How financing female-led businesses can improve and accelerate the way to a net-zero carbon future for people and the planet?

gender equality and finance

At last month’s COP27, dubbed the ‘implementation COP’, climate finance took centre stage in the ongoing work to bridge the emissions and adaptation gaps. Financial institutions will need to mobilize around US$1 trillion dollars of annual investment by 2030 in order to stay on track with our net-zero carbon goal. But resource mobilisation is only half the issue – we also must make sure that these resources are allocated in an equitable way that improves, rather than worsens, societal inequalities.

Female-led businessess and initiatives

An important part of this work is to invest in female-led initiatives, especially within sustainable development. Financing female-led initiatives benefits both society and the environment, as research shows that female business leaders are better at taking climate into consideration in their business decisions.  Despite this, the IFC estimates that only 7% of total private equity and venture funding in emerging markets is targeted towards female-led businesses and, similarly, just 3% of philanthropic environmental funding supports girls’ and women’s environmental activism. Female-led businesses often have difficulty accessing funding from climate finance providers who may overlook smaller businesses in favour of investing in large-scale projects.

gender equality and finance

Various examples of actions and initiatives worldwide

So, what can organisations do to help solve this problem? Many are setting targets to improve gender representation, and listing gender as one of their key impact areas:

For example, NatWest Group, British banking and insurance company, have set a target of providing £100 billion in climate and sustainable financing and funding by the end of 2025. As part of this commitment in 2021 they supported 55,000 small and medium enterprises (SMEs) through their enterprise programmes, of which 60% of the participants were women-led businesses and 52% of the businesses were social enterprises. As part of their enterprise programmes they educate small business owners on a range of business matters, including specific training on climate and sustainability. 

KBC Group, Belgian bank,  launched Start it @KBC, an acceleration programme for start-ups, and has actively committed to fostering female entrepreneurship in the start-up landscape. The bank aims for an equal number of female and male entrepreneurs, and currently, 46% of the Start It @KBC start-ups have a woman as a founder, an increase of 34% since 2017.

Some financial institutions are also offering insurance products to help mitigate the risk that female entrepreneurs often face when starting their businesses. For example, Wema Bank, a digital bank based in Nigeria, launched a platform called SARA specifically for women entrepreneurs, which provides discounted health insurance and access to loans at a 9% interest rate.

Banco Hipotecario, based in El Salvador, has launched a programme called “Women In Action” that provides access to commercial financing, home loans and study loans for women. Importantly, they provide four months moratorium on repayments during maternity leave, illness, or a death in the family.  This moratorium helps defray the risks of insurance.

Another way that members can support women is by providing financing for scholarships and opportunities for additional training and skill building. In 2021, ANZ (the Australian and New Zealand Bank) launched a new scholarship opportunity for women leaders working across the fields of environmental and corporate sustainability as well as sustainable finance. The CEW & ANZ Sustainability Scholarship is designed for female sustainability practitioners with at least five years’ leadership experience looking to develop their skills and enhance their capabilities.

These examples show that many financial institutions have already been able to make substantial contributions to gender equality. As awareness of gender mainstreaming grows, it is surely that more financial institutions will commit to setting gender-related targets. Creating targets is an important step towards gender equality, but those targets must also be monitored and evaluated to ensure they are heading in the right direction. According to the OECD, around 70% of blended finance vehicles dedicated to gender equality and 40% of those that have committed to mainstreaming gender equality provide transparent reporting on the impact of their projects and initiatives.

One group that is working towards a more gender-responsive approach to climate finance is 2XGlobal. 2XGlobal will be launched in January 2023 following a merger between the 2XCollaborative and GenderSmart to support and mobilise capital to empower women. The partnership of more than 16 financial institutions will equip capital providers to increase the volume and impact of capital to support women’s businesses, projects, and institutions. They have a special interest in gender-smart climate finance through the 2X Gender and Climate Finance Taskforce, which has already committed to mobilizing $15 billion in capital by the end of 2022.

gender equality and finance

Available tools to asset and improve gender equality

UNEP FI also has a variety of resources available to our members to help them achieve their climate commitments in a gender-responsive way. The Principles for Responsible Banking’s Impact Radar tool was designed to help members to report on their impacts and provide advice to members on how to improve in various impact areas, including gender.  In 2020 UNEP FI released a guidance for banks on Gender Equality Target Setting. UNEP FI encourages all its members to make gender targets a part of their overall commitments to climate change, even if it isn’t listed as one of thier impact areas.

gender equality and finance

Authors: Joana Pedro, Cassandra Devine and Marie Wallner