The Orange Revolution: Financial Market Innovations Towards a Gender-Smart Net Zero

The Problem: 

With less than a decade to address critically climate change and the other UN SDGs, the pressure is on to find innovative and inclusive solutions.  The pre-COVID US$2-3 trillion annual SDG financing gap in developing economies has increased to an estimated $4-5 trillion per year.  Given this financing gap, the global financial system is positioned to play an integral and increasingly important role in addressing the gap.  However, much of the architecture of the global financial system was built without designing for the unique needs of developing economies, designing for environmental responsibility, gender equality, or equality more broadly.  

The Opportunities:

The Environmental, social and corporate governance (ESG) movement has promoted rebuilding the financial system to consider these risks better, but even deeper integration of these considerations is fundamental for post-COVID recovery and deceleration of climate change. And both of these battles are fundamentally intertwined with gender equality:

Building ‘Forward’ Better:  The COVID-19 pandemic, ongoing conflicts worldwide, and the climate crisis have jointly exacerbated the regressive effects on gender inequality – as a result, the eradication of the global gender pay gap is now set back by over a century.  Women were almost twice as likely to lose their livelihoods during the pandemic, due to various factors such as disproportionate childcare burdens to labor market asymmetries.  Building forward better underscores an opportunity to redress these failures and re-structure economies that better integrate and empower women.  Closing the gender-regressive gap in the workforce could add up to US$13 trillion to global GDP by 2030.  In light of this substantial economic impact, gender equality must be central to post-COVID recovery. 

Sustainable Agriculture: The global food system generates 21-37% of global greenhouse emissions, and agriculture is both highly correlated with and vulnerable to the impacts of climate change. Women produce over 60% of agricultural output in the least developed countries, and are over-represented in more informal, less sophisticated and smaller scale production.  This means women in agriculture are most vulnerable to climate change, given their lower earnings, technological access and scale. On the flip side, they also represent an outsized opportunity to benefit from improved sustainable agriculture.  Ensuring financial empowerment and improved and more sustainable agricultural inputs and technologies reach women will be key to re-engineering the global food system towards a Net Zero future, and creating more economic growth at the bottom of the pyramid.

Transforming Energy: In much of the world, women are often primary decision-makers and biggest users of household energy, given that women spend more time in the home and take on disproportionate share of energy-intensive activities, such as food preparation. At the same time, the lack of affordable clean energy solutions has disproportionate impact on women’s health, household time use and economic power.  These negative impacts range from increased death rates from unclean cooking to significant time burdens that limit availability for income generation and other activities. Integrating gender considerations in the roll-out of sustainable energy solutions such as solar rooftop panels, clean cookstoves and affordable electric vehicles thus has significant potential for ensuring SDG7 benefits the most vulnerable, and also improves uptake of said solutions.

Just Transition to Net Zero: Globally women are more likely to live in poverty, a phenomenon known as ‘feminisation of poverty’.  This phenomenon makes  women are even more vulnerable to the ravages of climate change, especially natural disasters, as they have lower earning, assets and safety nets to weather economic shocks. On the flip side, a massive shift in the gender dynamic of financial markets is occurring, as women gain historically unparalleled levels of representation and power in both wealth and asset management.  This opens promising possibilities for Net Zero and the SDGs, as women investors are more likely to consider environmental implications of their investments.  As decision-makers, and as beneficiaries, women are critical stakeholders in building towards climate change adaptation and a decarbonized future in line with the Paris Agreement.

A Solution:

So we cannot talk about achieving climate justice or economic growth with half of humanity missing from the equation. And one of the biggest barriers to addressing that gap is the lack of innovative financial mechanisms that are designed with a gender lens. Fundamentally, this represents yet another leap in rethinking financial markets, a process that has been underway for generations.

While green bonds have been revolutionary in deploying capital towards environmental sustainability over decades, the world needs even greater waves of innovation that consider a just transition with inclusive growth.  In response, in 2017 IIX launched the Women’s Livelihood Bond Series. After 700-years of stock exchanges being in existence, finally there was an instrument designed by and for women of colour listed on a stock exchange. The $8.5 million Women’s Livelihood Bond (WLB1) was a first of its kind - mobilising capital for a multi-country, multi-sector portfolio that collectively supported women’s economic empowerment with a focus on underserved communities in emerging markets. Listing the bond on the Singapore Exchange and subsequently quoting it on Bloomberg allowed IIX to build credibility with investors and to lay the foundation for mainstreaming the broader gender lens investing movement. 

