Gender bonds: Unlocking the full potential of women empowerment

Empowering women can also help greening economies

Women’s empowerment can only be achieved by facilitating the female population in attaining control over various areas of their lives. The attainment of gender equality is a human right, not a female fight, which can be made possible by providing women with strength, self-confidence and power by ensuring effective financial inclusion for women. The vision of women’s empowerment cannot be fulfilled without the development of women’s economic empowerment through financial inclusion. The lack of financial inclusion proves to be a major obstacle in the path of women’s empowerment.

This problem is faced by a majority of developing countries like Pakistan. Based upon the Financial Inclusion Insights (FII) Survey 2020, the financial inclusion in Pakistan was approximately 21 percent. According to the available data, 36 percent of Pakistan’s adult male population is considered financially included whereas the ratio for adult women is still in the single digits, that is 7 percent. Pakistan ranked at 151st out of the total 153 countries in the Global Gender Gap Report 2020, having only Iraq and Yemen ranked lower. In comparison, Malaysia ranked 104th in the Global Gender Gap Report 2020.

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In this regard, on 17 September 2021, the State Bank of Pakistan (SBP) launched the “Banking on Equality Policy: Reducing the Gender Gap in Financial Inclusion” to enhance women’s financial inclusion in Pakistan. The policy will prove to be a major milestone in shaping the landscape for women’s economic empowerment in Pakistan.

This policy aims to achieve 20 million active women-owned accounts by the year 2030 and introduce women-centric financial products and services. Progress toward gender equality is not solely a question of greater investment, but also of having a wider variety of gender investments available to investors can accelerate this progress toward a more equal future.

Gender Bonds can play an important role in this regard by financing various projects related to the socio-economic advancement and the empowerment of women. Globally Gender Bonds are still at a nascent stage of development.On 19 May 2021, the Securities and Exchange Commission of Pakistan (SECP) issued the Gender Bonds Guidelines for financing projects related to women’s economic empowerment. Gender Bonds are a type of social or sustainability bond that can prove to be a game-changer for a country’s green economic transformation. As investors have become more sensitive to issues of women’s empowerment, the greater acknowledgment by investors will induce demand for more Gender Bonds and induce more capital from a more diverse set of investors.

Women’s economic empowerment is central to realizing women’s rights and gender equality. Advancing equality and diversity in the banking sector is a compelling proposition rather than a zero-sum game. Establishing gender as a pillar of strategies will produce a swifter and more-inclusive transition to sustainable energy.

A key catalyst to this acknowledgment will be a deeper understanding of the impact that Gender Bonds can deliver alongside the financial returns they can generate. A key potential of gender bonds is the creation of bonds that are gender equality-focused but have the use of funds policies that address multiple issues.

By diversifying the use of the proceeds framework for gender bonds, issuers may attract a wider base of investors who may not have considered Gender Bonds beforehand,thus broadening the investor base .For example, Gender Bonds can also play a vital role in the attainment of UN-SDGs 2030. Gender Bonds, by investing in the full and effective participation of women in economic life, also have the potential to support efforts on poverty eradication (UN-SDG # 1), full and productive employment, promotion of sustainable industrial development and decent work (UN-SDG # 8 and 9), peaceful and inclusive societies (UN-SDG # 16).

Pakistan can move forward in the journey of women’s empowerment through the issuance of gender bonds for financing to women-centric projects such as the provision of essential services including education and vocational training projects especially in rural areas; healthcare facilities; financing and financial services for women; housing and car financing schemes with low-interest rates; safe and dignified transportation service for females; development of daycare projects.

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On a global level the sustainable bond issuance has been growing rapidly, both in terms of volume and types of instruments. In 2020, sustainable bonds of approximately $732.1 billion were issued. Between the years 2017 to 2021, the International Finance Corporation raised $3.8 billion through issuing 63 social bonds in 11 different currencies.

Gender-smart financing can be significantly increased through mainstreaming gender considerations and promoting gender equality in sustainable bond issues, including green, social, sustainability, and sustainability-linked bonds. To increase women’s empowerment via gender bonds is by issuing gender bonds that have green and social mandates as well.This will not only widen the gender bond market by adding different mandates and key performance indicators,but the market may also shift toward different understandings of gender impact. The issuance of gender bonds will encourage Gender Lens Investments which is based on the premise that investing in companies that promote gender equality through their internal policies or through their business activities, is not only morally responsible, but can lead to higher financial returns.

To accelerate Pakistan’s sustainable economic growth, it needs to be ensured that the female population is economically active. Banks can also provide low-interest-rate financing schemes to women entrepreneurs for green or eco-friendly businesses. The proceeds from the issuance of gender bonds may also be invested in organizations providing equal employment opportunities to females or breaking the glass ceiling with female leadership.

The provision of suitable, affordable and quality financial services to all segments of society contributes to balanced as well as sustainable economic growth and development.Gender inequality poses a significant threat to alleviating poverty and boosting shared prosperity. Gender bonds can prove to be an indispensable tool to enhance women’s empowerment, especially in developing countries.

Women’s economic empowerment is central to realizing women’s rights and gender equality. Advancing equality and diversity in the banking sector is a compelling proposition rather than a zero-sum game. Establishing gender as a pillar of strategies will produce a swifter and more-inclusive transition to sustainable energy.

Syed Asim Ali Bukhari
The writer is pursuing his PhD in Green Banking from the Universiti Sains Malaysia (USM), Penang, Malaysia and can be reached at [email protected]


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