Gender is an Untapped Opportunity for Climate-Smart Investors

Above image – ©Shannon Fagan, istockphoto

I’ve always been an environmentalist. I grew up with a real love for nature and especially the ocean – not only for humans, but for all living things – and as a young adult, supported groups like Tree People, Ocean Conservancy, NRDC, and Heal the Bay.

So when my business partner and I sold our company in 1998 and I began using my capital to support other entrepreneurs, it was only natural that sustainability would be one of my key investment themes.

I started investing in companies making sustainable food, sustainable packaging, and products that would reduce the amount of toxins in the environment. Soon after, I began to invest in climate solutions such as clean energy including solar, wind, and water. Early on, I joined Toniic’s 100% impact network, for investors who are committed to using their capital for impact across every investment.

Sustainability wasn’t my only investment theme. I was also an early adopter and field builder in gender-smart investing – a field which has become my life’s work, as the co-founder of GenderSmart Investing Summit and CEO of Catalyst at Large. But combining these two lenses was challenging for a long time.

In theory, ESG covered both, with climate and sustainability being covered by the “E” and the gender being folded into the “S” and the “G.” But in practice, gender and other diversity factors such as race and ethnicity often got pushed to the side under ESG’s broad umbrella.

Besides, I was looking for a deeper approach. One that accounted not just for the risks of ignoring climate and diversity, but for the opportunities that came with paying attention to them: of investing in innovators, creating good jobs, meeting the needs of all stakeholders, and working with investee companies to help them do better. Financial return had to be a part of that picture, but I was willing to consider a whole portfolio approach to return.

Over the last few years, it’s become easier to find vehicles that combine climate, sustainability, and gender/inclusivity – especially in the private markets, where at least 100 funds now have a dual gender and sustainability lens.

We’re also seeing major infrastructure players such as PIDG deploy a gender lens to sharpen their climate investments, working closely with investees to improve the gender balance of their workforce, reach customers, and ensure their projects meet gender-differentiated needs around issues such as safety and economic inequality. In the public markets, players like PAX/Impax, Adasina Social Capital, Trillium, Boston Common, and Nia Impact Solutions are leading the way in creating investment offerings that combine climate, sustainability, and diversity factors.

In real estate, PGIM combines a focus on climate change resilience and preparedness with a dedication to diversity and inclusion – including gender inclusion – across development, construction, supply chains, and their customer base. They work directly with tenants and residents to ensure that women’s needs are taken into consideration on everything from sustainability to safety.

Meanwhile, community lender Calvert Impact Capital’s emerging markets portfolio is both gender- and climate-smart, investing in everything from clean cookstoves to loans for environmental products, while CNote’s portfolio includes loans to help people put solar panels on their homes, while also taking into account gender-balanced teams and addressing accessibility concerns.

On the gender side, these changes are driven partly by the urgency of the climate emergency, with both entrepreneurs and gender lens fund managers deeply motivated to create and invest in solutions that address both climate adaptation and mitigation and gender diversity.

There is also a growing recognition that gender-smart investing is not just about counting women, but part of a broader matrix of justice, equity, diversity, and inclusion issues.

On the climate side, there is a budding recognition that addressing the climate crisis will require tapping into the knowledge, insights, and expertise of the whole population. If we want climate solutions that create a just transition for everyone affected, we need everyone involved – as innovators, entrepreneurs, workers, policymakers, customers, investors, and more.

There is a growing body of evidence that gender and other forms of inclusivity are material to climate investment. A 2020 report from Bloomberg New Energy Finance found that energy companies with at least 30 percent women on their boards performed better on climate governance and innovation. For now, we don’t know if this is correlation or causation, but what we do know is that women are not a minority group. We constitute at least 52 percent of the population. As a 2021 paper my organization GenderSmart co-published with Kite Insights put it, to discount women’s needs “is to build in failure.”

For example, gender-blind infrastructure projects that ignore the needs and norms of women (safety, freedom from harassment, design for end-users), may fail to recruit women employees or be underutilized by women customers and users. And allocators who fail to diversify their investment pipelines will miss vital market opportunities and innovations that may be key to helping communities mitigate and adapt to the climate crisis.

We need gender-balanced leadership and decision-making across all climate investment processes to unlock innovations and services that are responsive to market needs.

The good news is that there are so many credible gender and climate funds and vehicles that are ready for capital, across all asset classes, right now. But we need much more capital moving in this direction – and we need it yesterday.

The World Resources Institute estimates that the world will need to invest $5 trillion a year by 2030 to fund measures to fight climate change. In 2019/2020, just $46 billion was invested in climate adaptation and mitigation. We need this to change fast, and we need it to move smarter, in ways that take into account the needs and intelligence of the whole population.

There are so many extraordinary women and men who are already doing this work and walking this journey. But there is still a lot of room – and a lot of need – for more leaders.

If you are a person in a position of influence in the investment space, or you just have capital you want to move in smarter ways, I encourage you to join us. Two great places to start are this toolkit from 2X Collaborative and these guides and the editorial work from GenderSmart. People and the planet need you.

If you are a person in a position of influence or with investment capacity – but especially if you are a woman in a position of influence or capacity – I encourage you to get behind these vehicles now. There are so many extraordinary women and men who are already there, ready to meet and walk along the journey with you.

 

Article by Suzanne Biegel, the founder of Catalyst at Large and co-founder of GenderSmart. Suzanne sits on the board of the 2X Collaborative (which will merge with GenderSmart on January 1 to become 2X Global). She is a global leader in gender-smart investing.

Suzanne leverages her deep networks in finance, philanthropy, development, research, and entrepreneurship to connect public and private investors to the people and information they need to move their capital in a gender-smart way. Biegel’s mission is to increase the flow of global capital to gender-smart investments and initiatives, to make sure this capital is used in ways that will generate the most impact, and to ensure that it reaches the entrepreneurs and innovators who need it in the most efficient way possible. To do this, she works with actors spanning the entire spectrum of investment to forge catalytic relationships, build collaboratives, and transform the entire system of global capital. Her work has influenced hundreds of funds and institutional investors, and billions of dollars of capital to move with a gender-smart lens.