Climate Finance Needs a Gender Strategy. Here’s How We Get Started.

By Suzanne Biegel & Rebecca Fries

With 16 million acres of wildfires burning across Australia, drought causing critical water shortages in southern Africa, and Extinction Rebellion storming the streets in the UK, the urgency of climate change is on everyone’s minds right now — and we are no exception.

Both of us work at the intersection of gender and finance: as CEO of Catalyst At Large and co-producer of the GenderSmart Investing Summit, Suzanne works with institutional and private investors to sharpen their gender strategy for better social and financial returns, while as Managing Director of Value For Women, Rebecca works with businesses, banks and investors that want to advance gender inclusion in energy, agriculture, and entrepreneurship. We are also both completely committed to mitigation, adaptation and resilience around the climate crisis, and believe gender inclusion is a key driver for this.

Increasingly, these conversations are going together — with people in the gender inclusion space looking for opportunities to invest in gender-smart climate solutions, and investors in climate finance wanting to learn how they can bring a gender lens to their work to achieve better and more equitable solutions. In light of this interest and urgency, the GenderSmart Investing Summit this April has made climate and gender finance a principal theme and is launching a working group to catalyse action and capital.

We know that we need to halve global climate emissions by 2030 to prevent the most catastrophic effects of runaway climate change. We also know that addressing gender inequality will be key to solving the climate crisis: whether that means investing in girls’ education or family planning (ranked sixth and seventh most impactful on Project Drawdown’s list of 80 actions we can take to dramatically reduce emissions by 2050), or bringing a gender analysis to more conventionally “green” solutions like solar energy, electric cars, or clean cookstoves. Increasingly, climate leaders are talking about the importance of a “just transition,” ensuring that as we work towards a climate-smart economy, we’re also paying attention to how gender, race, class, and ethnicity shape who is creating — and benefiting from — the solutions: whether in the form of investment returns, good green jobs, or access to natural resources like clean water and sustainable agriculture.

But when it comes to the practicals of bringing together gender and climate, investors often get stuck, whether it’s because they don’t know yet what vehicles are available to invest in, or because they view gender as a trade-off rather than a lens that amplifies choices and impact.

Here are six things investors and financial thought leaders who care about climate and gender can be doing to drive greater impact in both of these arenas, and to drive impact in them simultaneously.

1. Name, amplify, and invest in what’s already out there.

One of the most common concerns we hear from the investors we talk to about climate and gender is the perception that combining them is too hard. It can be hard enough to do a good climate deal, fund managers say, or to find investors who want to invest in green vehicles, without also bringing in gender, and vice versa. Investors fear that there isn’t enough product out there that meets both criteria, or that bringing a gender lens to their work means that everything will need to be reanalyzed from scratch.

But we’re not starting from point zero. There are vehicles that combine climate and gender available right now for investors at every level. (Please note that the following are examples only, not investment recommendations.) Calvert Impact Capital has $435 million in assets, but sells its Community Investment Notes for as little as $20 in the United States. WaterEquity now brings an intentional gender lens to its investments in safe water and sanitation, while Root Capital has a climate and gender initiative in sustainable agriculture. In VC, sustainable apparel fund Alante Capital brings an additional diversity lens (of race, gender, and sexuality) to the founders it chooses to invest in. Thirteen of the first 53 women founders SheEO has invested in over the last three years helm businesses focused on climate and environmental sustainability.

But these connections aren’t always obvious, or named explicitly. The finance industry needs to make it easier for investors to identify opportunities at the intersection at gender and climate — and the first step to doing that is to name and amplify what’s already out there.

2. Leverage your power as an investor by investing in and building gender-smart businesses, no matter what the industry.

An investment doesn’t need to explicitly focus on gender to benefit from using a gender lens. And whether you’re investing your own capital or deploying institutional assets, there are opportunities to magnify your impact and improve your business outcomes by paying attention to gender. If you’re investing in green businesses, you can bring gender into your due diligence process by asking businesses where the women are and why, how their business model impacts women, or how the products and services they offer impact the lives of women and girls. Are they missing out on potential growth or impact opportunities by ignoring a key market segment?

It’s not just institutional investors that have influence to leverage — individual investors can ask these questions, too. When Suzanne invested in rCup, she went to the leadership team with a list of five gender-related issues she cared about, from the composition of the board and the management team, to the role of women in their supply chains, pointing to how each could produce better business outcomes. You don’t need to be investing huge amounts of capital to leverage your influence as an investor in this way — although it definitely helps. Investors in public markets can use their proxy votes to push businesses to improve their gender metrics, or lobby their pension funds to pay more attention to the gender make-up of the businesses they invest in.

3. Increase the flow of capital to women-run enterprises in climate-focused sectors.

Women founders in the climate space suffer from many of the same issues as women founders in other industries: they’re less likely to get funded, receive smaller investments when they do, and are more likely to be overlooked when investors and fund managers look only in the usual channels.

