How investors need to get bolder on gender and climate issues

In her work as an "catalyst", Suzanne Biegel champions the need for ‘gender-smart investing’. Because it’s both smart financially and vital for the future of our planet and its people. And in case anyone hasn’t already noticed the urgency of the climate crisis, she sees the Corona pandemic as the perfect wake-up call.

As Suzanne explains, gender-smart financing (factoring gender into your analysis of a potential investment) can be done intentionally, for example by investing in female entrepreneurs, companies with women leadership, or products & services that explicitly benefit women and girls. Or through an integrated approach, by carrying out due diligence to ensure companies you invest in are paying attention to gender issues, and thus more likely to spot gender-related risks and opportunities.

As a consultant and in her involvement with initiatives such as gendersmartinvesting.com (see Box), Suzanne carries out research to help investment allocators to create a gender-smart investment strategy and identify potential partners. “I bring together development banks, commercial financial institutions and other lead actors to see how we can get more capital moving more strategically to gender-smart investment, and so unlock the potential that comes from increased gender balance and focus on women.”

“Frontier Markets is a female-founded Indian solar energy company that uses a female entrepreneur model, recruiting and training women to market, sell and deliver products door-to-door in the country’s remote villages.”

Better outcomes

According to Suzanne, gender-smart financing is also one the most effective ways to address the impacts of climate change. “Take agriculture. We know that if women have the same access to inputs, such as seeds or tools, they do more with it. So if we want to drive a transition in climate-smart agriculture, we should be getting more capital to women and those offering products and services to women.”

Yet when it comes to innovations that address environmental issues, women entrepreneurs still have far less access than men to funding. One way to change this is to have more women making investment decisions. “There’s increasing evidence that women investors, private and institutional, attach greater importance to climate issues when making an investment analysis or decision.”

“So if we want to drive a transition in climate-smart agriculture, we should be getting more capital to women and those offering products and services to women.”

Suzanne also cites Paul Hawken’s influential 2017 book, Drawdown, in which some 200 experts worldwide researched and modelled the 100 most effective ways to reverse global warming. “At numbers 6 and 7 were investing in girls’ education and access to family planning, which are interrelated, of course, as girls in pathways to employment have fewer children, and have them later, ultimately helping slow global population growth. And those with more education can make smarter decisions in relation to climate change. So we also need to be thinking holistically about how investments that positively affect women and girls will positively affect climate change in ways like this.”

Competitive edge

To many investors, Suzanne tends to stress the business (as against the social equity) case for investing in women-led businesses. One example being Frontier Markets, a female-founded Indian solar energy company that uses a female entrepreneur model, recruiting and training women to market, sell and deliver products door-to-door in the country’s remote villages.

“80% of household-related purchasing decisions are made by women, and that includes energy supply decisions. This business model makes sense. It also leverages female strengths such as listening skills to develop stronger customer relations and get better quality feedback to drive product development. As well as creating job opportunities for women in rural India and bringing off-grid energy to millions more.”

As Suzanne observes, companies built on innovative climate technologies are often male-dominated and would benefit greatly from having women in key positions to help them leverage the kind of gender-smart competitive edge enjoyed by Frontier Markets

“They need to look beyond the billion-dollar funds to invest in smaller innovative solutions, even when they don’t necessarily look like the things they’re used to investing in.”

Magnifying inequities

Suzanne feels the Corona pandemic is magnifying and exacerbating existing gender inequities. “As with any crisis, COVID-19’s economic impact will disproportionately hit women and girls, for example in their reduced access to resources and education.”

Another gender-sensitive outcome of the pandemic she foresees is restricted mobility. “If travel remains more limited after the crisis, it will of course be positive for the climate. But will also mean our economies and societies become even more digital-dependant, worsening the existing well-documented gender digital divide. So we need to ensure women and girls worldwide get better access to digital technology.”

Stepping up

Asked who needs to step up, and how, if we are to hit the SDGs by 2030, Suzanne lists five main areas.

First, the Development Finance Institutions (DFIs) and their partners. “They need to be bolder. For example by backing first-time, innovative fund managers. And strongly encouraging gender-balanced leadership and workforces from investees — and then helping them achieve them.” She applauds initiatives like the 2X Challenge, designed to mobilize capital towards women entrepreneurs, gender-balanced business leadership, employees and consumers. “This is going in exactly the right direction. But they need to move faster, break through some of their old patterns, and be bolder in their commitments.”

Secondly, she feels everyone, from major pension funds to family offices or foundations, needs to be less conservative. “They need to look beyond the billion-dollar funds to invest in smaller innovative solutions, even when they don’t necessarily look like the structures or people they’re used to investing in.” Suzanne believes this requires people in institutional roles coming together to get over traditional institutional barriers and be honest with themselves about how they need to change. Whether that’s by altering their structure or leveraging their influence, for example by not accepting all-male boards, to drive more diverse decision-making.

Thirdly, Suzanne believes college and university endowments, who manage a huge pool of capital particularly in the US, need to think with more urgency and realize that investing in a merged climate and gender agenda is not inherently risky but vital to their future, too.

Fourthly, the banks, who work with all the actors, including the world’s corporates, and yet continue to fund climate-damaging energy sources, industries, companies and business models. “Banks are probably top of the list. They need to be far more self-critical and leverage their role far more effectively.”

And finally, government and policymakers. “With a sweep of a pen, a government can say, for example, we will no longer allow polluting chemical fertilisers, or even polluting industries. And if the regulators get on board, we’ll have a more level playing field. So no one can claim anymore that sustainably or social equity undermine competitiveness.”

And as Suzanne points out, all the actors she mentions can also choose who they partner with. “It’s time to use that muscle.”

So while there are more funds, vehicles and money moving in the right directions, it’s currently all too little and too slow.

Too little, too slow

Suzanne has seen many changes in her 10 years as an investment industry strategist and 20 as an investor herself: the number of gender-lens products targeting listed companies has gone from one to over 50 and over $3.4 billion Assets Under Management (AUM). The private equity and venture capital market with a gender lens is doubling year on year and Suzanne now tracks some 200 gender-lens funds, many of which also invest in climate solutions.

“Initiatives like the 2X Challenge have really put a stake in the ground to galvanise the global investing community to look afresh at their investment criteria and indicators. There are also exciting new partnerships, for example between corporates, banks and DFIs. And policy agendas are being developed in countries like Australia, Canada, the Netherlands and the UK that explicitly make climate and gender issues top priorities.”

However, while she sees visionaries amongst individual investors and at institutions, they are few and far between. “So while there are more funds, vehicles and money moving in the right directions, it’s currently too little and too slow.”

Crossroads

Suzanne feels the pandemic has put us at a crossroads. “The world has shown itself capable of achieving remarkable things in response to the Corona crisis. My hope is we take that same level of energy, momentum, determination and collaboration to launch and back new funds, invest in new initiatives and make changes within our organisations much more quickly than we previously thought possible. So one version of the future is that we really do get it together and invest in ways that are more sustainable, impactful and critical. The alternate version is that people don’t wake up to this opportunity, don’t make the necessary changes and revert to what they know.”

So she makes a final appeal is to all investors. “Whether you’re investing $100 million or $100, don’t underestimate your power. You can use your voice to make the world more equitable and sustainable. And I believe gender-balanced leadership has a key role to play in that.”

Suzanne Biegel is co-founder of GenderSmart (gendersmartinvesting.com). Its activities include the Gender & Climate Investment Working Group, which brings together 80 investment pioneers from across geographies and backgrounds to unlock the potential of applying a gender lens to climate finance and vice versa.

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