- Efforts to combat climate change are leaving women behind, say studies, leading to them missing out on reskilling efforts and new green jobs.
- ‘Gender-smart’ climate finance can help redress this balance, say the European Investment Bank and British International Investment.
- Investment focused on the nexus of climate change and gender is nascent, but a development finance institution-led initiative is working to scale it up.
In the Indian cities of Pune and Bangalore, new metro lines will save an estimated 30 million hours of travel time, cut greenhouse gas emissions and improve air quality by cutting road traffic. Transport has the highest reliance on fossil fuels of any sector and accounts for 37% of carbon emissions from end-use sectors, according to the International Energy Agency. Efforts to reduce them and thereby tackle climate change are driving the roll-out of new technology from electric vehicles to aviation biofuel. A less touted, but hugely important benefit of improved public transport is how it can help address gender inequality in employment, particularly in emerging markets.
In India, efforts are being made to embed gender equality into the new transport systems, underlining the growing recognition of the importance of social as well as environmental advances as part of a ‘just’ transition to a low-carbon economy.
In Bangalore, 33% of jobs on the metro system will be filled by women, while creche facilities and more favourable schedules are offered to female drivers. In Pune, solar-powered electric vehicles will transport passengers from metro stops to their final destinations, making journeys both more secure and more accessible.
In developing countries, the lack of transport is a key barrier to the labour force for women leading to their significantly reduced participation, according to the International Labour Organisation, a United Nations agency. Empowering women to participate equally in the global economy could add $28trn in GDP growth by 2025, according to a 2015 analysis by consultancy McKinsey.
‘Gender-smart’ climate finance
This is an example of what the European Investment Bank (EIB), which provided €500m ($544m) of backing for the India deal in 2015, calls “gender-smart” climate finance. This is broadly defined as an investment that delivers both significant climate outcomes and addresses gender inequality.
Substantial evidence shows that women are disproportionately affected by climate change. They are estimated to account for around 80% of people displaced by climate change and 14 times more likely to die during environmental disasters, the UN Development Programme says.
A look at certain highly climate-exposed sectors yields further examples: women account for 43% of the agricultural workforce in developing countries, but they tend to have far less access to finance, legal rights and education than men as a result of entrenched gender inequality. In Zambia, 78% of small-scale farmers are women and severe weather and droughts have led to crop failures costing the country $13.8bn, according to the World Economic Forum.
The systemic gender imbalance in terms of pay and numbers employed globally means that, without due consideration of gender in respect of job creation and reskilling, the climate transition risks exacerbating inequality, according to research published in October by Boston Consulting Group (BCG). The consulting firm predicts there will be fewer jobs for women in the green economy and that, because women are already under-represented in areas where green reskilling will take place, they will miss out on this too.
“We know society is unequal, so unless the green transition actively includes inclusive design, we will just perpetuate these inequalities,” says Ellen Brookes, a climate change executive at the UK government’s development arm, formerly known as CDC and now renamed British International Investment (BII). “You can see this in the Stem [science, technology, engineering and mathematics] sectors. There are fewer women working in those sectors, raising funds around those topics and in senior positions.”
If these trends persist, BCG says, climate mitigation and adaptation strategies, as designed today, could delay the attainment of gender equity by 15 to 20 years. The green economy will be responsible for 67 million new jobs by 2030, the consultancy says, but the current gender distribution of jobs suggests women will only hold 25% of these. That could translate into a three-percentage-point fall in female economic participation and opportunity by 2030, according to BCG’s analysis.
Addressing the gender imbalance
Practitioners of sustainable finance innovation are working to address these imbalances. Gender lens investing is an established, but still niche focus for ESG-conscious money managers. According to Morningstar, there are 198 funds with a gender investment focus with combined assets of $86.5bn, while EIB data shows that gender lens financing is rising fast but amounted to an even lower total than that in 2020 (see chart below). And investment that incorporates both a climate and a gender lens is an even more nascent area, says Moa Westman, a gender specialist at EIB.
Data from the OECD and other development institutions shows that the number of financing projects that are climate and gender-tagged are in a minority, even though there is a strong business and environmental case for them, says Westman. “There’s still much more to be done in terms of raising awareness on the intersections and not seeing these as two separate investment fields.”
There are any number of points, both broad and specific, to support the business case argument. They include that: achieving gender parity could boost global gross GDP by as much as $2trn, or 2% to 3%, according to Citi; or giving women equal access to educational, financial and legal resources would boost farm yields by up to 30%, according to the UN Food and Agriculture Organisation.
To promote a better understanding of what Westman calls the “gender and climate nexus”, EIB, BII and German DFI DEG collaborated to launch the 2X Gender and Climate Taskforce in January last year. It is part of the broader 2XCollaborative programme, which aims to drive $15bn of capital towards female empowerment by the end of 2022 from private investors. The task force has created an investment guide that presents the business and impact case for gender-smart climate finance.
With a view to catalysing the development of this market, BII and EIB are embedding this approach in their investment strategy and EIB is doing so through its Climate Bank Roadmap.
Private market investment efforts
Recent EIB investments include €30m in the women-owned-and-led Jasmine Private Market Fund, an equity fund targeting climate-related growth capital investments in small and medium-sized enterprises in South East Asia.
BII has started assessing deals from the origination stage through a gender lens using the 2X criteria as standard in the past year or so, says Marijn Wiersma, gender lead at the organisation. BII previously only did so after deals closed. Over the next five years, at least 25% of its total new commitments will be in gender-smart finance.
In October last year, BII (then CDC) committed $70m to India’s first dedicated climate fund, which meets the 2X Criteria. This fund is 2X qualified because at least 30% of the portfolio will meet 2X challenge criteria and the fund’s staff also meet the criteria themselves as 40% of them are women.
The initiatives are also looking to increase financing to early-stage women-led businesses. Female-founded companies received only 2.1% of venture capital dollars invested in 2021 in the US, according to PitchBook.
“Whether women are working in Stem or not, they have way less access to financing than men do in venture capital, [as] it is less than 3% female-led and in private equity, it’s just over 10%,” says Wiersma. “It is a big issue and is something we are seriously looking at.”
It is also an issue driven by entrenched cultural traditions in many countries, so it won’t be solved quickly – but it will happen even more slowly without efforts such as these.