To change this, we can actively seek out investment in women-led enterprises focused on mitigating and adapting to the impacts of the climate crisis. A first step to doing this is setting a gender target in your portfolio. Another way to build the pipeline of investible women-run climate enterprises is to partner with accelerator programmes focused on women or climate. At an even earlier stage, we can work to make sure that climate and tech-related education and vocational training programs reach women — more women in energy, business, and climate-related fields will lead to new and diverse ways to think about climate resilience and mitigation, and infuse climate investment pipelines with more qualified women.

4. Articulate the business case, as well as the environmental impact.

It’s not enough to assert that paying attention to gender will get investors and companies better environmental outcomes. Demonstrating the business case will ultimately drive the flow of more capital with a gender lens. Making informed investment choices starts with capturing and using sex-disaggregated data and seeking insights about gendered patterns in needs, barriers, and opportunities amongst both women and men.

Some of this research has already been started. In 2018, Value for Women teamed up with DFID and the Shell Foundation to research the business impact of gender inclusion in SMEs and clean energy value chains. In their pilot study of five Shell Foundation-backed entrepreneurs, they found that implementing a holistic gender inclusion strategy across market research, product design, value proposition, sales, marketing, customer segmentation, and human resources could impact sales by up to 85%. Articulating the business case has motivated exponential uptake of gender inclusion work in clean energy, with Value for Women’s approach now being adopted by DFIs, impact investors, and a smattering of clean energy SMEs globally.

5. Create and share tools and materials to make it easier for investors and companies to act.

One of the biggest barriers to investing in gender-smart climate solutions is a lack of clear and accessible information on where to start for investors, financial intermediaries, and fund managers alike. Most investors aren’t aware of the options already available to them, nor are most financial advisors thinking about how they can help their clients direct their investments in this way. And if an investor does want to combine a gender and climate lens, how do they ensure they invest in the vehicles and innovations that will have the greatest impact?

We need language and materials that articulate the financial and climate benefits of adopting a gender lens in clear and accessible ways. We need simple auditing tools that help investors to evaluate potential investments on their gender and climate impact — and that help businesses assess where and how they can do better. Rather than siloing investment vehicles into single categories of “climate” or “gender,” we need to make it easier for investors to identify vehicles that combine both.

And we need to articulate what “good” really looks like: ranking vehicles as necessary-but-not-sufficient, good, or exemplar. We can’t let the perfect be the enemy of the good — it’s important to start somewhere — but we also need to be clear about the standards and impact we are working towards.

There is no one-size-fits-all approach to gender lens investing. But together, these tools and materials will provide a roadmap for investors seeking to combine climate and gender, making it easier to move capital with greater velocity and impact.

6. Where the vehicles we need don’t exist, create them.

In many cases, bringing a gender lens to the green investment sector will mean adapting existing funds and vehicles. But in some cases, combining climate and gender will mean opening our eyes to new fields of innovation and opportunity that otherwise might have been overlooked — and in turn, necessitate the creation of new vehicles.

Criterion Institute is leading on a number of projects demonstrating what is possible in the design of new vehicles. One example is their work with Pacific Rise, a joint project with DFAT driving social investment to women in the Pacific, who as the first to face the consequences of the climate crisis will also be innovators in global climate resilience. In its work on climate risk insurance for the Global South, InsuResilience is paying attention to the way that gender inequalities create different vulnerabilities and risks for women and men in the face of extreme weather events and climate-related disasters.

An example of an individual investor exercising leadership in creating new vehicles is Allison Carlson, the founder and chair of the Forsythia Foundation. Following her experience as an infertility patient, Carlson became deeply interested in the impact of toxic chemicals on health, fertility and environment. She wanted to invest in businesses that were innovating in green chemistry, and when she couldn’t find a fund that did that, she added a venture component to Forsythia’s work — funding the entire project to get it off the ground, and signing on as the first investor.

Conclusion

Few of these shifts are simple: they require a concerted effort to identify gaps in the market and our collective knowledge as an industry, to collaborate with professionals with different skill sets and expertise than our own, and to continually innovate new vehicles and strategies to ensure that capital flows in the most impactful and sustainable ways possible — both for the economy and the planet.

The good news is that many of the solutions we need to be investing in are already here. They are technologies of the present as much as they are of the future: around clean energy, food waste, transportation, fashion, the way we design our cities, and more. Many of the barriers to dramatically reducing emissions are human and political, rather than limits of science or innovation. We have good evidence of what works — now we need to provide the support to accelerate it.

And there’s no time to waste. As the Deputy Secretary-General of the UN, Amina Mohammad has said, the 2020s needs to be the Decade of Action if we are to curb the worst effects of catastrophic climate change, achieve the Sustainable Development Goals, and secure a prosperous future for people and planet. And this year, 2020, is the year we need to set the framework of that action in motion.

We need to act with intelligence, urgency, and a spirit of humbleness and collaboration. It’s time to get ambitious. Think about where you can make a difference on this agenda. We’d love to know that that commitment looks like for you.

Suzanne Biegel is the CEO of Catalyst At Large and co-producer of the GenderSmart Investing Summit. She is a global leader in gender-smart investing. Rebecca Fries is Founder and Managing Director of Value For Women, whose expertise centres on gender inclusive business and investment practice across the globe.