It’s a precarious time for the global economy, with geopolitical unrest and volatility in the fallout from the pandemic. For many, this means a retreat from investment—but not, it seems, from investments with purpose. Despite rockiness in the stock market, Bloomberg recently reported that ESG (environmental, social, and governance) funds have attracted more than $22 billion so far this year.
While people often think of ESG in relation to climate, fostering social equity is also a major area of impact and opportunity. And the two go hand-in-hand—especially when it comes to women. As noted in a recent report from BCG, investments in measures that enhance society’s ability to respond to climate change, like expanded access to microfinance for smallholder farmers, often have the additional benefit of positively affecting women’s livelihood.
Conversely, investments in women can also drive sustainability efforts. Companies with women on their boards are likely to improve energy efficiency, lower costs and invest in renewable power generation.[1] And women are more likely to invest in causes they believe in, like protecting the environment.[2]
The intersection between climate and gender presents an exciting opportunity for financial services providers that have made strides on the gender front. Just as developing a women-centered approach to financial services lays the groundwork for reaching other underserved markets like marginalized groups and informal businesses, it also lays the groundwork for environmental efforts. FSPs can leverage aspects of their women’s market programs to develop their climate efforts; for example, by leveraging non-financial services to orient customers around environmental goals or adapting gender-intelligent training processes for climate-focused initiatives.
In a nod to the interconnectedness of the two missions, we are increasingly seeing FSPs link gender and climate efforts within their institutions. In the past, “E” may have been siloed from the “S” and the “G” in ESG—but that is changing. Take NatWest, for example: During our recent Ask the Expert session on Gender and Climate, Julie Baker shared how NatWest has linked its climate and women’s efforts by ensuring all strategic partnerships are approved by a joint committee with representatives from the Climate, Enterprise, and Financial Inclusion teams. This enables the bank to get far more out of its strategic partnerships by finding ways a single partner can help advance multiple ESG goals simultaneously.
We also see a new path toward investing in gender equity through financial instruments developed in the climate finance sphere. Social Gender Bonds, for instance, use the Green Bonds blueprint of raising money toward social good initiatives and giving FSPs access to less expensive forms of financing to deliver them. The bonds are awarded to companies with a good track record in the space, and Alliance members are well-positioned in this regard.
In April, NMB Bank announced its first Gender Bond in Sub-Saharan Africa, a USD $32 million investment co-funded by IFC, which will finance more than 2,000 women-owned small- and medium-sized businesses in Tanzania to grow and create jobs.
Banco Pichincha, in partnership with IFC, also announced the issuance of Ecuador’s first ever social gender bond, a USD $50 million principle matched by a USD $50 million investment from IDB Invest, which will go towards financing for women-led SMEs. We-Fi will provide additional support around reaching underserved SMEs, as well. These sizable investments in the female economy are signposts that gender-lens finance is growing—and will join DEI (diversity, equity and inclusion) in the movement toward socially responsible finance.
The two-way street—and mutual benefits—of climate and gender finance is an area ripe for exploration, and the Alliance is providing platforms for doing just that. This June, we are hosting our first-ever Investment Forum (exclusive to Alliance members). During it, we’ll bring together investors and fintechs to discuss how to drive purpose with dollars, products and services. The intersection of climate and gender will also be a major focus of our 2022 Annual Summit this November. We look forward to charting the path forward toward a more inclusive and sustainable financial sector with you there.
[1] https://assets.bbhub.io/professional/sites/24/BNEF-Sasakawa-Peace-Foundation-Gender-Diversity-and-Climate-Innovation_12012020_FINAL.pdf
[2] https://im.bnymellon.com/us/en/intermediary/inclusive-investment.jsp
