Maximising Impact by Investing in Climate Resilience and Gender Equality: A Twofold Opportunity

 

London, 17 September 2024 – 2024 has continued the alarming trend of shattering climate records. For 13 consecutive months leading up to July, each month surpassed its previous global heat record. July 2024 was the second hottest month ever recorded, eclipsed only by the scorching temperatures of July 2023.[1]

 

The consequences of this relentless warming have been catastrophic. Extreme weather events have wreaked havoc across the globe, claiming hundreds of lives and forcing millions to be displaced from their homes already this year from droughts across Southern Africa; devastating floods across East Africa, South Asia and Brazil; and historically high heat levels in South and Southeast Asia.

 

Early accounts of these climate disasters reveal distinct and disproportionate impacts on women and gender minorities. These effects include significant livelihood losses,[2] exacerbated by women's limited access to the financial resources needed to cope with such shocks.[3] Disasters have also led to increased gender-based violence and reduced access to critical sexual and reproductive healthcare, as challenges of destroyed infrastructure entwine with existing harmful gender norms.[4]^,[5]

 

These challenges are not isolated. They reflect a broader pattern of inequalities being intensified by the climate crisis, highlighting how the resilience of our social, economic, ecological and financial systems requires that gender inequalities are addressed. Otherwise, projections indicate under a worst-case scenario, climate change will push up to 158 million more women and girls into poverty and lead 236 million more women to face hunger by 2050.[6]

 

Gender-responsive investments can significantly improve climate resilience outcomes

 

Growing evidence shows that investing in women leads to improved climate resilience outcomes. Closing the gender gaps in farm productivity and wages in agriculture would reduce global food insecurity by 2 per cent, representing 45 million people,[7] and thereby enhancing resilient agri-food systems. Women’s active participation in conservation and natural resource management results in more effective and sustainable practices and more equitable sharing of benefits: demonstrating the role women play in supporting resilient natural systems.[8] Ensuring women have resources to support themselves, their families and their businesses through climate shocks is critical for resilient social systems. However, the current gaps mean that women in low- and middle-income countries are losing an additional US$37 billion in income compared to men due to heat stress and US$16 billion due to floods.[9] Reducing the burden on women’s time by ensuring access to clean and sustainable water and energy sources not only builds resilient infrastructure but also fosters social cohesion by addressing resource scarcity, a common cause of conflict.[10] Closing the US$1.5 trillion financing gap for women entrepreneurs[11]—who are more likely to start sustainability-focused businesses[12]—would also contribute significantly to creating more resilient industry and commerce.

 

The nexus between gender and climate resilience has historically been overlooked by investors, but new examples are demonstrating what is possible

 

An integrated approach that finances both climate resilience and gender equality offers a clear strategy to strengthen climate resilience efforts while closing the significant financing gaps that exist for both objectives simultaneously: an additional US$212 billion is needed annually for adaptation[13] and US$360 billion for gender equality.[14]

 

However, this is not happening. Only 4% of tracked public climate adaptation finance in 2022 was gender responsive,[15] while equivalent data for private finance remains unavailable, illustrating ongoing data challenges at the gender-environment nexus.[16] Adequate financing for climate resilience and gender equality will require a rapid scaling up of resources from both public and private sources, using a range of financing tools and approaches.

 

Sustainable bonds—a proven tool for accessing capital markets and rapidly mobilizing finance—have demonstrated great potential. With increasing interest from investors in climate goals, there is a strategic opportunity to scale up their use for gender-responsive climate resilience finance.

 

Recent years have seen a rapid growth in the demand for green, social, sustainability and sustainability-linked (GSSS) bonds with climate resilience and/or gender equality objectives. A share of 19 per cent of the labelled green bond market is now made up of bonds with resilience-related use of proceeds.[17] While bonds aligned to gender equality objectives remain a smaller portion (just 1 per cent of all GSSS labelled debt deals),[18] their growth is consistent: global capital invested in “gender bonds” grew from US$4.3 billion in 2020 to US$14.5 billion in 2023.[19] Bringing the two objectives together within GSSS bonds that target both gender equality and climate resilience can help expand the potential investor pool, mobilize new finance and strengthen the gender-responsiveness of climate resilience investments.

