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Supporting Underfunded Women-Owned Businesses in the Context of Climate Change and Gender Equality

In the most recent summary of findings report from their new Future Economy Lab in Asia, SecondMuse Capital has unveiled the connection between gender equality and climate change, highlighting the “undervalued relationship” between the two issues.

“Gender inequality and climate change are interconnected in South and Southeast Asia. In the face of mounting climate challenges, women are uniquely positioned to serve as catalysts for climate mitigation and adaptation. Their roles in sectors such as agriculture, forestry, and ecotourism, which are all closely tied to climate resilience, provide women with valuable insights and hands-on experience in sustainable practices,” the report explains.

“Moreover, studies have consistently shown that when women have access to resources and decision-making power, they are more likely to prioritize environmental conservation and community well-being, particularly as men migrate more for work in the region.”

Recognizing the potential of women’s contribution in alleviating the impact of climate change, the report emphasizes that while gender lens investing has taken off, it remains removed from climate finance.

“Investors are increasingly incorporating gender considerations into their strategies and directing capital toward businesses that prioritize gender diversity and women’s economic inclusion, in recognition of the superior financial and social returns that can be attained. A common standard for gender lens investment is the 2XC criteria, which requires that an investment meet certain targets in support of women in entrepreneurship, leadership, employment, and consumer roles,” the report says.

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“While there is a distinct relationship between gender inequality and climate change, investment mandates rarely combine a climate and gender lens, and there is a lack of communication and understanding between the two ‘worlds.’ Climate financiers are not always aware of the potential for gender equality to help catalyze positive climate action, and gender-lens investors may perceive climate science as being less relevant, difficult to understand, or difficult to integrate into their efforts.”

Supporting underfunded women’s businesses to tackle climate change

SecondMuse Capital is the impact-focused capital arm of SecondMuse. Supported by Visa Foundation and AVPN, the organization carried out Future Economy Lab focusing on “Financing Gender-Smart Climate Businesses in Asia.” The lab addresses financing barriers faced by gender-smart, climate-positive micro, small, and medium-sized enterprises (MSMEs) in South and Southeast Asia, specifically in India, Indonesia, and Vietnam.

SecondMuse Capital reviewed more than 40 recent literature sources for this report, including reports by leading institutions, academic research, news articles, and webinars. It also conducted more than 25 key stakeholder interviews with individuals with relevant experience and expertise.

It highlights the challenges typically faced by women business owners:
– Women are less likely to hold independent access to basic financial services and registrations
– Collateral requirements and gender biases exclude women from finance
– Women business owners have less access to resources, information, and networks than men
– Community is both a challenge and a solution

But what are the solutions that stakeholders can look into in the effort to tackle climate change and gender inequality? According to SecondMuse Capital, it has identified several gaps and opportunity areas that it could address by designing its financial mechanism to get more accessible capital into gender-smart climate MSMEs in South and Southeast Asia.

Also Read: What is left behind in our conversation on climate change

“These opportunity areas are key levers of change, addressing some of the systemic challenges and specific contextual obstacles outlined in this report.”

One example of such key opportunities is utilizing blended (public and private) finance to lower the real and perceived financial risk of climate-related investments.

“Blending different funding sources can address both real and perceived credit risks, making investments more attractive to a broader investor base by adjusting the risk-return profiles. In turn, more funding will be directed toward proving the efficacy and scaling of gender-smart climate-focused projects.”

Image Credit: Nathan Cima on Unsplash

The post The climate change and gender equality connection: How to support underfunded women-owned business appeared first on e27.

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