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Solving the Trillion Dollar Climate Challenge Begins with Women

Climate emergencies have damaged the world this past summer––from the wildfires torching 1.5 million acres across the US west to the shock floods devastating Germany and China. Yet, it’s easy to forget that these regions are some of the most well-prepared to tackle climate change. A new study of 176 countries confirms that the top 10 nations most vulnerable to both climate change impacts are in Africa and South Asia, with 8 African countries among the top.

With the UN Environment Program (UNEP) estimating that adaptation costs alone faced by just developing countries will be in a range of US$140 billion to US$300 billion per year by 2030, there is a global consensus on the need to intervene as a matter of urgency, particularly with the 2021 United Nations Climate Change Conference (COP26) on the horizon.

In Asia Pacific and Africa, a majority of the labor force works in sectors impacted by climate change, like agriculture, forestry, and fisheries. These effects are felt most acutely by women in the developing world, who are trapped in subsistence living due to high structural barriers to gaining self-sufficiency. In fact, over 60% of all working women in southern Asia and sub-Saharan Africa are employed in agriculture.

In Asia Pacific and Africa, a majority of the labor force works in sectors impacted by climate change, like agriculture, forestry, and fisheries.

Adding insult to injury, the COVID-19 pandemic has disproportionately impacted women in the Global South — facing increased responsibilities at home, experiencing higher unemployment rates, and struggling to maintain their businesses.

Women can power the engine for recovery if we step up

The Asia-Pacific region alone has over 50 million women-owned small and medium enterprises (WSMEs), mostly in the micro, small and medium range that provide employment to over 100 million people. As such, women’s equal participation in the economy could generate more than enough to close the climate finance gap––a powerful indication that investing in women is also a smart solution to investing in climate action.

Three workers at Amru Rice

Amru Rice contributes to national food security, global economic recovery and women’s empowerment despite the pandemic.

Increasing the resilience of both the people and the planet must start with building sustainable livelihoods for the most vulnerable, especially women who play a pivotal role in combating climate change due to their close relationship with natural resources such as land, water, and energy. From an economic standpoint, closing the gender gap could add up to US$28 trillion to global GDP by 2025, which is more than enough to close the climate finance gap.

While many entrepreneurs and businesses deal with these challenges through innovative, market-based social and environmental solutions, access to finance is still a major barrier to scaling ventures and empowering underserved women. Enter sustainable finance.

Sustainable Finance: The X-Factor for Recovery

The pandemic-driven surge in social bonds have proven that investors are doubling down on inclusive growth. 2020 represented key milestones in the sustainable finance market – with social and sustainability bond issuances surpassing green bonds for the first time in April 2020.

These trends are promising, but they are not enough. At the end of 2020, the United Nations Conference on Trade and Development (UNCTAD) reported that international private-sector investment in areas related to the Sustainable Development Goals had fallen by 30% in developing economies, with the poorest countries grappling with pre-2015 levels of SDG investment activity.

In the Global South, the challenges are particularly tough:

  • In sub-Saharan Africa, women-owned micro, small and medium enterprises (WMSMEs) are reporting revenue losses of over 50%.
  • 85% of WSMEs are at risk of bankruptcy across frontier markets.
  • 50% of WSMEs do not have access to capital for business operations across South and Southeast Asia.

Building Climate-smart Resilience through the Women’s Livelihood Bond Series

To close these gaps, businesses are building innovative pathways to climate resilience and COVID recovery for underserved women. Impact Investment Exchange (IIX) brings a gender-lens to climate finance with the Women’s Livelihood BondTM (WLB) Series.

Increasing the resilience of both the people and the planet must start with building sustainable livelihoods for the most vulnerable, especially women who play a pivotal role in combating climate change due to their close relationship with natural resources such as land, water, and energy.

The US$150 million WLB Series is a series of innovative debt securities that create sustainable livelihoods for over 3 million women across developing countries. With three WLB issuances so far and a fourth on the way, which will include Asia and Africa, hundreds of thousands of underserved women have been given a voice and value on the capital markets.

The WLB brings together a diverse set of stakeholders, helping overcome the wider set of barriers hindering the pace of social innovations. Partners that comprise the growing movement to scale the WLB Series include: USAID and DFC, Shearman & Sterling, Latham & Watkins, Global Affairs Canada (GAC), the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the United Nations Capital Development Fund (UNCDF), and more.

Standing Firm with Underserved Women across the Global South

To build more resilient communities, the WLB Series unlocks capital for women-focused enterprises. The WLB Series utilizes a comprehensive multi-dimensional strategy to group together a basket of entities focused on addressing these gender-based constraints. While each enterprise seeks to address different structural issues, all entities share the common goal of advancing sustainable livelihoods for women.

While many entrepreneurs and businesses deal with these challenges through innovative, market-based social and environmental solutions, access to finance is still a major barrier to scaling ventures and empowering underserved women. Enter sustainable finance.

IIX’s WLB Series has shown extraordinary resilience throughout the pandemic. Despite the upheaval to global markets, all borrowers of the second issuance (the WLB2) remained on track to hit or over-deliver on their impact target.

Amru Rice, a woman-focused enterprise in Cambodia, sources sustainable rice from thousands of smallholder farmers – 70% of which have women as the lead farmer. Benefiting from its deep impact on women, Amru’s business has been powering through to contribute to national food security, global economic recovery and women’s empowerment despite the pandemic.

Through cross-sector partnerships, innovative financial instruments, and a renewed commitment to inclusive growth and women’s empowerment, we can rebuild the foundations for sustainability that will combat climate change and outlast the pandemic era.

Durreen Shahnaz Shares Some of Her Personal Journey   Watch the Full Program
Durreen Shahnaz is a pioneer in impact investing and the founder of Impact Investment Exchange (IIX). IIX connects the Back Streets of underserved communities to the Wall Streets of the world. To date, it has unlocked over US$215 million of private sector investment capital impacting over 87 million lives.

This article was produced in collaboration with the Magazine's Content Partners.

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