Financial inclusion key to addressing higher number of women impacted by climate change

Investors share how they are including a gender lens and financial inclusion criteria in their decision making

Firms must consider financial inclusion and invest with a gender lens in order to address the number of women disproportionately affected by climate change, investment industry professionals have told PA Future on International Women’s Day – where the UN theme for this year is ‘InvestInWomen’.

Women tend to have a higher vulnerability in the areas most impacted by climate change, said chief impact and blended finance office, deputy chief executive at BlueOrchard, Maria Teresa Zappia. Climate change events can also exacerbate domestic violence towards women, she said.

“Women represent 40% of the agricultural labour force in developing countries and agriculture is the most important employment sector for women in low and lower-middle income countries. Natural resources and stable environmental conditions are relied on heavily for these productive activities. However, climate events can jeopardise this.

“For instance, as water becomes scarcer, women may spend more time and energy collecting it, which can limit their opportunities to engage in income-generating activities and education. In India, women from the poorest rural communities spend almost two and a half months in a year only fetching water. So, gender roles and gender inequality put women at a higher disadvantage against the climate crisis.”

Further, Zappia noted climate change can threaten women’s health as they face limited access to essential services and healthcare. “Extreme heat can increase the incidence of stillbirth, while climate change contributes to the spread of vector-borne diseases like malaria, dengue fever and Zika virus, which are associated with worse maternal and neonatal outcomes”, she added.

Lastly, climate change can worsen domestic violence against women. Zappia said: “Adverse climate events impact women and girls by increasing their vulnerabilities to gender-based violence and sexual abuse. Research has shown that the risk of a woman being killed by her partner or ex-partner increases by 28.8% within three days after a heatwave occurs. Another trigger for violence is the scarcity of productive land, a problem exacerbated by climate change.”

See also: – Why women are the shining stars of asset management

How is this being addressed?

The fact women are more vulnerable to climate change effects has been well documented and, to mitigate this, at COP28’s Gender Equality Day last year organisations launched the COP28 Gender-Responsive Just Transitions & Climate Action Partnership, which aims to finance flows to regions most impacted by climate change and address access to education, skills and capacity building in these regions where women are more vulnerable to effects.

There have also been a number of other efforts, such as the 2X Challenge launched at the G7 summit in 2018, aimed at tackling gender inequalities in regions that feel the impacts of climate change more greatly. Here, Development Finance Solutions (DFIs) committed to mobilising private sector investments of $3bn (£2.4bn) in developing country markets over three years – a target that has been tripled to $6.9bn (£5.4bn). These investments provide women with improved access to leadership opportunities, quality employment, finance, enterprise support, and products and services that enhance economic participation and access.

But more needs to be done, particularly from an investment and fund perspective, and one way is by tackling financial inclusion, said commentators. A report by Consultative Group to Assist the Poor, published last year, said financial inclusion is a cornerstone of action on climate adaptation as it can bolsters climate resilience in low-income communities especially among women and girls.

BlueOrchard ensures gender analysis is part of its funding criteria and allocation of resources for climate change initiatives, especially at the local level. For example, the firm “increases access to climate risk insurance for farmers, improves financial inclusion for the unbanked population, and promotes education, particularly for women”.

Zappia said: “Conducting gender analysis of all budget lines related to climate change is necessary to guarantee investments are sensitive to gender considerations in programs that consider females who live in communities most impacted by climate change.”

Meanwhile, Nazmeera Moola, chief sustainability officer at Ninety One, shared various examples of how the firm financially empowers women living in regions most affected by climate change.

One example is the group’s Emerging Africa Infrastructure fund (EAIF), which provides long-term commercial debt to infrastructure projects in Africa, again focusing on financial inclusion. Ninety One was the first commercial lender to ASA International Group – ASA stands for the Association of Social Advancement and is an international microfinance institution that aims to enhance the socio-economic progress of low-income entrepreneurs by increasing financial inclusion.

It offers small, socially responsible loans exclusively for income-generating activity, predominantly to economically active low-income female micro-entrepreneurs with little or no formal access to credit. Some 97% of the group’s clients are women across four regions spanning 13 countries in Asia and Africa.

Moola noted that investments are made with a gender lens as it ensures women and girls benefit equally from the infrastructure investments. The fund has created 23,991 permanent jobs so far, the majority of which are female employees working in the region.

Further, Ninety One also has an Emerging Markets Sustainable Equities fund, which Moola said is another key driver of financial inclusion. The portfolio consists of companies in either emerging or frontier markets that aim to reduce its harmful effects on society and the environment. The Article 8 fund holds shares in Bank Rakyat Indonesia (BRI), which is a microfinance, SME (small and medium enterprise), consumer and corporate bank in Indonesia, and it runs a programme called Empowering Women Through Ultra Micro Ecosystem, which provides access to capital, coaching and capacity building, especially for housewives, to 15.1 million women borrowers.

This, Moola continued, contributes to Indonesia’s target to achieve financial inclusion to 90% by the end of this year by encouraging women in Indonesia – a region that feels the impacts of climate change more greatly – to participate in the economy, and as a result, become economically empowered.

Rupal Kantaria, vice chair of 30% Club and partner at Oliver Wyman, said more firms need to consider including gender lens investing into portfolio decision making.

She said firms must “recognise women as agents of change, not just victims, and involve them in driving solutions. It is important to understand that greater gender diversity leads to better business outcomes”. This is because, as Kantaria asserts, “women are effective changemakers, both as consumers, investors, and leaders”.

It is also interesting to note, Kantaria said, if a firm has a higher proportion of women at senior levels in the business then more investments tend to be driven by a gender lens.

This story first appeared in our sister publication, PA future.