SPI Journal, Spring 2023
Connecting the dots

Are capital markets committed to gender equality?

It is time to increase awareness of the necessity for more gender finance, writes Valérie Guillaumin, director, sustainable finance, International Capital Market Association.


As UN Women urged in its review of progress towards achieving gender equality, ‘Without heightened commitment from the global community, gender equality will remain nothing more than an unrealised goal.’

Capital markets have significant efforts to make in this field. If you look at any public report related to the contribution of sustainable bonds (including sustainability-linked bonds) to the United Nations’ sustainable development goals, SDG 5 (gender equality) constantly appears at the lower end of the scale, representing a tiny fraction of the global sustainable investment space. However, we cannot ignore that gender equality remains a concern, even in developed countries.

As environment-related investments have considerably expanded during the past decade, one might wonder why the financing for projects advancing gender equality and women’s empowerment has not followed the same trend since it is key to climate action. Why is SDG 5 less attractive than the other goals? Is it because issuers do not feel it is relevant enough or is it because investors do not think this is a worthwhile investment? Both statements are hard to believe, especially since there is increasing pressure on issuers to disclose information related to their social and governance strategies.

Multiple initiatives have been developed to support the integration of gender considerations into new sources of financing and to ensure issuers include a gender lens in their funding programmes. The International Capital Market Association has released various guidelines to encourage the debt capital market to consider issues related to gender.

ICMA, together with the International Finance Corporation and UN Women, published in November 2021 ‘Bonds to bridge the gender gap’ to promote fixed-income instruments that can be used to address gender inequalities. It provides practical guidance on how to use sustainable bonds (use-of-proceeds bonds such as social bonds and SLBs) to credibly access financing for projects and strategies that advance gender equality objectives. The guide offers a broad range of opportunities to the public and private sectors to identify gender inequalities that are most related to their own operations.

The Social Bond Principles, issued with ICMA’s support, identify women as a potential target population that can benefit from social projects. The complementary handbook for impact reporting provides a non-exhaustive list of quantitative social indicators that may be considered, notably related to women’s empowerment. Social or sustainability bond issuers can consider how their use of proceeds can mitigate gender inequalities and measure and track gender gaps/impact in their reporting.

Issuers can also consider gender across their organisations. If bond issuers do not have a sufficient pipeline of eligible projects, they can look towards general purpose bonds (SLBs, as defined in the Sustainability-Linked Bond Principles) which can be a good alternative to include gender equality objectives in a funding programme.

An SLB issuer can demonstrate its dedication to advancing gender equality by committing to achieving one or more gender-related key performance indicators assessed against predefined sustainability targets. The Sustainability-Linked Bond Principle’s KPI registry includes high-level recommendations as well as examples for the selection of KPIs. It guides market participants in the understanding of material issues, definition of calculation methodologies and/or calibration of their targets. It contains examples of KPIs related to diversity that can be easily combined with environment-related KPIs.

Finally, the 2022 edition of the ‘Green, Social and Sustainability Bonds: A High-Level Mapping to the Sustainable Development Goals’ includes a new section on gender lens investing that gives examples of eligible projects and reporting indicators. It encourages issuers to disaggregate data by gender as part of their impact reporting process if the target population includes women.

The UN ‘Sustainable Development Goals Report 2022’, while recognising that there has been progress over the last decades, points out that the world is not on track to achieve gender equality by 2030. Capital markets have all the tools to transform women’s future and it is time to increase awareness. Some organisations have already paved the way (either as a sole objective or mixed with other social or environmental projects). These include the Asian Development Bank, the Council of Europe Development Bank, the Impact Investment Exchange, IFC and Itaú Unibanco. I hope they will be followed by many others.