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Investing in women for climate resilience

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Investing in women for climate resilience

Gender-responsive climate finance is needed so women are integrated into the global climate finance architecture to improve livelihoods and build climate resilience.

Laura Del Duca, Wilatluk Sinswat / Published on 4 July 2024

More than 25 years ago, Milu Thapa struggled to find the funding to help establish a new initiative in Nepal – a skill development and handicraft enterprise called the Women’s Creation Center. She and her co-founders faced numerous challenges in securing the financing needed to launch the center. “We went everywhere – to the government, families, and friends, asking them to help us,” she recalled.

Since those days, women in Nepal have become much more likely to engage in economic activities, yet finance for them remains elusive. This is the case not just in Nepal, but throughout Asia and in much of the Global South.

Nine in ten countries have laws that differentiate between men and women in ways that may hinder women’s economic opportunities; for example, laws may treat men and women differently in terms of providing access to credit. Just 0.01 percent of funding worldwide supports projects that address both climate change and women’s rights. As recently as 2017 and 2018, financial support to programs with gender equality or women’s empowerment as the principal objectives accounted to only 4% of bilateral aid from the Development Assistance Committee of the Organization for Economic Cooperation and Development (OECD).

Rising on global agendas

This must change. In 2024, the issue is finally capturing long-deserved global attention – in part due to growing awareness of the connections between climate resilience and gender justice. Finance was the theme of this year’sInternational Women’s Day and a priority theme at the Commission on the Status of Women. It was the focus of international policy meetings held in Bangkok in May at the UN-hosted Feminist Finance Forum on the role of gender in fostering just and equitable transitions, and promoting innovative climate action. Calls are growing for the global climate finance architecture to address gender inequality. For example, there is growing pressure to incorporate more women-led initiatives at the next UN Climate Conference (COP29), which is being touted as “the finance COP,” and for gender balance in the COP29 committee.

As the situation in Nepal illustrates, women must be integrated into the financial picture to help foster sustainable livelihoods and build climate resilience for all. Most of the Nepali population lives in rural areas and relies on small-scale, subsistence farming that is not as productive as it could be. Women account for 74% of the agricultural workforce, and 60% of the owners of micro, small and medium enterprises (MSMEs).

Access to climate-resilient farming practices, financial resources, and entrepreneurial support can help address economic and productivity issues that Nepal confronts – particularly to address climate-change-linked declines in farming and livestock production. Rising temperatures, drying of surface water, and deteriorating water quality are already taking a toll on agricultural productivity in the country.

Ghuran Thakur, an agricultural and climate finance expert with over 30-years of experience in the field in Nepal, told us, “to achieve food sufficiency in a sustainable manner, it is vital for the country to invest in women.” Among the strategies he suggested: facilitating women’s access to climate-resilient farming practices, machinery, and technologies; and providing climate-related loans, crop-insurance systems, and entrepreneurial support.

Even though women smallholders and MSME owners seek modest-sized loans, they face many obstacles to secure financing from commercial banks, which often question their profitability. As a result, women rely on other financial avenues and products, such as in-kind borrowing and microcredits offered through cooperatives and microfinance institutions.

Driving change

To make gender-responsive climate finance the norm will require comprehensive societal and structural change. Such transformation cannot happen overnight, but some steps can and should begin now.

Development banks and financial institutions should lead the way by prioritizing measures to direct resources for sustainable development towards all genders, equitably.

They and other key players – including governments, civil society organizations and national and international non-governmental organizations – should also help fund and/or provide training to build financial literacy, improve management and entrepreneurial skills, and enhance knowledge needed to pursue sustainable livelihoods. Such training is needed so that women can optimize available opportunities effectively, and those who receive funds can use them more productively.

Financial stakeholders in the public and private sectors should establish robust partnerships to tackle gender-related barriers together. Multilateral finance institutions, domestic banks and local cooperatives should also work together to provide climate-related financial products and digital financial services, including microcredits and agricultural insurance systems.

These efforts should be part of wider aims to ensure women’s equitable access to markets, require inclusive participation in decision-making, and establish women’s rights and control over assets and resources. In these issues, men must also engage as allies in championing entrepreneurship irrespective of gender – and in driving social, economic, and environmental transformation. Mr. Thakur’s work on rural and agricultural finance demonstrates the imperative of having men championing women’s economic empowerment, agency, and gender-equitable participation in climate actions.

Ms. Thapa’s journey underscores the returns from investing in women. Initially offering training in sewing and making handicrafts, the center she and her friends started rapidly took on marketing too, setting up an exhibition to showcase the women’s products. That first exhibition, which started with 50 participants, has since grown to include more than 200 stalls prior to the pandemic in 2020.  There were more than 100 stalls at the exhibition last year, the 20th anniversary of the event. The center has supported more than 500 women with training and market connections. Indeed, more than a quarter of the women who have trained with the center are now entrepreneurs.

“When we invest in women and empower them economically, they can sustain livelihoods of their homes, their community, and their country,” Ms. Thapa said. “It is a ‘must’.”

SEI authors

Laura Del Duca
Laura Del Duca

Policy Fellow

SEI Headquarters

Wilatluk Sinswat

Research Fellow

SEI Asia

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