Over the past few years, gender equality has become increasingly incorporated in the investment strategies of impact investors and institutional investors, with its benefits recognized from both a development and business perspective. Convergence has consistently tracked the alignment of blended finance transactions with SDG 5 (Gender Equality), witnessing a number of blended finance initiatives aiming to mainstream a gender lens, including the 2X Challenge, the Equality Fund, and Women’s World Banking. Nonetheless, unlocking more capital to improve the development outcomes for women and girls remains a challenge.
This year, Convergence analyzed how gender has been incorporated in the blended finance market, based on its database of over 530 blended finance transactions, the majority of which have launched since 2010. Convergence found that while blended finance has demonstrated the ability to mobilize additional financing for gender-focused projects, publicly available information indicates that participants in blended finance transactions have not taken deliberate, consolidated action to incorporate a gender lens.
How has gender been approached in the blended finance market?
To assess the state of gender lens investing in the blended finance market to date, we drew from Grand Challenges Canada’s Gender Equality Coding System to categorize historical deals into three main categories, assigning scores ranging from 0 - 2 to all transactions:
Figure 1: Convergence’s Gender Scoring for Blended Finance Transactions
Of the ~530 historical blended finance transactions analyzed, and based only on materials in the public domain, almost 24% of the transactions reflected a gender focus, with 14% of transactions achieving a gender score of 1, and 10% achieving a score of 2. Most deals (76%) were given a gender score of 0.
What do these trends reveal about the state of gender lens investing?
*Figure 2: Proportion of blended finance transactions with a demonstrated gender focus *
Unsurprisingly, 3/4 of blended finance transactions demonstrated minimal gender-awareness. Most of these transactions did not evidence a consideration of the relationship between gender and other socio-economic factors. Public descriptions of the transactions provided no details on how women or girls might benefit from them, (e.g. through increased health, safety, or improved access to and control over resources.) Some transactions discussed women and girls in general terms but did not articulate how the project, fund, or facility would specifically empower women or improve their access to resources. For example, a press release on one project stated (paraphrased): “Given the fact that women spend more time in the home than men, the clean cooking project will be more beneficial for women.” Such statements lack substantive detail on how particular categories of women, rather than women as half of the general population, are affected.
Gender-disaggregated data is common in blended finance
Collecting gender-disaggregated data is an important first step in developing evidence-based approaches for equitable development and assessing the impact of the blended finance market on women and girls. Thus, our baseline criteria for a score of 1 was at minimum the presence of gender-disaggregated data, most frequently evidenced through impact reports provided by fund managers or projects sponsors. With this baseline, we found 68 transactions to be ‘gender-aware and counting heads’, scoring a 1. More than a third (33%) of all blended finance transactions reported gender-disaggregated data. Commonly used indicators are the proportion of women-owned businesses in a fund or facility’s SME portfolio and the number of female participants in trainings and capacity building programs. On an organizational level, indicators include the percentage of an organization that is female-owned (or the number of women members in a cooperative), and the proportion of a board of directors or management team comprised of women.
One example is the Acumen Resilient Agriculture Fund (ARAF). The fund provides equity and grant funding to support pioneering, and early-growth stage innovative agribusinesses to enhance climate resilience of smallholder farmers in Africa. It received grant and equity investments from FMO (Dutch development bank) and the Green Climate Fund (GCF), amongst others. With support from GCF, a gender assessment and a gender action plan was conducted for the fund. First, a gender assessment was conducted to identify the gaps that should be addressed by gender-responsive project interventions and included gender disaggregated data on key development indicators in its target countries of Uganda, Ghana and Nigeria. The action plan then focused on integrating the constraints and opportunities identified through the gender analysis into the project design. This included targeting the number of women and girls reached by ARAF over 12 years, the number of ARAF targeted households headed by women, and several other outcome indicators disaggregated by gender.
*Figure 3: Proportion of transactions that report gender-disaggregated data since 2010 *
From counting heads towards gender-intentional actions
To accelerate progress towards gender equality, there must be a shift towards concrete, gender-intentional actions. Only 57 historical transactions in our database signaled an intentional aim to achieve women’s empowerment or gender equality, thus scoring a 2. Unsurprisingly, we found an outsized focus on gender-intentional transactions in the microfinance (25% of transactions), health (15% of transactions), and water, sanitation and hygiene (WASH) sectors (17% of transactions), including the IIX Women’s Livelihood Bond, the Japan ASEAN Women Empowerment Fund, WaterCredit Investment Fund 3, and Sanergy. What all these transactions had in common was an explicit target to remove respective resource constraints faced by women and girls, whether it was access to quality education, vocational training, toilets or microloans.
Our analysis also shows that a gender lens can also be comprehensively integrated in infrastructure projects. Optima Energía, a Mexican energy service company, received support from the Canadian Climate Fund for the Private Sector in the Americas (C2F) and the Inter-American Development Bank (IDB) to install 25,000 high efficiency lights for the Municipality of Ensenada. The LED technology boosts the quality of light in the streets and contributes to public safety whilst reducing electricity expenses. Optima Energía received funding from the Canadian Climate Fund to sign the Women’s Empowerment Principles and achieve certification of compliance with government standards on workplace equality under the Mexican Standards on Labor Equality and Non-Discrimination. Publicly available documentation noted that Optima Energía created an internship for female engineering students in 2016 and 2017 to gain experience in a sector where they are underrepresented.
Towards greater impact for all genders
At large, blended finance practitioners have yet to address gender in a comprehensive manner or convey in their public outreach how they are addressing gender. Nevertheless, there are many positive examples of how a gender lens can be incorporated into blended finance transactions. Convergence recognizes the need to move beyond the gender binary to discern the impact of blended finance transactions on those identifying across the gender spectrum. The growing prevalence of gender-disaggregated data in the blended finance market is a crucial step towards developing a more cohesive set of metrics to capture gender equality outcomes. With improved data and information, gender analysis will become more reliable and standardized over time.
To make a lasting impact, investors and deal sponsors of all stripes must move beyond merely counting the number of women reached. Transactions that only refer to women by general statements or the number of female beneficiaries may lead to gender-washing at the cost of more substantive action. Furthermore, deal sponsors who cannot articulate gender issues will find themselves at a disadvantage in competing for capital. We believe this will be true across the board over time. And from our vantage point within the blended finance market, we expect the trend to be even more pronounced for anyone fundraising for a blended structure, where the support of catalytic, impact-driven funders is critical in attracting more traditional commercial investors. If designed and executed appropriately, projects with an integrated gender lens can catalyze greater, sustainable change. Making that case will matter.
Convergence is committed to channelling insights from its gender analyses into dialogue to share existing benchmarks and document good practice in the field. We will continue to work towards refining our gender scoring criteria as we gather more data.
*This blog post, contributed by Convergence Data & Research Intern, Divya Jalan, is part of a new series that will look at gender in the blended finance market, including key opportunities and challenges for achieving, measuring, and bolstering gender equality in blended finance transactions. Stay tuned for future blogs in the series. *