Celebrating Sustainable Finance and Empowering Women: A Holistic Approach to ESG
In the words of Audrey Choi , leading global sustainable finance expert and former Chief Sustainability Officer, Morgan Stanley, in her TEDx talk, declared "The Future is Already Here".
What is sustainable finance?
Sustainable finance refers to the integration of environmental, social and governance (ESG) factors into financial decision decision-making processes to promote long-term sustainable development.?
This approach considers not only financial returns but also the broader impacts of investments on society, the environment and corporate governance practices.?
Sustainable finance encompasses a range of strategies and practices, including responsible investing, impact investing, green finance, and socially responsible investing, all aimed at aligning financial activities with sustainability goals such as climate action, socal equity and ethical business practices.
To commemorate International Women’s Day today on March 8, 2024, in alignment with the theme, “Invest in Women: Accelerate Progress” focuses on addressing economic disempowerment and the campaign theme for this year is “Inspire Inclusion”.?
A recently published ?study that examined seventy-four (74) nations explored corporate environmental responsibility, which is an integral aspect of corporate social responsibility, through the lens of women's empowerment and their role in shaping eco-friendly policies found that:
“Women, especially those in underdeveloped countries, are typically the first to notice environmental problems and report them, and ecofeminism advocates more attention to their concerns (Dong & Kim, 2022). Previous research indicates that women are more capable environmental stewards in jobs and in creating green policies (Saif & Raza, 2022). Ecofeminism offers a distinct perspective on women's rights and environmental damage, arguing that women are uniquely suited to fight environmental deterioration (Barthold et al., 2022). This study's eco-feminist threshold model analysis of gender equality and financial dependence on corporate sustainability supports this conception, positing that including women's perspectives and experiences in environmental decision-making may help solve complicated environmental issues and promote sustainability.”
A number of previous studies have focused on ecofeminism and CSR; however, no direct study has investigated women's autonomy at various threshold points to support corporate environmentally friendly practices (Fatima, 2023; Ourkiya, 2023). Elmagrhi et al. (2019) examined the impact of female directors on corporate environmental performance using an extensive data set of Chinese public limited companies, determining that the proportion of female directors and their age positively impacts corporate environmental quality. Other demographic characteristics of female directors would most likely be required to investigate the impact of female directors' pro-environmental behaviour on long-term corporate growth. According to Liu (2018), women are more environmentally conscious in their professional actions, which improves corporate green image and reduces environmental violations. The role of women as stewards in cleaning the corporate environment is critical to the success of managing governance issues. Xie et al. (2020) showed that board gender diversity increases businesses' environmental responsibility and financial performance. The green measures implemented by women on boards have reduced business pollution, providing them with an edge over competitors. Burkhardt et al. (2020) demonstrated that company policies to increase female senior management enhance environmental performance. Senior female managers are more likely to develop and advocate for eco-friendly goods and use company resources wisely. In addition, women's impact in advancing eco-friendly initiatives in the corporate sector might be limited if a business has low environmental flexibility and prioritises work above greening measures.?
Audrey Choi: a case study
One notable female sustainable finance expert is Audrey Choi. Audrey Choi, the daughter of a female North Korean defector, served as the Chief Sustainability Officer and Chief Marketing Officer at Morgan Stanley, where she lead the company's global sustainability strategy and oversaw the firm's efforts to promote sustainable investing. She is widely recognized for her expertise in sustainable finance, ESG (Environmental, Social, and Governance) investing, and impact investing.?
Choi’s career has spanned the highest levels of finance, government and journalism — as a C-Suite officer of Morgan Stanley, as chief of staff of the White House’s Council of Economic Advisers and as bureau chief for The Wall Street Journal. After obtaining a Bachelor's degree in Economics and Government from Harvard University and a Master's degree in Public Policy from the Harvard Kennedy School. She was a White House Fellow, serving President Al Gore, a Fulbright Scholar and David Rockefeller Fellow. A first-generation Korean American, she is fluent in French and German.
After completing her education, Choi worked at various organizations where she gained experience in finance and social impact. One significant step in her career journey was joining Morgan Stanley, a leading global financial services firm, where she currently serves as the Chief Sustainability Officer and Chief Marketing Officer.
