Investing at the intersection of gender and climate for a more sustainable planet and economy

Investing at the intersection of gender and climate for a more sustainable planet and economy 150 150 Sophie Clark

As investors, we believe that deploying capital to climate solutions that centralize women as actors and changemakers is imperative.”

Investing at the intersection of gender and climate for a more sustainable planet and economy

By Patience Marime-Ball

In a few days, world leaders, climate groups, and financiers will convene at the Cop26 Summit in Glasgow, Scotland to agree a path toward a more sustainable future. The urgency of finding a solution is intense. The 2021 Intergovernmental Panel on Climate Change report stresses that the predictions were correct and the planet is in serious danger. To put it in stronger terms, John Kerry, the Biden administration’s climate envoy, has said the summit is “the last best hope for the world to get its act together.” 

At Women of the World Endowment (WoWE) we know that women are at the center of creating solutions and building a more sustainable future. As investors, we believe that deploying capital to climate solutions that centralize women as actors and changemakers is imperative. The data shows that the intersection of gender, climate, and finance is not only more likely to result in positive outcomes for the environment, but also for investors and the economy. 

In McKinsey’s 2015 study “Why diversity matters” companies with diverse voices were consistently higher performing organizations than companies with homogenous boards: “Companies in the top quartile for diversity are 35 percent more likely to have financial returns above their respective national industry medians. Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.”

When it comes to climate specifically, we see a similar trend. Companies with three or more active female board members have more consistent climate related disclosures. As well as having better climate disclosure, having three or more women on boards also improves how likely the company is to use renewable energy sources. Having a critical mass of women in leadership positions improves a company’s openness to climate measures and commitment to following those measures through. 

The key takeaway? An entity with women at the decision-making table is more likely to commit to climate solutions and to be more profitable relative to its peers. 

We can see this in our own endowment portfolio which is invested in entities that centralize the role of women as actors. In our public markets portfolio, we have seen strong investment returns that are mostly above our benchmark since launching our portfolio in April 2020. Over six years the Equileap Global Gender Index has outperformed the MSCI World Index by 10.7%, showing the viability, and profitability, of gender focused investing. In our young private markets investment portfolio we have strong returns from companies innovating at the intersection of gender of climate. One of our women-led venture fund investments enjoyed a strong exit when Electriphi, an electric-car charging company, was acquired by Ford. All of the above strengthens our convictions that investing with a gender intersectional focus is profitable. 

There are risks as well when women are not included in decision-making, including for the environment. 

We have seen this in Ghana where the government’s failure to value work done by women impeded natural disaster recovery efforts, as well as preparations to better prepare for the next challenge. 

In Ghana, women-run subsistence farms provide necessary food security for the broader population. Their farm work requires an intimate knowledge of the land, of weather cycles, and of crop rotation. However, despite the immense amount of work that goes into cultivating crops and feeding households and communities — their farm output is not included in Ghana’s GDP calculations. Record-breaking floods in 2007 spotlighted this discrepancy. Women farmers were not included in government aid programs and did not receive funding to rebuild their farming operations. Being deemed economically insignificant had a devastating effect on the farmers, the communities that relied on their production, and the post-climate disaster recovery.  

In addition to the economic repercussions of their undervalued work, the government failed to recognize that these women are expert climate actors. Who knows the land better than people who have grown food from it for generations? Who can see most clearly what we need to do to meet the demands of a changing climate than those who work with it? Ignoring their contributions limits the country’s capacity both for recovering faster from natural disasters and preventing or better mitigating the next challenges. 

There is a strong environmental, social and economic case to be made for a combined approach to gender and climate in finance.  Businesses and organizations can thrive and profit when they include gender alongside climate in their processes and decision-making.  And if we believe that finance should be climate-smart, then all finance should be gender-smart as well. Ultimately, when we invest at the intersection of gender AND sustainability, our human, environmental, and economic health is exponentially improved.

With gratitude and best wishes for good health,

Patience Marime-Ball
Founder and CEO of Women of the World Endowment

Your donations to WoWE fuel our work of investing in, for, and through women to build a better world

By donating into our Endowment you are contributing to a world that values the full potential of women and girls. There are multiple ways to support WoWE. Donations can be made here. Donor Advised Fund donations here. Gifts of securities are also welcome. You can also contribute to WoWE with your Amazon purchases. Learn more about Amazon Smiles here.

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