To date, the IIX WLB Series has mobilised US$78 million and is empowering 1 million women to transition to sustainable livelihoods, accelerate COVID-recovery, and combat climate change. IIX’s own gender-lens capacity is demonstrated by being a woman-led firm with women of colour working across the investment process, including the investment committee, the structuring team, the credit portfolio management team and the impact management team. This allows IIX to bring a critical intersectional lens to the gender-lens investment movement by ensuring the voices, insights and lived experiences of women of colour are included both in the investment decision making process and as part of ongoing reporting which is verified by women at the last mile who benefit from the bond proceeds. 

During the pandemic, IIX ensured transparency of results by digitising their impact measurement process through their IIX Values platform which uses mobile technology to collect impact data from women beneficiaries, ensuring they have a voice and value in the reporting process. This has served as an important way for the WLB Series to mitigate the risk of impact washing even as it scales and maintain  sustainable debt market continues to focus on scale, often at the expense of depth and transparency. 

Recognizing the incredible potential for gender equality to create more inclusive, resilient financial markets, IIX has now joined forces with a number of ecosystem actors on the Orange Bond Initaitive. Orange Bonds are a new asset class for gender lens investing with a mission to mobilise US$10 billion by 2030 to empower 100 million women, girls, and the LGBTQI+ community to advance the UN’s Global Goals. Drawing its colour from the orange hue of SDG 5: Gender Equality, the initiative recently announced a multi-stakeholder steering committee and a commitment to promote diversity and inclusion by ensuring the Orange Bond Principles and subsequent transactions will include the Global South and the 99%. The Initiative aims to build a gender-empowered financial system that pushes the frontiers of finance to build a more inclusive, resilient, and green world that benefits all of humanity.  

If this resonates, practitioners can consider supporting momentum towards a more climate-resilient and gender-equitable world by taking the Orange Bond Pledge. 

Tara Sabre Collier and Natasha Garcha took part in the Skoll Centre's OXIFIED Fireside Chat Series in March. Watch the full conversation.

Natasha Garcha is the Senior Director of Innovative Finance at Impact Investment Exchange (IIX) where she works on IIX’s gender lens investing initiatives and impact measurement work in Asia-Pacific, Sub-Saharan Africa and the United States. Natasha’s team focuses on the structuring, impact verification and investor relations for IIX’s Women’s Livelihood Bond series, the world’s first gender lens Social Bond listed on a stock exchange. Natasha (on behalf of IIX) leads the International Capital Markets Association impact reporting working group for Social Bonds.

Natasha begun her career on Wall Street as part of D.E. Shaw & Co., a New York-based hedge fund where she worked in the global Investor Relations team and served as the Co-Head of Corporate Social Responsibility in India. Natasha was also the co-founder of the Shades of Happiness Foundation (SoHF), a non-profit with the mission to empower children from low- income communities in India through access to quality education.

Natasha holds an M.B.A from the University of Oxford (Dean’s List MT, TT), a Social Justice Certification from Harvard University (as part of an Master’s in International Relations degree focused on women’s rights), a Master’s in Business Law from National Law School of India and a Bachelor’s in Commerce from Delhi University. She is currently completing a Social Justice certification and Masters from Harvard University focused on women, peace and security. She is an BNY Mellon Achievement Awardee, an active writer featured in multiple online publications (The Economist, Devex, Medium), and a Steering Committee member of the ‘Principles for Investment in Fisheries’.

Tara Sabre Collier is a sustainable finance advisor to governments and development finance institutions, including leading ecosystem building for MOBILIST, the UK government’s flagship climate finance mobilisation programme, which invests in developing economy  sustainable finance products and takes them to IPO. In addition to advising other impact investors and funds,  she is a Visiting Fellow at Said Business School, Oxford University and an angel investor focusing on BIPOC-led impact ventures.  She has over 15 years’ experience in impact investing,  international development and corporate strategy.

Most recently, she was the Gender Lead at Shell Foundation and prior to that,  she has worked for and with the World Bank, the International Finance Corporation, the United Nations, Ernst & Young and GroFin Capital, among others.  She earned her MBA at Oxford University. as a Skoll Scholar. She earned her MPA in International Public/ Non-Profit Management & Policy from New  York University  and a BA in Spanish and International Affairs from Spelman College.