As the world grapples with the dual crises of climate change and gender inequality, the intersection of climate finance and gender-targeted funding emerges as a crucial pathway to achieving the Sustainable Development Goals (SDGs). These frameworks not only aim for environmental sustainability but also strive for gender equality, recognizing that empowering women is vital for effective climate action.
Understanding the need for integrated approaches
Climate change disproportionately affects women, particularly in developing countries, where they often bear the brunt of environmental degradation and resource scarcity. According to UNDP, women are structurally vulnerable to climate impacts, exacerbating existing gender-based inequities that keep them impoverished and marginalized. The SDGs, particularly SDG 5 (gender equality) and SDG 13 (climate action), highlight this interconnectedness. More than 53 indicators across the SDGs directly reference gender equality, underscoring its role in sustainable development.
Despite some progress, the financing gap for gender-targeted initiatives remains stark. The International Finance Corporation (IFC) estimates that only 7% of total private equity and venture funding in emerging markets is directed toward female-led businesses. In 2022, sustainable bonds aligned with SDG 5 constituted only 1% of the US $900 billion issued through various sustainable finance instruments. Moreover, approximately US $360 billion annually is needed in developing countries alone to achieve gender equality goals. It is thus imperative that new financing models be leveraged to aid accelerated capital flows towards meeting gender targets. Thus, integrating gender considerations into climate finance is not merely an ethical imperative but a strategic necessity for effective climate action.
Case studies at the intersection of gender and climate finance
The Green Climate Fund (GCF) is one such example, where significant strides have been made in incorporating gender considerations into its funding mechanisms throughout the project planning, preparation and development stages. Its Gender Policy and Action Plan ensure that projects funded by the GCF actively promote gender equality and empower women. For instance, projects that focus on renewable energy not only reduce carbon emissions but also create employment opportunities for women in energy sectors.
Similarly, the 2XGlobal Initiative launched in early 2023, aims to mobilize US $15 billion towards female-led businesses and projects that address climate change. 2X Global manages Climate Gender Equity Fund (CGEF), a public-private partnership led by USAID with founding members Amazon, Reckitt, The UPS Foundation. Through this fund, US $24 million are committed to support women-led and women-benefitting climate solutions, such as solar water pumps, reforestation, plastic recycling, agroecology and women-entrepreneur programs. By focusing on gender-smart climate finance, 2XGlobal emphasizes the importance of investing in women as key agents of change in sustainable development
The Clean Impact Bond (CIB), launched by IFC, Sistema.bio and partners in 2022 is a kind of development impact bond to mobilize finance from a variety of partners to scale up the production of clean cooking solutions, by quantifying and selling the health and gender co-benefits to buyers which offered gender co-benefits. It is a results-based finance instrument, aimed at providing greater access to clean equipment to low-income consumers in Africa while addressing adverse impacts on health, climate, and gender equality associated with traditional cookstoves.
The structure of CIB transactions has been effectively assessed utilising carbon market transactions that are already in place, such those covered by the World Bank’s Ci-Dev, and that offer a strong basis for replication in terms of co-benefits for women and health. Stakeholders measure and certify the results produced by clean cooking solution producers and distributors to grant financial support through the CIB.
This assessment is one of the first to define and quantify the gender outcome of a clean cookstove intervention by using shifts in time use toward productive and/or restful activity. If women’s saved time was used for more unpaid care work, saving time will not likely lead to improvements in gender equality and women’s empowerment. Conversely, a shift from lower-valued to higher-valued activities in terms of income generation may achieve these benefits. The customer would buy the gender and health co-benefits that resulted from using these gadgets as a form of credit. Co-gender advantages can be crucial in such a vehicle, given that women are the group that clean cooking benefits the most.
The CIB shows that there is a feasible approach to monetising gender co-benefits in the climate finance market by achieving two important goals: i) it offers data-driven metrics for measuring the impact and monetary value of gender and health, and ii) it shows that there are willing buyers for gender and health co-benefits, indicating the potential market demand for gender. In this sense, the CIB provides a place to start when figuring out a source of income for gender credits and if outcome funders are present.
Opportunities ahead
Many existing financing schemes focus primarily on large-scale projects, often overlooking smaller initiatives led by women or targeting vulnerable communities. This oversight not only limits access to essential resources but also undermines the potential benefits of inclusive funding strategies. To bridge this gap, it is essential for financial stakeholders to mainstream gender considerations in investment decisions and support the paradigm shift. This includes: i) ensuring equitable participation of women in decision-making processes, ii) developing clear policies that mandate gender considerations in project implementation, and finally iii) creating transparent reporting systems to track the impact of investments on gender equality outcomes
The integration of climate finance with gender-targeted funding is not just a moral obligation; it is a strategic approach essential for achieving the SDGs. By investing in women-led initiatives and ensuring their active participation in climate action, we can create resilient communities capable of tackling both environmental challenges and social inequalities.
As the world moves forward towards the achievement of global goals, it is crucial for governments, financial institutions, and civil society to collaborate effectively to mobilize resources that address these intertwined challenges.
Bibliography:
- https://www.undp.org/sites/g/files/zskgke326/files/publications/UNDP%20Gender%20and%20Climate%20Finance%20Policy%20Brief%205-WEB.pdf
- https://www.unepfi.org/themes/climate-change/gender-climate-and-finance-how-financing-female-led-businesses-can-lead-the-way-to-a-net-zero-future-for-people-and-the-planet/
- https://www.unwomen.org/sites/default/files/2023-12/booklet-gender-finance-2023-en.pdf
- https://www.undp.org/sites/g/files/zskgke326/files/publications/Gender_Climate_Change_Training%20Module%205%20Finance.pdf
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