 

Innovative cases demonstrate the kinds of investments that could be financed using such instruments. In India, a new financial product, combining parametric insurance with cash for lost income, is helping women in the informal sector maintain their livelihoods while protecting their health in the face of extreme heat.[20] In Iceland, the first-ever sovereign gender bond (US$50 million), issued in 2024, finances projects that include providing decent living standards for women and gender minorities, increasing affordable housing for low-income women and increasing maximum payment during parental leave.[21] In Uganda, a new bond aims to address the impact of climate change on rural women by providing credit to women-led adaptation-focused agricultural businesses.[22] UN Women is also supporting innovative insurance products—including index-based crop insurance in Mali, health insurance in Senegal and parametric insurance in Fiji—that help women and women-owned businesses to build resilience to climate-related health and financial shocks.

 

This growing momentum is promising but to reach its full potential, future growth must be rooted in high-quality, credible financing. Avoiding “green washing” or “impact washing” is essential for building investor confidence and driving sustainable market growth. Clear and consistent standards, definitions and frameworks are crucial for directing finance towards robust and credible climate resilience investments—including those that are gender responsive.

 

Integrating gender in the Climate Bonds Resilience Taxonomy

To meet the demand for robust and credible climate resilience investments, Climate Bonds Initiative is leading the development of the Climate Bonds Resilience Taxonomy (CBRT): a robust classification system that provides a consistent, transparent and systematic approach in defining and identifying adaptation and resilience investments. UN Women supports this initiative by participating in the Climate Bond Initiative’s Resilience Taxonomy Advisory Group (RTAG), helping to strengthen gender considerations within the CBRT.

 

The CBRT recognizes that increased gender inequalities can result from climate change and that gender considerations cut across all sectors. The taxonomy also identifies specific investment areas to address the gendered impacts of climate change. Examples include conducting gender-responsive financial capability training for community-based financial organizations, implementing gender-targeted credit schemes and establishing accessible women's health clinics to provide essential care during and after extreme climate events.

 

To refine and expand the CBRT, UN Women and Climate Bonds Initiative will convene a Technical Working Group of relevant experts. This group will deepen and strengthen the taxonomy’s approach to gender, including expanding the initial list of investment opportunities, advising on the eligibility definitions for investments and developing specific investment-level screening criteria.

 

A new partnership to advance gender-responsive, equitable and just climate finance

 

Climate Bonds Initiative and UN Women are excited to announce that our collaboration on the CBRT marks the beginning of a broader partnership. Today, we have signed a Memorandum of Understanding (MoU) to cement this expanded effort. This work aims to integrate gender considerations within the tools, standards and resources guiding the green finance market. The partnership will focus initially on sectors related to resilience and adaptation. Together, Climate Bonds Initiative and UN Women will work to:

-Develop guidance and rules to enable investors to finance projects that enhance the gendered dimensions of climate resilience.

-Produce research, data analysis and thought leadership, including strengthening the tracking of gender objectives within climate finance flows.

-Undertake policy and advocacy work to promote gender-responsive climate finance.

-Provide technical assistance focused on integrating gender considerations into climate finance policies.

 

Strengthened collaboration and integrated approaches to gender and adaptation finance are crucial for climate solutions with impact. UN Women and Climate Bonds Initiative aim to drive transformative change and advance gender equality and climate justice by partnering closely with stakeholders across the ecosystem.

 

If you are interested in contributing to this work or for any further information about this partnership, please email:

Alexandra Lockyer, Sustainable Finance Analyst, UN Women, alexandra.lockyer@unwomen.org

Qing Xu, Sustainable Finance Specialist, UN Women, qing.xu@unwomen.org

Ujala Qadir, Director of Strategy and Programs, Climate Bond Initiatives ujala.qadir@climatebonds.net

Alicia Lerner, Resilience Coordinator, Climate Bonds Initiative, alicia.lerner@climatebonds.net