SPI Journal, Spring 2023
Connecting the dots

Connecting the dots between finance and gender equality

There are many opportunities for the financial sector to make a difference, explains Anita Bhatia, assistant secretary-general and deputy executive director of UN Women.


Developments over the last decade have demonstrated that the financial industry can be tapped to help solve some of our most intractable global problems. Both regulators and financial market participants have leaned in.

When the pandemic hit, central banks stepped in to inject massive liquidity to keep economies going. Financiers have formed alliances to fight climate change, such as the Glasgow Financial Alliance for Net Zero, which represents more than $130tn in assets. And when sanctions were put in place to cut funding to warmongers, it was bankers who delivered those sanctions. In recent years, professional associations and boards have created standards to analyse securities by how consistent they are with environmental, social and governance principles. Investors are also being called on to take part in restructuring the public debt of poor countries to avoid deeper poverty.

These are laudable contributions. But they beg the question: why has finance not done the same for gender equality? Why has money not been used more aggressively to empower women? After all, women are central to the challenges we face, often disproportionately as victims, but more importantly as agents of change. The disconnect between finance and gender is a reflection of norms and behaviours rooted in our societies. It will take generations to change that. In the meantime, there are some low-hanging opportunities for the financial sector.

Let’s start with central banks. To their credit, they have made progress on female representation among their staff. But shares in workforce, salary gaps, chances of promotion and positions in management all indicate that gender equality is yet to reach the central banking profession.

There is also a clear absence of a gender lens in the design and execution of policies – whether in the choice of monetary stance, bank regulation, deposit insurance or bond issuance. How much more effective and cheaper would monetary stimulus be if it were designed with women in mind, let alone in the room? The quality of loan portfolios would improve if bank regulators took the reality of female borrowers into account.

Forecasts of inflation and growth based on assumptions about how households consume, save, borrow and work ignore the fact that many of those households are headed by women. Projections of growth, and therefore of demand for money and interest-rate transmissions use systems of national accounts that do not fully factor in the care economy. This non-market sector, which grew exponentially during the pandemic, has made the need for revised accounting models more urgent. When interest rates are set to stabilise wage growth, it is essential to consider that female occupational choice is not binary between labour and leisure, but trinary among paid labour, unpaid labour and leisure.

More can be done by asset managers as well. Most of them market their portfolios as environmental, social and governance-aligned. It would be a competitive disadvantage not to do so as this is what clients increasingly want. Clients also want to see investments that advance gender equality, but this has yet to be reflected in asset managers’ broader focus. Until recently, there may have been technical obstacles, such as the absence of accepted standards to identify gender-aligned securities. But that is changing. In 2021, UN Women, in partnership with the International Finance Corporation and the International Capital Market Association, published joint guidelines on gender bonds, which can support the issuance of gender-aligned bonds.

There is much room for improvement in public finance. Governments are the largest issuers of debt instruments and a driving force behind the explosive growth in green bonds. Almost every month we hear of another billion-dollar sovereign green issuance. It makes sense: these bonds are a great way for public debt managers to diversify their investor bases and for their political leaders to signal commitment to the environment. But no government has ever issued a gender bond.

In September 2022, the Japan International Cooperation Agency announced the launch of a ¥20bn ($180m) gender bond to boost its lending capacity to developing countries facing challenges in promoting gender equality against the backdrop of the Covid-19 pandemic. This is the closest the world has come to a gender-related sovereign issuance. There is a large, unclaimed reputational prize for the first government that issues a gender bond.

More than 3,000 investment houses with a combined $100tn under management have signed on to the UN-sponsored Principles of Responsible Investment. At the same time there has been an exponential rise in the number of thematic securities issued in the last few years, particularly green bonds. This clearly shows that investors and finance ministries are recognising the challenges posed by climate change.

But even though gender inequality is a major systemic challenge, the world has yet to see the mobilisation of finance at scale to address the issue. The framework provided by UN Women, IFC and ICMA fills a long-standing gap for such issuances and should be used to signal commitment to the gender agenda.