Why must gender and climate action go together?
As global warming worsens, so do the economic and social costs associated with it. These costs impact different groups such as women, migrants, senior citizens, indigenous people and people with disabilities differently, implying they fall most heavily on the marginalised groups. This shows that gender and climate change are deeply interconnected, and achieving sustainable development requires addressing them together. Gender norms influence access to resources, decision-making power, livelihoods and information; all of which determine how individuals and communities experience climate risks and respond to them. As a result, climate change both reflects and reinforces gender inequalities, making it impossible to address one without addressing the other.
Women’s structural vulnerabilities such as lack of access to livelihood, finance, resources and information reduces their adaptive capacity and render them weaker to climate change, further entrenching poverty and exclusion. For instance, studies suggest that mortality rates among women and children during climate-induced natural disasters is around 14 times higher than those among men. An article published by Gender in Humanitarian Action (GiHA) states that in 2024, women and children were disproportionately affected by floods caused due to heavy rainfalls in Afghanistan. While women were inside their homes, men took shelter outside in mosques and more solid buildings. Women-led organisations also reported that the prevalent cultural norms prevented women from accessing preparedness, mobility and early-warning information and resources, which in turn restricted them form evacuating swiftly. Out of the 180 confirmed casualties, 74 were women and 51 were children under 5, and women also represented 35% of the patients of the Health Cluster mobile team’s healthcare service delivery.
Impact of women’s participation in climate action
Beyond being disproportionately affected, women are also critical agents of change in climate action. Research consistently shows that empowering women through participation and leadership in climate action generates significant economic and social returns. For example, women’s involvement in local climate responses is linked to better resource management, conservation and disaster preparedness. 1%-point rise in the share of female managers is associated with a ~0.5% reduction in CO2 emissions globally. Women also act as “benefit multipliers”, strengthening the long-term sustainability of climate responses and amplifying co-benefits within their communities. Climate finance can catalyse the much-needed transition to zero-carbon and climate-resilient development while also fostering equitable social policy, including gender equality and women’s empowerment.
The business case for gender-responsive climate finance
Gender equality is not only a fundamental human right but also “smart economics”. It is the driver of economic growth and sustainable development. Applying a gendered lens to climate projects enhances effectiveness. Climate investments become more cost-efficient when women are actively included. Firms with gender-diverse boards are more likely to improve their environmental footprint: about 60% more likely to lower energy use per unit output, around 39% more likely to reduce GHG emissions and approximately 46% more likely to reduce water usage.
Despite this recognition, investments in gender-responsive finance remain significantly underprioritised. The global gender gap in financial inclusion represents an estimate of US $700 billion opportunity in financial services for women. Globally, 79% of adults (81% for men and 77% for women) have an account at a financial institution. However, in regions such as sub-Saharan Africa, and the Middle East and North Africa, the same data for women dips to 36.9% and 38% respectively. Similarly, in countries such as Pakistan and Bangladesh, the gender gap for financial accounts is as wide as 30% and 20% respectively.
Sectors which attract the bulk of climate investment such as energy, manufacturing, infrastructure, transportation and agriculture are also the ones where women are severely underrepresented in leadership. For instance, the share of women startup founders in the energy sector is just 7%. The financing gap for women-owned micro, small & medium enterprises (WMSMEs) amounts to over US $1.9 trillion globally, which represents 34% of the global MSME finance gap. The WE Finance Code by World Bank states that if women entrepreneurs were given equal access to finance, their businesses could contribute an additional US $5-6 trillion to global GDP.
Mechanisms and instruments to enhance gender-responsive finance
While evidence on gender-responsive climate interventions is still emerging, there is some knowledge on promising areas of action such as creating green jobs for women, adaptive social protection, investments in resilience, and addressing gender-based violence within climate responses. Some key mechanisms through which gender-responsive climate finance works and pays off are:
- Blended finance + technical assistance – These vehicles support de-risking of gender-smart ventures by combining concessional and commercial capital, especially in early stages or in sectors with high upfront costs. For example, Climate Investor One (CIO) is a blended finance fund investing renewable energy (RE) infrastructure in Asia, Africa and Latin America. It uses blended capital in its 3 sub-funds to address risks throughout the project lifecycle. CIO integrates gender consideration in all phases of development construction and operations. Climate fund managers accompany this with gender analyses and a gender action plan that is carried into construction and operational stages. This approach has helped embed gender-inclusive employment practices and workforce development into large-scale RE projects, contributing to project sustainability as well as socio-economic benefits.
- Sustainability-linked finance – These instruments tie financing criteria to gender as well as climate performance. The KPIs embedded in these instruments create financial incentives, such as reduced borrowing costs for borrowers upon achieving ambitious gender targets. For example, in Brazil, IFC’s ‘Super Green’ loan to Neoenergia Coelba set a key objective of increasing the share of women working as electricians. Achievement of the targets would enable Neoenergia to increase the share of female electricians in the sector to 7% by 2026, while benefitting from lower interest costs.
- Gender bonds – This is a type of social bond that aims to “finance specific women-led or -founded businesses, develop products and/or services for them or boost their leadership.” A notable example of a successful gender bond is the issuance by Banistmo in Panama. The bond raised US $50 million with proceeds specifically for financing women-led SMEs. The bond achieved full disbursement within 2 years and supported more than 300 women-led businesses across rural and urban areas. In addition to improving access to finance, the bond incorporated external verification and alignment with multiple SDGs; thereby, enhancing transparency, accountability and investor confidence while delivering tangible impact.
Conclusion
Embedding gender equality into climate investments ensures that the shift to green economy is just, leaving no one behind. There is a large unmet need for capital among women-led businesses and women entrepreneurs, especially in emerging markets. With climate finance, gender equality and business performance closely linked, such investments offer more than social or environmental returns. Involving women in climate finance can facilitate innovation and enhance problem-solving leading to efficient, effective and sustainable climate solutions.
References
https://www.cgdev.org/blog/are-providers-climate-finance-tackling-gender-effectively
https://reliefweb.int/report/afghanistan/gender-alert-floods-northeastern-region-afghanistan
https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2650~3b693e6009.en.pdf
https://www.worldbank.org/en/publication/globalfindex
https://www.iea.org/topics/energy-and-gender
https://womenasleversofchange.com/static/pdf/Women-As-Levers-Of-Change.pdf
https://www.idbinvest.org/en/blog/gender/latin-america-world-leader-gender-bonds
https://www.ifc.org/content/dam/ifc/doclink/2024/pursuing-gender-inclusive-climate-investments.pdf
https://latinfinance.com/daily-brief/2022/07/13/ifc-grants-super-green-loan-to-neoenergia-unit/