How to fight climate change with gender equality
by Moa Westman, gender specialist at the European Investment Bank
This article forms part of a series from contributors to GenderSmart’s Gender and Climate Investment Working Group. For many, Gender and Climate Investing is a new field, but there is already a lot of great work and experience to share. By showcasing powerful examples from across the investment ecosystem, Working Group contributors are using their voices in the lead up to February’s GenderSmart Investing Summit and beyond to highlight the important role a combined gender and climate lens can play in delivering a just, green economy transition. Through this series, we hope to inspire the adoption of this approach across the financial system.
In many ways, women are leading the call for climate action. They are leaders, entrepreneurs and activists. Take Greta Thunberg, the 17-year-old Swedish activist, Patricia Espinosa, the Mexican diplomat who leads the United Nations Framework Convention on Climate Change, the UNFCCC or the numerous female business leaders in the climate space.
A new report from BloombergNEF shows that emissions growth from firms with a third of female directors was 0.6% compared with 3.5% from those without any women on the board and that such firms typically score better on environmental disclosures.
Overall, though, women remain largely underrepresented in the decision-making bodies designing climate actions or drafting climate change policies, whether it is in the public or private sector. Nevertheless, climate-related projects and policies that involve women have proven to be more effective and deliver better environmental outcomes, according to the UNFCCC.
While climate change can be devastating for all people, especially those who depend on natural resources for their income, it affects women and men differently. Gender and social roles define the access men and women have to productive, natural and financial resources with implications for their resilience to the effects of climate change. Projects and investments implemented without women’s meaningful participation are less effective and often aggravate existing gender inequalities.
Last year, The European Investment Bank (EIB) made a historical commitment to align all financing activities with the goals of the Paris Agreement by the end of 2020 and to dedicate at least 50% of its financing to climate action and environmental sustainability by 2025. To deliver on these commitments, it launched a Climate Bank Roadmap.
The Roadmap highlights how well‐targeted investment can both assist the green transition and contribute to social development and gender equality. Gender responsive climate actions can strengthen climate and environmental outcomes and, often, are also a business and market opportunity. They help expand the customer base, enhance customer satisfaction, improve financial and business performance, and attract more investments from impact investors.
We see four key avenues to advance gender responsive climate investments.
1.Lending to women entrepreneurs and fund managers active in the climate and environment space to scale-up their businesses and funds
Women entrepreneurs are more likely to start sustainability-focused businesses and Funds– but often lack finance to scale up. Frontier Markets, a provider of off-grid solar-power solutions in rural India, increased sales by 30% after the company began to employ female entrepreneurs as suppliers and sales agents. Involving women improved the company’s reach and helped bring clean energy into homes that previously had no electricity.
Another example, is the EcoEnterprises Fund, a pioneering impact fund in Latin America with a women led management team. The Fund invests in biodiversity focused businesses, such as sustainable forestry and sustainable agriculture. It works actively with its portfolio companies to enhance women’s but also indigenous communities’ employment and leadership opportunities. The fund is backed by the EIB and was FinDev Canada’s first 2X challenge investment.
2. Financing projects that can tackle deep-rooted gender inequalities as well as strengthen the resilience and adaptive capacity of women and girls worldwide.
Family farms run by women tend to be smaller than those run by men. The smaller size and limited access to financial and productive resources means that women generally lack the funds to cover weather-related losses or adopt technologies that would make their farms more efficient and resilient to climate change. Improving the conditions of female farmers, however, could increase their farm yields by 20-30%, improve soil fertility and protect ecosystems, according to the Food and Agriculture Organization.
BlueOrchard managed InsuResilience Investment Fund works with Micro Finance Institutions that combines its loans to micro-entrepreneurs with insurance products against extreme weather events and natural disasters to protect vulnerable people against the impacts of climate change. These services and products are needed to build out the necessary infrastructure so that vulnerable populations have the ability to protect themselves and take adaptation and resilience requirements into account as part of their investment decisions.
EIB announced its investment in the Fund in December 2020 along with a commitment that 40% of the Fund’s investments will be in line with the 2X Challenge Criteria, ensuring that women get improved access to finance as well as climate insurance and helping them to cope with the effects of climate change on their farms, businesses, and in their lives.
3. Ensuring that women and girls have access to and benefit from the low-carbon and climate resilient infrastructure/services created by climate finance.
A good example is investments in low carbon public transport that consider women and girls travel needs, security, safety and accessibility, while at the same time providing employment opportunities for women and men equally. For more about these types of approaches, checkout this blogpost.
4. Supporting our clients to set targets for women’s employment and leadership opportunities, through advisory and technical assistance
In 2020, responsAbility Investments, supported by EIB and FMO, had one of its Climate Funds qualified for the 2X Challenge by making a commitment to apply a gender lens to its portfolio investments and have at least 50% of its companies provide quality employment for women. The energy sector is one of the least gender diverse sectors with only 32% of the workforce being women.
The Fund’s investments in off-grid renewable energy solutions can also improve women’s lives. Women in rural communities spend up to 14 hours a day on unpaid care work, according to Oxfam. Much of that work is dedicated to collecting firewood, limiting women and girls’ ability to pursue educational or other productive activities. d.light, one of the Fund’s portfolio companies in East Africa, provide a pay-as-you-go scheme that enables low-income households, including those headed by women, to buy lanterns and home energy kits powered with solar energy. Payments are distributed over several months, avoiding heavy upfront costs. d.light’s products have improved access to clean energy and enabled women shop owners to extend their business hours well into the night.
Climate investors need to think carefully about how to best seize the opportunities that will promote gender equality in climate action, environmental sustainability and empower women, while at the same time building new markets. More integrated investments are needed to solve today’s climate change, environmental and social inequality crises that are all interlinked, in a way that is sustainable and leaves no one behind.
Full article: https://www.eib.org/en/essays/climate-change-gender-investment
GenderSmart is committed to highlighting great work that is underway to address the climate emergency with a climate and gender lens. If you haven't already, please let us know what you are up to, and we'll be sure to amplify it. Image: Annie Spratt, Unsplash