A Fintech Approach To Advance Gender Parity & Reverse Climate Change
I wasn’t there when New York City — the city I love and call home — was engulfed with smoke.
However, I have been traveling across the world over the last six weeks attending fintech events like Women’s World Banking’s Making Finance Work for Women Summit in Mumbai and Money 20/20’s Europe show in Amsterdam.
What I’ve seen consistently is the interconnection between money, technology, gender parity, and climate change.
The reality is that reversing climate change faster starts with advancing gender parity, as I recently wrote in my latest article for Forbes (read the full story here).
Let me break down the highlights for how fintech companies, leaders, and tools play a critical role in helping to reverse climate change and tactics to ensure we have clean air to breathe.
#1 We have the power of financial inclusion
Ensuring equal access to resources and opportunities empowers women to invest in clean technologies, lead environmentally conscious initiatives, and contribute to climate resilience.
#2 We, as part of the fintech industry, play a crucial role
We can advance environmental, social, and governance (ESG) investing through our fintech tools. Fintech companies like Physis Investment or robo-advisor services like Betterment’s socially responsible investing are tools to make informed investment decisions prioritizing gender equality and climate action.
However, although the fintech industry has advocated for ESG investing and its benefits, there are better solutions than this. Though ESG investing may lead us to believe that the market can solve major issues like climate change, government intervention is necessary to prevent disaster.
Furthermore, ESG investing can get in the way of returns. According to Christina Juhasz, Managing Partner and Chief Investment Officer, Emerging Market Funds, Women’s World Banking Asset Management, “If you cannot invest in fossil fuels or if you’re investing in climate mitigation, you may not have a return on the bottom line.”
What can be helpful is focusing on the “S” in ESG, which can be done through gender-lens investing or GLI. The three definitions of investment in GLI are women-founded or lead companies, companies that offer products and services that are beneficial to women, and companies that have an inclusive workplace practice for women.
Plus, gender-lens investing doesn’t have the same return issue as ESG since “diversity correlates to growth.”
Aureolis Ventures, an early-stage investment firm, understands this and actively participates in GLI, looking beyond just choosing female founders and factoring in the volume of business, team skills and expertise, and diverse perspectives. With GLI, we can have a more significant social impact and increase returns.
#3 We’re making progress in gender parity and climate change, just not fast enough
GLI is a stepping stone to better ESG practices and promotes diversity, growth, and inclusive workplaces. For example, government policies, like Germany’s focus on gender equality, can further support climate initiatives, as I wrote in the article:
“To understand how these strategies translate into government, look at Germany for an example.
Michael Brill, Senior Portfolio Manager at KfW Development Bank, says gender equality is fundamental to Germany’s foreign policy. This policy addresses United Nations initiatives related to climate change and biodiversity preservation, critical components of foreign development policy.
KfW Development Bank has been utilizing fintech and investment strategies since 1948 to improve global economic, social, and environmental conditions on behalf of the Federal Republic of Germany and its federal states.
‘Gender lens investing is working for us as a tool with the overarching goal to reduce inequity,’ he said. ‘It should not be about excluding men or any other participants in the market, but rather to reduce that inequality, which is still there, and which we believe and our government believes, is the real obstacle through meaningful and sustainable financial investments in emerging and developing markets, but also in our regions.’
In terms of numbers, up to 85% of KfW Development Bank’s investments have gender equality as a significant objective, with 8% of the portfolio dedicated to gender equality as a core objective.
‘Once you have women at the table making policy of these leadership positions in various government agencies, you can put forth policies with feminist agenda that align with gender lens investing,’ Brill said.”
So how do we get tactical about the solutions for reversing climate change?
First, let’s champion financial inclusion: We must prioritize efforts to provide women with equal access to financial resources and opportunities. Together, we can create programs and initiatives that support women’s economic empowerment, allowing them to invest in clean technologies and sustainable initiatives.
Second, let’s enhance the “S” in ESG through GLI investing through fintech: We have the tools and expertise to improve GLI investing. By collaborating with investors and businesses, we can develop fintech platforms that assess investments based on their environmental impact, social responsibility, and governance practices. Together, we can promote gender-focused investment funds and support companies committed to gender equality and climate action.
But remember – this is not a silver bullet.
We must encourage government intervention: While market-driven solutions are essential, governments must step in. We can advocate for policies and regulations that promote sustainable practices, incentivize clean technologies, and support gender equality and climate initiatives. We can drive meaningful and sustainable financial investments in emerging and developing markets by aligning our efforts with government policies.
Together, we can make a real impact in reversing climate change while promoting gender parity and financial inclusion.
As I wrote in the Forbes article,
“To have enough clean air to breathe, the fintech industry needs to be committed to all the defenses, tools, startups, and strategies to reverse climate change in the small window left.
Investing in women is how to get there, fast enough.”