Gender Finance: Breaking Boundaries and Advancing Equality with UN SDG 5

Women and girls make up half of the world’s population and so represent half the world’s potential when it comes to achieving not only the United Nations Sustainable Development Goal (UN SDG) 5 – Achieve gender equality and empower all women and girls – but the complete set of SDGs set out in 2015. 

But as we reach the half-way mark between the launch of these goals and their 2030 achievement aim, we see that in many countries, the advancement of gender equality and the empowerment of women and girls still remain topics low on the agenda – and this is where gender finance aims to break the mould.  

 

The importance of achieving UN SDG 5

There are 195 countries in the world and not a single one where men and women are financially equal. 

It is estimated that only 1 in 4 women have access to financial services, indicating that women still face a disproportionate number of structural, cultural and financial obstacles in their day-to-day activities.  

It is against this backdrop that the rise of gender finance and gender-lens investing is taking place. This new area of sustainable finance, which has been building momentum especially in recent years, seeks to advance gender equality and promotes women’s empowerment by better linking gender and finance.  

Gender finance is about using the power of international capital markets to reduce the gender gap in the world economy and create a global society where women and girls are given the same access to education, financial services and opportunities as their male counterparts. 

 

Empowering through investment

Just how far we are from achieving UN SDG 5 became undeniable during the COVID-19 pandemic and the turbulent months and years that followed. Multiple studies suggest that women and girls are being disproportionately affected by the negative consequences of climate change and the COVID-19 pandemic. Some studies indicate that the pandemic alone led gender equality to reverse by as much as 10 years in some parts of the world.  

10 years is a jarring figure when you consider that we are just 7 years away from the initial deadline for the achieving of all 17 UN SDGs.    

To counteract and proactively contribute to UN SDG 5, issuers from different sectors are turning to international capital markets to seek financing for projects or strategies that advance gender equality and women’s empowerment. Sustainable debt instruments that contribute to these goals are referred to as gender-focused bonds, and issuers and investors alike can seize the opportunity to help these instruments increase their standing in the international sustainable bond sphere. 

 

Making gender-focused bonds visible

Our work in gender finance took its first concrete and public steps back in May 2022, in the form of a Memorandum of Understanding with UN Women, in which we committed to join forces to advance gender finance and gender-lens investing

This first joint action in advancing gender equality and the empowerment of women and girls led to the flagging of gender-focused bonds displayed on the Luxembourg Green Exchange (LGX), to bring further visibility to such bonds and make it easier for investors to identify debt instruments that include a component that specifically support women and girls.  

Gender-focused bonds can be social, sustainability or sustainability-linked bonds, and allocate all or a portion of their financing to concrete projects and strategies that contribute to gender equality objectives.  

Examples of initiatives financed through gender-focused bonds include financing for small and micro women-led enterprises in India or Tanzania, educational programmes for girls in developing countries, or the increase of the proportion of women on company boards or management teams in developed countries.

 

Where do we go from here?

Beyond the role that gender finance can and will play in achieving UN SDG 5, it is also a business opportunity.

According to our May 2023 market study entitled 'Linking gender and finance: An overview of the gender-focused bond market', this new area of sustainable finance accounts for almost 2% of the world's listed GSSS bonds today, and we expect this number to grow in the coming months and years.

The study, which analysed data on 169 outstanding listed green, social, sustainability and sustainability-linked (GSSS) bonds identified via the LGX DataHub, which allocate all or a portion of their proceeds to financing projects or set clear objectives that contribute to gender equality and women's empowerment. Among other key findings, the study suggests that sustainability-linked bonds (SLBs) are a particularly popular instrument for issuers looking to include a gender dimension in their financing strategy and currently 6% of all listed SLBs include a sustainability performance target linked to advancing gender equality.

There is plenty of food for thought contained within this study which may help steer the ship as we move forward with equality and inclusivity in mind.

If you or your team are ready to become part of the movement towards a more equal world, the LGX Academy is now holding dedicated 2-hour sessions that will give you a deeper understanding of the scope and state of the gender-focused bond market, with concrete takeaways on the current challenges and opportunities, as well as actionable recommendations for both issuers and investors wishing to contribute to gender equality through their financial strategies and investment decisions.

Our LGX experts can also actively with your team to integrate a gender dimension in your bonds' reporting both at the pre- and post-issuance stages through the LGX Assistance Services. By delivering practical recommendations, we ensure that issuers have the right tool to monitor the progress they make during the lifetime of the bond.

The time to act is now, and the opportunity to make a mark is something we all have the chance to be part of.