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The Female Quotient

Climate Change

Data, tech, and diversity will help most in directing more capital to climate change portfolios

8 December 2023 in The Female Quotient

Climate finance is the hottest topic on the table when it comes to doing something tangible about climate change. We urgently need to propagate the “hows” around investing in positive values....

I by IMD FQ

Climate finance is the hottest topic on the table when it comes to doing something tangible about climate change. We urgently need to propagate the “hows around investing in positive values.

Flows of capital are starting to be redirected in meaningful ways and there is increasing agency in terms of how that capital is invested and who does so. The once-huge gender disparity in these activities is slowly starting to right itself.

Aside from the fact that it’s a human right, it’s now become a viable business case.

“Women are known to invest in social impact (ESG and so on), so for women leaders and women entrepreneurs, climate finance is really important if we want the world that we need in terms of the green economy; the clean economy. We must get the money into women as innovators,” says Anino Emuwa, Founder of Avandis Consulting and 100 Women@Davos. She works with businesses across industries, producing solutions for these complex strategies.

But organizations now fully on board with the agenda still have many questions about how to go about it. Their concerns are broad and complex, and include questions such as: “How do we put money into innovation?” “How do we get more women involved?” And, “How do we bring in the tools needed to help women construct sustainability-strong portfolios?”

Leaders specifically are asking: how do I put all this at the forefront of my leadership agenda?

These concerns underpinned a panel discussion on female empowerment in climate investing and economic opportunities at the Female Quotient Equality Lounge in Dubai during COP28.

It was convened to help recognize the pivotal role women now play in sustainability and climate change, and to help further the conversation on deploying capital in the most strategic and innovative ways able to drive tangible solutions.

Data: The key to changing how we deploy money

“Once you start changing flows of capital, you really start seeing big changes,” says Anders Rodenberg, CEO of Denominator. “Data is such an important facilitator because it’s creating new investment products; new supplies to – basically – women so they can deploy their capital in a way that gives us better outcomes.”

One instance of how data can revitalize products can be illustrated by the pension world.

“If you sign up for a 401K in the US [a tax-advantaged retirement account offered by many employers] you get options for, ‘I don’t want any weapons, deforestation, or tobacco in my portfolio’, but you cannot, as a woman, say, ‘I don’t want to give my money to companies that don’t perform well on gender.’” Anders explains.

He says enabling these types of products would mean you would suddenly hear the voice of women. “They have a lot of money, and you get change.

No new tech? No value-driven portfolios

But data can’t effect change without the right tech in place. It allows asset management companies, for instance, to build portfolios that represent the preferences and values of the individual. 

Women are known to invest in social impact (ESG and so on), so for women leaders and women entrepreneurs, climate finance is really important if we want the world that we need in terms of the green economy

“I am not a tech person, but I left the tier-one world and joined a small fintech because they were all built on the cloud, powered by AI, and I had to figure out how you combine the two worlds,” explains Carolina Minio Paluello, CEO at Arabesque AI.

“By joining them, I was bringing the expertise of what it is a use case, and they had the new tech. So I can now go back to the asset management world and say, ‘Unless you adopt the new tech you will never be able to build portfolios that represent preferences and values for the individuals.’”

A major question remaining to be answered, she says, is, “How fast can we bring this new tech and data to those who want to lead in this journey?  

Another is, “How can we create more simple solutions for people to be able to activate this at scale in ways that have largely been inaccessible before?” adds Moira Forbes, Executive Vice President.

No one said it would be easy, but they said it would be worth it

If we feel we are not seeing optimal levels of acceleration in these scenarios, it might help to put matters into context.

“When COVID hit, people understood that sustainability wasn’t just something to add to a marketing slide; it matters to every single person in the world. That in turn accelerated PPPs. CEOs got the data and can now do the reporting. But that’s not the solution: the transition is. And it’s going to be hard,” says Ann Rosenberg, Senior Sustainability and Climate Advisor.

“It’s not easy to go from oil and gas into the renewables world, and it’s not easy to change an entire supply chain around fashion.”

Plus, it’s no longer the concern of merely wealthy countries, Rosenberg says. But if the UN is uniting the world to get this fixed, let’s try and be optimistic and grateful.

If you’re going to do something tomorrow, Professor of Finance at IMD Salvatore Cantale, suggests you set KPIs.

“KPIs are so powerful, and we have financial instruments that are very much linked to KPIs such as Sustainability-Linked Bonds and Sustainability-Liked Notes. We can have SPIs that are completely driven by equality and inclusion,” he said.

“We are trying to make sure there is more diversity in general in this field and I do it through boards. Companies can be quick to commit to capital but even quicker to step back. That happens a bit less when women are on boards.”

As the entire panel agreed, the data shows that the more women you have in senior positions, the more you see better values of companies on ESG. Minio Paluello added that this is particularly the case when it comes to lowering carbon emissions.

Women investors don’t just care about performance. They direct more capital to portfolios that add positive value, climate change being an integral part of these. They are at the forefront of driving sustainable investments, making conversations on gender related to the topic highly meaningful.

TheFemale Quotient’s Equality LoungeatCOP28 in Dubai created a forum to discuss the work women are doing worldwide to shape climate policies and to showcase the significant impact of diversity, equity, and inclusion in meeting target goals.

Moira Forbes

Executive Vice President, Forbes

Ann Rosenberg

Senior Sustainability and Climate Advisor

Anders Rodenberg

CEO, Denominator

Dr. Anino Emuwa

Founder, Avandis Consulting and 100 Women@Davos

Carolina Minio Paluello

CEO, Arabesque AI

Salvatore Cantale

Professor, IMD

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