Photo by COP28 / Christopher Pike
By Farid Tadros and Felicia Siegrist
As the world comes together at COP28 to assess the progress made in addressing climate change and plan for climate action, it is more important than ever to be intentional in elevating the role of women-led businesses in shaping our future. Climate action will bring a seismic shift in how we interact and consume, how industries retool, and how markets function. If we are to achieve the system change needed, we can no longer overlook the importance of women in driving green innovations and the challenges they face to participating in the green economy.
The transition to a low-carbon economy can present an enormous economic opportunity, with a potential value of $26 trillion and the ability to create 65 million new jobs by 2030. However, women continue to face financing gaps, with women founders just receiving 6.9% of venture dollars in climate tech in Q1 2023. It is estimated that at the current trajectory, women will only hold 25% of green jobs. More intentional climate action is needed to ensure that women-led businesses lead and are at the forefront of the businesses which will be innovating and powering the green economy.
The entrepreneurial energy and spirit of women is key to transitioning to a green economy: Basima Abdulrahman, the founder and CEO of KESK in Iraq, builds affordable green energy engineering services and smart solar photovoltaic products for its customers, and has an immeasurable role in supporting the introduction and use of clean technologies to customer segments in her country. Tatiana Malvasio, Co-founder and COO of Kilimo, uses artificial intelligence (AI) to help farmers in Latin America improve their resilience by improving irrigation efficiency and optimize their crops, ultimately translating into savings on energy, fertilizer, and labor costs.
However, these women changemakers and others like them who want to start and scale their climate businesses continue to face significant challenges. Programs such as the IFC-led SheWins Climate play an important role in unlocking the innovative power of these women changemakers. With support from We-Fi, SheWins Climate aims to strengthen the entrepreneurial ecosystem to mobilize access to finance for women-led businesses in green sectors.
In the corporate sector, companies with greater gender diversity on their boards continue to demonstrate stronger performance in climate action indicators, highlighting the crucial role of women entrepreneurs in driving the transition to a greener future. A recent study found that a critical mass of 30% of women on a company’s board improved climate governance, innovation, and a lower growth rate of emissions: 0.6% compared to 3.5% for companies with no women on their board. Another study across 24 industrialized economies over the period 2009-19 found that women in managerial positions may be better suited than male managers to reducing firm CO2 emissions.
Bridging the funding gap is crucial to ensure women entrepreneurs can access the resources and support they need. Innovative approaches, using blended finance or results-based instruments, such as social impact bonds, can help catalyze climate finance and support for women-led green businesses by crowding in private capital. For example, in South Africa, the Green Outcomes Fund (GOF) was established to provide outcomes-based match funding to local investment funds to support investments into local micro, small, and medium enterprises that make a demonstrable contribution to the nation’s green economy, create enterprises, and jobs. GOF does so by incentivizing existing funds to develop new products or venture into new investment areas, as well as by creating first-time funds, which often struggle to raise funding. Innovative financing approaches need to be put in place to unlock risk capital, ensure that it is channeled to green businesses, and that it is combined with a gender lens.
Women entrepreneurs bring innovative prowess and prioritize sustainable practices, benefiting the environment, society, and their own businesses. However, limited access to finance, and gender bias pose real challenges for women in the green economy. By addressing these obstacles and promoting gender equality, women can play a pivotal role in shaping a greener and more sustainable future for all.