How Providing Sustainable Finance to More Women Helps Fight Climate Change

Women business operators, particularly small business owners, need innovative financing solutions that give them greater power to fight climate change. Photo: ADB
Women business operators, particularly small business owners, need innovative financing solutions that give them greater power to fight climate change. Photo: ADB

By Gisela Garzon de la Roza, Anne Valko Celestino

Women´s contributions to climate action are severely limited by systems that downplay women´s roles, capacity, and potential. Greater access to sustainable and gender-equitable green finance will help women be frontrunners in global efforts to address climate change.

Women and girls are particularly affected by climate change, and they can aid and benefit from climate adaptation and resilience efforts. They can also be instrumental in deploying green investments and strategies. Governments and the private sector, the largest economic and financial resource guardians, can empower women to fight against climate disruption. And financial resources are a powerful tool. In Asia and the Pacific,  aligning finance with gender equality goals could have a major impact both on climate action and the economic inclusion of women. The region hosts the largest proportion of women and girls in the world and has some of the biggest carbon-dioxide emitters globally.

Without the full participation of both women and men across the value chain, from business agents and consumers of energy resources to professionals and decision-makers in energy producing and distributor companies, we will not be able to meet the climate challenges of our time. However, affordable green finance is not yet accessible at a scale and quality that can make a difference, especially for women.

Gender analysis of green lending shows that women are usually being loaned small amounts of money for one-off investments, thereby hindering their opportunity to make substantive investments that would make them climate resilient, while also seriously limiting their contributions to climate action.

Take the real-life example of a businesswoman who owns a small hotel in a remote location which lacks proper infrastructure to withstand ever-colder winters – or ever hotter summers. She lacks the money to upgrade the premises of her business. She needs two main things.

First, she needs to identify transformative renewable energy technologies as well as adaptation technologies, such as insulating the building. Second, she needs patient capital from a trusting financial partner until the returns on her energy investments start to kick in. This would empower her to think medium-term and take a risk she would otherwise not dare taking.

We can help women like this business owner by deploying gender-responsive finance while achieving effective climate action.

Financial systems in Asia and the Pacific are investing resources and efforts to align green finance with social principles to positively impact society and enhance organizations' long-term financial value. But this is not enough. Gender transformative finance can further enhance sustainable finance systems and market economies.

Despite the COVID-19 pandemic dislocations, which proved worse for women among other groups, global wealth and the resources available and invested in climate action have increased. Among the financing mechanisms mobilized and availed for climate change responses, however, few are made accessible to women. In this context, it is imperative to align these gains with the gender equality agenda so that all can win.

Affordable green finance is not yet accessible at a scale and quality that can make a difference, especially for women.

To make this work,  we need to bridge sustainable and gender equitable finance by advancing innovative finance in economic sectors where women predominantly do business, such as in hospitality, food services, or agricultural-processing, and under conditions that work for women.

In the above example, this would mean offering the woman sizable, long-term debt-financing to purchase the technologies she needs to make her business infrastructure climate resilient and energy efficient. This could translate into investing in a full refurbishment for proper insulation and climate resilience, as well as in solar clean energy for the whole business operation.

Gender transformative climate finance would also mean adapting financial conditions to the business revenue cycle under which she operates. This would likewise entail being assisted by financial partners that take her concerns and her way of doing business seriously and are prepared to deliver information on how the investments can help her contribute to climate action.

To bring women to the forefront of the climate agenda, the challenges are clear. So are the solutions.  Equip women with technical knowledge to understand green gaps and opportunities and enable them with adequate financial resources commensurate to their needs. If these are advanced, the benefits to all are assured.