February 19, 2025

Gender and Sustainable Finance

The Ongoing Gender Disparities in the Workforce

Despite considerable progress in recent decades, labor markets worldwide remain segregated by gender. Women’s participation in the workforce continues to lag behind men’s, wage disparities persist, and women are disproportionately represented in the informal sector and among the poor. In many countries, legal barriers still restrict women from fully realizing their economic potential.

While gender equality is a crucial development goal in its own right, women’s economic involvement also plays a vital role in fostering growth and stability. In aging economies, increased female workforce participation can help counteract the effects of a shrinking labor pool, while in developing economies, improved opportunities for women can drive broader economic progress, such as higher school enrollment rates for girls.

Fostering and harnessing the aptitude and experience of all women in financial services is crucial in developing a strong pipeline of talent. This will indeed lead to a greater multiplicity of thought, experience, and leadership styles in decision-making processes, for the economic benefit of the businesses and the wider community as a whole.

The Intersection of Gender Equality and Climate Finance

Equal gender representation is not a new conversation nor its’ suggested solutions. But, it further complicates the issues with the global temperature rise and the associated costs of climate change.

Marginalised communities and groups (e.g. women, children, immigrants, the elderly, and people with health conditions and impairments) are more exposed to climatic risks and the cost of climate change is more challenging for them to deal with. Women, in particular, are structurally vulnerable and their lack of preparation towards tackling climate change can worsen the existing gender-based inequities.

However, it is encouraging to observe the gradual changes in narrative, especially since there are recent integration of gender considerations into key multilateral climate finance mechanisms, including the Green Climate Fund, are attempting to adapt their funding requirements to prioritise projects that emphasise gender equity and includes women in leadership roles.

These steps are definitely moving in the right direction but gender considerations have yet to be successfully mainstreamed in ongoing climate change activities and programmes, as well as national planning. To enhance the effectiveness of supported actions and ensure their long-term viability, hence maximising the impact of climate finance, existing funding mechanisms across scales need to tackle deeply rooted structural inequities.

The Business Case for Gender Diversity in Leadership

Research shows that companies with greater gender diversity are up to 25% more likely to outperform their peers in profitability (McKinsey’s 2019 diversity report). This is a significant advantage. Yet, despite this, women hold less than a quarter of board seats worldwide (Deloitte Global’s 2024 Women in the Boardroom report). In Europe, the situation is somewhat better than the global average, but progress remains inconsistent and insufficient. Nobel laureate Claudia Goldin’s research highlights that despite women now making up 60% of new university graduates in the EU, structural barriers still hinder their rise to top positions.

Goldin’s findings point to two key obstacles:

Career interruptions for caregiving
Rigid workplace structures that make it difficult for women to reach leadership roles.

These challenges contribute to women’s persistent underrepresentation in economic decision-making – especially at the highest levels. Today, only one in three board members are women, and just 8% of board chairs are women (Consilium).

While countries like France and Norway have achieved near-equal representation through quota systems, others still lag far behind. Closing the gender gap in leadership is not just about fairness; it’s a critical step toward broader economic and societal progress.

The Role of Gender Diversity in Insurance and Pensions

In the insurance and pensions sector, this issue carries particular weight. At its core, our industry is about assessing and managing risk for all of society.

In Ireland, impressive steps are being taken to advance significant efforts for ‘women in finance’. One such milestone was the launch of Ireland’s Women in Finance Charter in 2022. It is an initiative funded by industry and supported by the Government of Ireland to improve gender balance at all levels within the sector.

A report assessing the progress this year saw:

56 firms employing 44,340 workers
121 gender balance targets set, the majority to be achieved within 3 years.
Key focus areas: improving flexible working, gender balance in succession planning, identifying female leaders, and examining hiring practices.

After assessing needs across 14 financial centres, the group created the Gender Finance Charter, launching it at the FC4S Annual General Meeting in Dublin in September 2023 with 21 financial centres committing to advance at least 2 principles in 2024including the International Sustainable Finance Centre of Excellence in Ireland.

The Financial Centres for Sustainability (FC4S) network has outlined ten objectives which involve the signatories bringing gender considerations into their decision-making, strategies, and operations over the next year. These include:

Improving access to finance for women-led or owned companies
Setting targets for female representation in financial systems
Poviding more gender-focused education programs
Persuading regulators and stock markets to publicly provide data on gender metrics within financial systems

The Need for a Gender Lens in Sustainable Finance

In order to hold a promise to secure a more inclusive climate-friendly future, we must encourage a paradigm shift in climate finance thinking so that the needs and priorities of the poor and marginalized segments of society (including women), become a priority in approving investments in climate change.

Enhanced data collection and reporting on both gender diversity within companies and the environmental impact of investments are essential. Financial institutions have the influence to advocate for policies that promote both climate action and gender equality.

How Financial Institutions Can Lead the Way

Directing capital toward sustainable initiatives that prioritise gender equity

Improving transparency and data reporting on gender diversity and leadership

Setting measurable targets for female representation in executive positions

Encouraging financial regulators to incorporate gender considerations into investment frameworks

Another key point is incorporating gender diversity in leadership to enhance risk management and decision-making within organisations.

Conclusion: The Future of Gender-Inclusive Finance

Understanding and addressing the interconnectedness of finance, gender representation, and climate change is crucial. Taking a more holistic and intersectional approach can lead to sustainable, resilient, and inclusive economic growth.

By integrating gender equality into finance and prioritising investments that support both sustainability and inclusivity, financial institutions can drive: