Understanding Challenges of Gender-Based Financial Products

Before taking up on this project, I have never worked on any professional programs with a gender lense. As an individual with experience in Economics and Finance, most of my academic and working experiences focus on achieving a higher efficiency in allocating assets or even just seeking profit-driven opportunities. As a female professional, I echoed deeply with girls who are deprived of educational opportunities, women who stuck in the domestic violence, or female employees who face workspace discrimination or sexual harassment, but I have never thought that the issue can be improved from a finance, or more specifically, issuer perspective.

I got amazed when I was preparing for our first client call: there already exit tons of financial products with a gender focus. On the equity side, we have Global Gender Equality UCITS ETF, Impact Shares YWCA Women’s Empowerment ETF (WOMN), while on the debt side, QBE Insurance Group “Gender Equality Bond”, World Bank’s sustainable development bond, IIX Women’s Livelihood Bond and Banco Davivienda SA’s Gender-focused Social Bond are all great examples revealing the efforts to gender equality in a financial product perspective. 

However, the size and influence of gender-based financial products is not even comparable to the climate market. The reasons behind are multi-layered but ultimately they are all linked to the difficulty in quantifying the return of any gender based projects. Similar to “E” as almost the only effective factor in most of the corporate ESG initiative, environment seems to be source of the most creative financial products, while gender, also important as a social factor, has constantly been ignored.

During the call with the client, we are connected with both the excitement and the frustration in the area. The client points out that gender-based products face different, if not more, challenges than the environment ones. Since we all share the same globe, benefits brought by climate capital injection in the developed world can naturally be shared with all human kind, but if we want to solve gender problems, we have to pay attention to the financial products in the developing world because that is where the gender issues become most severe. A relatively low credit rating in the developing world naturally leads to expectation of a higher yield; exchange rate risk in emerging market can lead to tons of uncertainty in the packaging of financial products; gender topics are still taboo in a lot of developing nations; finally, how to scale up the gender financial market can be a true bottleneck.

Our first step aims at using a cost saving, or the reduction of negative externality, perspective to quantify the benefit of female empowerment. For example, with a long term view, investing today’s female participation in the workforce can lead to the social cost reduction in intervening gender-based domestic violence. We can also seek guarantees from multilaterals to solve the credit risk issue. In general, everyone is researching and exploring the area in the same time. Hopefully, our final report can be a pioneer guidebook for gender-based financial products with overview of what we already have and prospective useful toolkits in the future.