Opportunity for Women in the Clean Energy Transition

As we celebrate Women’s History Month, it is again a time of reflection. We delight in the pockets of progress over the years but reiterate that there is certainly no room for complacency. The World Bank estimated that there are still almost 2.4 billion women who are without equal economic opportunity and more than 178 countries that still maintain legal barriers to prevent the full economic participation of women.^[1]

Closer to my home, in the United States, numbers feel more optimistic. American women contribute more than $7 trillion to US gross domestic product each year.^[2] In addition, they control $10 trillion in assets, a number that is expected to grow to $30 trillion – an amount roughly equivalent to U.S. gross domestic product – over the next decade.^[3] And, by 2028, estimates suggest women will be responsible for 75% of discretionary spending.^[4]

When it comes to climate change, women are still disproportionately affected; however, given their growing economic importance, women have a really significant role to play in the rapid and just transition to a low carbon economy. At COP28, the nexus of gender and climate change was a clear focus. Vice President Harris reinforced the US government’s commitments to the Women in the Sustainable Economy (WISE) Initiative which, through public-private partnerships, gives women around the world access to capital and financing that supports climate resilience and women’s leadership on climate issues.^[5]

To meet net zero by 2050, the U.S. must transition swiftly. It’s an incredible challenge that requires the alignment of energy demand and production, diverse infrastructure components, supply chains across sectors, capital formation, public opinion, and more. Women’s influence is increasingly converging to the center as women become empowered to contribute to and benefit from the transition. At the US Sustainable Investment Forum (SIF), our research finds that climate is a top criterion for both institutional investors and money managers, and that diversity, equity and inclusion (DEI) issues are among our members’ top five investment themes and engagement priorities. This important climate-DEI intersection creates a potential wealth of opportunities for investors.

Many of these opportunities may be found in projects funded through the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA), which work in tandem to incentivize private capital to move the equitable transition forward, accelerating the development and deployment of clean energy technology. Goldman Sachs research estimates that the IRA’s impact could encourage $11 trillion of total infrastructure investment by 2050,^[6] and BlueGreen Alliance research estimates that more than nine million jobs will be created over the next decade, across technologies, as the U.S. builds more resilient infrastructure, including grids, buildings and transport, with a focus on conserving and maintaining access to clean air, water, soil and more.^[7]  These industries and impacts have the potential to benefit women, as well as communities that have been disproportionally affected by climate change and the transition away from fossil fuels.

Incentivization of new projects is expected to stimulate necessary capital expenditures. For example, the IRA made it possible for governments, non-profits and other entities to take advantage of clean energy tax credits. This could translate into further public financing benefits for local communities. Historically, municipal bonds have comprised about 70% of state and local infrastructure financing, and state and local municipal bond sales are expected to reach about $400 billion in 2024.^[8] Grants, tax credits and other incentives and financing have the potential to transform communities and industries as our climate and energy resilience emerges.

Women are essential to the transformation, resilience and impact our world requires. Yet, there is still work to be done in the global job market. We know that increased representation of women in government, and a higher share of women in corporate leadership roles, lead to more stringent climate policies and lower carbon emissions.^[9] In addition, workforce and leadership diversity has been found to foster innovation and creative solutions,^[10] and lead to superior investment returns.^[11] As a result, diversity in the workplace can help address existential climate challenges and deliver the market returns we need to finance the climate transition.

So, what’s the problem?

While women hold more C-suite positions than they have in the past, they remain under-represented in leadership and decision-making positions across sectors and industries,^[12] and in government.^[13] This is true globally, and it is also front-and-center in the United States. Last year, the U.S. workforce participation rate for women in their prime working years reached an all-time high.^[14] However, there are notable gender gaps in various industries. For example:

The Energy Sector – While women comprise almost 50% of the U.S. workforce, just 25% of workers in the energy sector and 32% of those in the renewable energy sector are female. In addition, women are under-represented on the boards of the world’s 200 largest utilities, holding 25 seats representing 16% of board members.^[15] In contrast, women hold 32% of board positions in S&P 500 companies.^[16] Even in the dynamic area of start-ups, only about 11% of energy sector founders are women, compared with 20% across all sectors.^[17]

The Financial Industry – In North America, women hold about one-fifth of senior finance services leadership roles, according to Deloitte, and that figure may fall as the number of women who are in position to be tapped for the next generation of leadership is expected to decline in coming years.^[18] A bright spot is found in private equity and venture capital. PE and VC firms with women co-owners are more likely to engage in and allocate a greater proportion of their portfolios to impact investments.^[19] It’s notable that just 34% of women in private equity firms hold investing positions.^[20]

The clean energy transition is gaining momentum, and gender equity is a critical aspect of its progress. Women are both disproportionately affected by negative aspects of climate change, and key contributors to positive change through their leadership in government and business. While women are recognized changemakers, gender equality has yet to be realized. We are at an exciting juncture of history where woman can be empowered to make a difference across all levels of the transition value chain. Governments, businesses, and investors can have a significant effect on climate and gender, while supporting strong economic growth and pursuing attractive market returns.

We will explore this topic in more detail at the upcoming US SIF Forum 2024 from June 24-26 in Chicago, IL. Early bird pricing is available until Mar. 15, 2024.

Article by Maria Lettini is the Chief Executive Officer of US SIF: The Sustainable Investment Forum. She joined US SIF in May of 2023 and is an innovative leader within the fields of sustainability and finance.  She is recognized for building meaningful partnerships across the capital markets value chain to address some of the world’s most critical, and financially material, environmental and social challenges.