SEANA SMITH: Well, Melody, following up on that, because it was interesting what we heard President Harker say just in terms of, one, the disparity that we are currently seeing when it comes to race and also gender, but then also just the structural changes that will be required in order to address this gap, because I think that's the unknown right now. Yes, we need to somehow put-- we need to put men and women on an equal playing field, but exactly how to do it, that's the big issue at hand.

MELODY HAHM: I think the first part is accountability, and I know that word has been a buzz word of 2020 and 2021 when it comes to especially a lot of the racial reconciliation we did see happening. But I do think we have a full screen just sector by sector breakdown of the percentage of S&P 500 companies that actually do report having diversity and discrimination policies.

It's pretty-- it's a mixed bag across the board. Materials is the clear outlier here. Only 36% of companies that are materials related on the S&P 500 actually do have a policy at all. That number should be 100% across the board, right? Because the first order of business is to really disclose a lot of these issues.

And I think if companies, if they have any kind of doubt in their mind about these sorts of metrics are important, it just makes plain business sense. According to the B of A report, S&P 500 companies with above median gender diversity on their board see 15% higher return on equity. And overall, more diverse companies in general see lower earnings risk one year out compared with their less diverse peers. So I don't know if there needs to be any more convincing, but I think it's safe to say that this should be a reality, especially in the year 2021.

ADAM SHAPIRO: And you can read more about this Bank of America report on the Yahoo Finance web page. Melody's article is there, as well as some others, breaking down what the report found. Melody, good to see you, and thank you.