How to use Sustainable Finance to drive Gender Equality

Introduction:

As gender equality has become an increasingly important sustainability and ESG issue (well actually it has always been important but great it has much more focus in recent years) we are seeing this manifest in a variety of Sustainable Finance transactions.

We have seen gender equality in use of proceeds based social bonds and loans, plus in more and more linked bonds/loans.

Let’s take a look at what we have seen in the market, plus some considerations and best practices.

Use of Proceeds:

Gender equality is a social theme that we have seen be included in social bonds/gender
bonds plus also projects and programs focused on this.

Some good examples

• CIBC Women in Leadership Bonds: Programs for women in management positions and lending to customers that have solid gender representation;

• Etihad SDG Loan: Increased programs for women pilots; and

• Bank of Ayudha (Gender Bond): Loans to women owned businesses

Even though some of these bonds have gender and women in the title, there are plenty of other examples that pick up this issue as just one category in a social use of proceeds bond/loan.

As for any social use of proceeds instruments, clear definitions of projects/assets, plus also target population and local context are very important aspects of a robust structure.

Linked Instruments:

In addition to the use of proceeds approach we have seen an increasing number of KPI + Targets including gender equality metrics.

Whilst this is a great development, we recommend that the following aspects are considered to ensure credible and ambitious structuring:

Key Market References:

• ICMA Social Reporting: 

  https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/June-2020/Harmonized-Framework-for-Impact-Reporting-for-Social-BondsJune-2020-090620.pdf

• ICMA Report: 

  https://www.icmagroup.org/assets/documents/Sustainable-finance/ICMAUN-WomenIFC-Bonds-to-Bridge-the-Gender-Gap-A-Practitioners-Guide-to-Using-Sustainable-Debt-for-Gender-Equality-November-2021.pdf

• IDH:

  https://www.idhsustainabletrade.com/kpis-to-track-and-evaluate-gender-equality-interventions/

• GRI:   https://www.globalreporting.org/standards/media/1020/gri-405-diversity-and-equal-opportunity-2016.pdf

Future Developments:

Gender equality will increasingly be an issue that is included in Sustainable Finance Transactions.

Geographic, specific industry and company context as pointed out above adds additional background to targets and ambition setting.

In some ways, like transitioning to a low carbon economy, we expect that gender equality use of proceeds and projects plus KPI and targets will have better defined implementation plans going forward.

We hope that projects/programs and also KPI/Targets that haven’t been well thought through and only touch the sides of the issue become a thing of the past and companies are held to a higher account.