Unleashing the power of gender-smart climate investing in developed markets

by John Stapel

When many investors — especially those with a focus on impact, equity and resilience — think about the opportunity to invest with a dual climate and gender lens, their starting point is emerging markets. That’s largely due to the greater amount of storytelling that has been done about the opportunities for growth and impact in this context.

But gender can be a source of rich market opportunity and impact in developed markets such as North America, Europe, Japan and South Korea, and Australia and New Zealand, too. That could mean investing in female innovators and entrepreneurs that other investors are missing due to narrow networks or implicit bias; working with investee companies to make sure products, teams and supply chains reflect the full communities they serve; or leveraging gender and other forms of diversity as a way to deepen environmental and social impact.

What’s more, these economies’ wealth, technology capacity, consumer power and global influence can make this context particularly powerful when it comes to scaling solutions, reaching new markets and creating economic, climate and societal impact that goes beyond the initial investment itself.

GenderSmart and Kite Insights recently published a new report looking at the opportunity to invest with a dual climate and gender focus in more developed economies. The report highlights funds, businesses and accelerators approaching climate and gender from a variety of examples, showing a wealth of exciting opportunities for savvy investors.

A growing field

There is no one size fits all way to combine climate and gender in your investments, with funds and companies working at the intersection taking a variety of  approaches to the two themes.

Envisioning Climate Solutions Fund, a climate tech private market fund managed by Seoul-based Envisioning Partners, is committed to making at least 30 percent of its investments in women-led or women-run businesses. Swiss-based impact investing firm Chi Impact Capital, which invests in companies aiming to solve burning environmental and social issues, doesn’t have an explicit gender target but uses its power as an investor to work with companies to become more gender balanced over time — believing that the pursuit of equity actually enhances economic profitability.

At their best, these funds and companies aren’t just looking at women in ownership and leadership. They’re also looking at talent, value chains, policies and product development, all in a climate-smart context.

Madison Park Development Corporation, a woman-run community development corporation that develops affordable low-income housing for low- and moderate-income families in Boston, builds sustainability into its projects. The units are energy-efficient, situated close to public infrastructure such as playgrounds, schools and transit, and have central heating and cooling to address residents’ needs in increasingly extreme climate conditions (and an amenity which is often not available in low-income housing). While there is no explicit gender-lens criteria for selecting applicants, criteria include single-parent households and families leaving domestic violence situations.

The report also highlights several female entrepreneurs working on innovative, scalable climate solutions. These include Mango Materials, which turns methane, an otherwise pollutant gas, into sustainable plastic and polyester alternatives; Re-Nuble, which harvests food waste locally and turns it into commercial-grade synthetic fertilizer for the indoor farming industry; and Shiok Meats, which grows slaughter-free, cell-based seafood that provides an alternative to conventional seafood farming.

The gender taboo

One challenge that was mentioned repeatedly amongst funds we spoke to was the resistance to directly addressing gender equality in developed markets — either in discussions with investors or in the positioning of the fund itself.

Representatives from Envisioning Partners noted that it was difficult to convince investors in developed markets that women are still in less privileged positions, while those from Chi Impact Capital noted the challenge of discussing gender impact and integration with all-male teams. It was easier to convince founders of the value of being climate-smart than of being gender-smart, the Chi team noted.

Envisioning Partners had previously had a separate sub-fund which invested solely in women-owned companies but had struggled to get limited partners to invest: The fund was viewed as too restrictive and was seen as tokenistic by both investors and entrepreneurs. The firm has since evolved to apply a gender lens across all its work.

Investor power

Both funds and founders talked about the positive influence investors can have on portfolio companies’ commitment to gender equality.

Re-Nuble is a woman-of-color-founded company with a gender-balanced team (roughly 55 percent men and 45 percent women), but founder Tinia Pina spoke to us about the importance of its investors’ focus on gender and race for maintaining a diverse team. "Knowing that those investors have due diligence looking for [gender and racial equity], we need to be consistent in knowing that we hire with those lenses," she said. Re-Nuble viewed these requirements as an opportunity to grow its talent pipeline, rather than a compliance burden.

From the investor side, the team from Chi Impact Capital spoke about the power that even minority investors can have in shaping a portfolio company’s impact. Because most companies Chi invests in have impact ingrained in their business models, it is open-minded and enthusiastic about enhancing its position as pioneers on both gender and climate indicators.

The time is now

At their best, these funds and companies aren’t just looking at women in ownership and leadership. They’re also looking at talent, value chains, policies and product development, all in a climate-smart context.

Whether you lead with climate or lead with gender, the opportunities to invest with an eye to both abound, and the examples in our report represent only a fraction of those we could have talked about. (For more examples, see our previous report about integrating climate and gender in investment portfolios, published in 2021.)

If you’re investing in these contexts and are looking for opportunities, not only are there investors who are already moving their capital in this way, but there are also really good tools and frameworks to help you identify and analyze these investment opportunities. And given the disproportionate amount of capital flowing in more developed economies, and the urgency of climate adaptation and resilience, the time to move your money in this direction is now.