Co-author: Ayesha Bery
4 min read
Advancing gender equality is key to achieving the Sustainable Development Goals (SDGs). To improve women and girls’ access to, and control over, resources and capital, money must move towards projects that integrate gender comprehensively – from design to delivery and assessment.
Recently, Convergence published a blog series on gender in blended finance to cover how gender is being assessed in blended finance, how to accelerate gender-related transactions, and which investors have been exemplary in integrating gender in their investment decisions. Here are key insights from each article presented in the series:
Assessing Gender Lens Investing in Blended Finance
Based on Convergence’s database of over 530 blended finance transactions, blended finance has been effective in mobilizing additional private financing for gender-related projects, with transactions aligned to SDG 5 representing an aggregate volume of over USD 15 billion. Based on materials in the public domain, 24% of the historical blended finance transactions to date reflect a gender focus. The remaining 76% do not mention gender, women, or girls.
Now more than ever, development practitioners ought to seriously consider gender in project design, and substantively demonstrate how gender is being integrated to advance inclusive and sustainable change. Deal sponsors who do not prioritize gender within their investment strategy will find themselves at a disadvantage in competing for capital. This applies particularly to deal sponsors fundraising for a blended structure, where the support of catalytic, impact-driven funders is critical in attracting more traditional commercial investors.
Advancing Gender Equality through the Indo-Pacific Design Funding Window
Based on Convergence’s database, most of the historical gender-related transactions (closed transactions as of 2019) in the Indo-Pacific region have focused on microfinance, energy and infrastructure, with Cambodia, Philippines and Indonesia being the most frequently targeted countries. While the public sector has emerged as a key financier of blended finance transactions in this region, Convergence identified an opportunity to drive additional private sector investment in this space.
Earlier this year, Convergence expanded the focus areas of the Indo-Pacific Design Funding Window to include gender equality, in addition to resilient and sustainable infrastructure to accelerate the number of bankable transactions in this region. Development practitioners in the Indo-Pacific region who are interested in design funding can explore these key questions to determine the robustness of their proposal as it relates to integrating a gender lens.
Through this Window, Convergence recently awarded Allotrope Partners design stage funding. This window is currently not accepting applications.
Incorporating gender into an investment strategy and decision-making can be challenging, given the lack of resources and standardization. The good news is that gender lens investing is on the rise, and in the past few months, new reports and guidance notes have emerged to encourage institutions to better integrate gender in their investment decisions.
Take “Investing with an LGBTQI lens: Rethinking Gender Analysis Across Investment Fields” for example. Authored by Criterion Institute and supported by Dreilinden gGmbH, this new report argues that investment can be a tool to address inequities faced by lesbian, gay, bisexual, transgender, queer, and intersex (LGBTQI) individuals. It outlines how to engage with managers and advisors to shape their practices and shift power dynamics in the transaction structure and terms. The report notes that adding questions about diversity, equity, and inclusion into due diligence processes “not only removes biases from the investment process and helps to unearth hidden opportunities, but also signals to existing and potential portfolio companies that these issues are important to asset holders.”
Although the market for non-binary investment strategies is still nascent, this report, and others summarized in the blog, will contribute to its growth.
Top investors in gender-related blended finance deals
Based on a review of over 1,000 individual gender-related blended finance investments, public sector entities, including development finance institutions (DFIs), multilateral development banks (MDBs) and development agencies, are the most active in applying a gender lens to their blended finance transactions. They account for 44% of financial commitments in Convergence’s database. Private investors have also shown a healthy appetite for gender-related blended finance transactions, accounting for nearly 40% of financial commitments, with impact investors playing a particularly active role. USAID ranks top in our league table of organizations in gender-related transactions, closely followed by partners of the 2X Challenge.
Investors are advancing on two fronts: tackling internal gender inequalities and adopting gender lens investment strategies. Both processes are crucial to advance gender equality and need to progress simultaneously. Since gender lens investment evidentially yields both financial and social returns, we expect more investors – whether public or private – to strengthen their commitments to gender equality. Learn who are the investors and organisations who are paving the way in gender lens investing.
Convergence is the global network for blended finance, and generates blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. If you want to learn more about gender in blended finance, visit the Convergence Resource Library to explore gender related publications. Connect with Convergence to share how you are integrating a gender lens into your institution’s investment strategy.