Seeking a Just, Gender-Conscious Climate Transition

The net-zero transition will struggle to move ahead if it’s not gender-conscious and doesn’t meet the needs of entire communities across Latin America and the Caribbean.

Image of a black women working at her office

In response to the climate crisis, the world is embarking on the transition to net-zero emissions. This must be a just transition, fair to all, and inclusive to women.

More than a change of focus is needed, since it’s not just an energy transition towards a low-carbon economy, but more broadly a transition away from extractive and resource-depleting patterns towards regenerative ones.

Broad considerations of justice and social equity must be paramount in this process. At its core, the underlying principles of the Agenda 2030 - universality, interlinkages and leaving no one behind – take hold. There will be no sustainable transition if the transition isn’t fair.

Business and financial players are expected to take rapid climate action, while addressing physical and transition risks on communities, employees and suppliers, especially those facing systemic inequities. Not just from a perspective of avoiding or mitigating negative impacts, but rather imagining and creating ways to foster decent work and livelihoods, enable our communities to flourish and build strong and resilient economies.

This question is typically and mistakenly addressed first from an environmental lens and, in the second instance, by looking at opportunities for inclusion, or minimizing exclusion.

That’s why the combination of climate action and just transition needs to be turned on its head: the net-zero transition will struggle to move ahead if it isn’t in the first instance owned and meets the needs of entire communities.

Women play a significant role in climate action.

It is estimated that 58 million women live in rural areas, of Latin America and the Caribbean (LAC) and of these around 24 million belong to indigenous communities. These women play an important role in addressing climate change, in adaptation efforts, in food security among others; however, they are also the most marginalized and vulnerable to the effects of climate change, as well as – very often – those with the highest share of informal jobs.

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Across the region, there are approximately 1.2-1.4 million women-owned/led SMEs (WSMEs), representing about 40% of SMEs. Yet the majority of these, report being underserved or unserved of financial services; this, coupled with capacity challenges, prevents them from taking climate action and investing in relevant technology. 

We must help Small and Medium Enterprises (SMEs), the biggest employer in the region, at the heart of where climate and development intersect. They form the backbone of the region’s economy and play an integral role in the region’s value chains.   

Individually, SMEs environmental footprint is small, but in aggregate they account for much of not most emissions, given their combined size.  In the race to net-zero, the risk of exclusion of SMEs from value chains is real, which could result in deteriorated livelihoods, ecosystems, and a diminished license for business to operate.

Today, women represent around 60% of university graduates in LAC. Yet, they continue to be underrepresented in the labor force, in leadership positions, and when it comes to income distribution. 

There’s upside too, since the transition to a net-zero emission economy could create 15 million net new jobs in the region by 2030; yet those jobs will be created in sector that have traditionally been male-dominated.

What this means is that, at a foundational level, business has the role and responsibility to understand, protect and promote women’s rights. Women can be powerful allies to a just transition, and businesses should embrace this allyship with ambition. There are steps than can be taken.

First, fast-track the participation of women in business decision making, be it on how business pivot to greener models, how it embraces technology or how it reaches new markets. Recent studies by MSCI and Arabesque have shown a correlation between the number of women on corporate boards and better delivery on climate action.

Second, let’s proactively make sure that men and women in the workforce can equally share the economic benefit from reskilling, upskilling, and accessing decent low-carbon job opportunities. At IDB Invest’s work with Honduras’ Elcatex is a good example of this.

Third, adopt an inclusive lens when addressing emissions and sustainability along the value chain. Ensure that SMEs, including those led or owned by women, as well as the likes of small-holder farmers are given the tools, incentives, climate-smart technologies and capacities to improve their sustainability, enhance productivity and remain part of value chains. Adaptation efforts are of particular importance in agricultural value chains, as our recent advisory work with Mexico’s Naturasol shows.

Finally, ensure that women have access to finance, particularly sustainable finance. In practice, this takes many shapes and forms, but at its core it needs intentionality and prioritization: by making funding available to women entrepreneurs and offering services that address their needs, financial institutions can play a key role in the success of women-led MSMEs and drive sustainable economic growth through reducing inequalities.

A concrete opportunity for corporate actors lies in sustainable financial instruments; hold yourself accountable to a just transition, by making sure social/just transition indicators come hand in hand with green ones in your sustainable bonds or loan frameworks.

Embedding gender considerations into climate action and climate investment decisions can not only mitigate the disproportionate impact of climate change on women, but can also empower women as change-makers in the net zero transition. 

Authors

Paula Peláez

Paula Peláez is the head of SMEs (small and medium-sized enterprises) and sustainable businesses at IDB Invest. She has been head of Business Call

Agribusiness

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