At Morgan Stanley, Choi has played a pivotal role in shaping the firm's approach to sustainable finance and responsible investing. She has been instrumental in developing and implementing sustainable investing initiatives, integrating ESG (Environmental, Social, and Governance) factors into investment decisions, and driving awareness about the importance of sustainability in finance.
In 2008, she pitched for the creation of the Global Sustainability Finance Group which was announced in early 2009 during the Global Financial Crisis, becoming its first CEO.
Choi's passion for sustainability and finance, combined with her expertise and leadership skills, have propelled her to become a prominent figure in the sustainable finance industry. Her career trajectory demonstrates how individuals with a strong commitment to sustainability can make a meaningful impact within the financial sector.
Additionally, Choi is a frequent speaker at conferences and events focused on sustainability and finance, contributing to the broader conversation on responsible investing and corporate sustainability. Her insights and leadership in this field make her a prominent figure in the sustainable finance community.
Audrey Choi has been involved in several projects aimed at scaling sustainable finance. Some of her notable contributions include:
1. Morgan Stanley's Sustainable Finance Initiative: As former Chief Sustainability Officer and Chief Marketing Officer at Morgan Stanley, Choi has spearheaded the firm's Sustainable Finance Initiative. This initiative focuses on integrating environmental, social, and governance (ESG) considerations into Morgan Stanley's business strategies and investment decisions. Under Choi's leadership, Morgan Stanley has developed innovative financial products and services that promote sustainable investing and support the transition to a low-carbon economy.
2. Partnership with the United Nations: Audrey Choi has been actively engaged in partnerships with the United Nations to advance sustainable finance goals. For example, Morgan Stanley has collaborated with the UN Environment Programme Finance Initiative (UNEP FI) to develop industry standards and guidelines for sustainable investing. Choi has played a key role in driving these partnerships and leveraging Morgan Stanley's resources to support global sustainability initiatives.
3. Public Advocacy and Thought Leadership: Audrey Choi is a vocal advocate for sustainable finance and regularly participates in public forums, conferences, and media appearances to promote the importance of integrating ESG factors into investment decisions. Through her thought leadership, Choi has helped raise awareness about the benefits of sustainable investing and has encouraged other financial institutions to follow suit.
4. Impact Investing: Audrey Choi has championed impact investing as a powerful tool for driving positive social and environmental change. She has been involved in launching and scaling impact investment funds at Morgan Stanley, targeting investments in areas such as renewable energy, affordable housing, and sustainable agriculture. By demonstrating the financial viability of impact investing, Choi has helped mobilize capital towards projects that generate both financial returns and positive social and environmental outcomes.
These projects showcase Audrey Choi's commitment to scaling sustainable finance and her efforts to mobilize capital towards investments that deliver long-term value for society and the planet.
Audrey hosted the Morgan Stanley podcast "At Scale".
The above episode explores the often overlooked potential of Indigenous knowledge and local expertise. Harish Hande , CEO of the SELCO Foundation, explains how listening to and collaborating with his clients in developing economies led to more effective solar energy solutions. In Alaska, Dune Lankard , Co-founder and President of The Native Conservancy, is leading a campaign to help indigenous communities build their own regenerative kelp farms and restore the marine ecosystem. In the Brazilian Amazon rainforest, Adriana Ramos works with indigenous communities to bring their traditional goods to the marketplace and stave off the pressures of deforestation and land development.
As we celebrate International Women's Day, it's an opportune time to reflect on the interconnectedness of sustainable finance, economic empowerment, and social justice. In the realm of Environmental, Social, and Governance (ESG) initiatives, these themes intersect in powerful ways, shaping the landscape of responsible investing and corporate stewardship.
Sustainable Finance: Driving Positive Change
Sustainable finance has emerged as a cornerstone of modern investment strategies, with a focus on environmental stewardship, social responsibility, and good governance. In our pursuit of a more sustainable future, integrating ESG factors into investment decisions is paramount. It not only promotes long-term value creation but also fosters positive societal and environmental impacts.
International Women's Day: Empowering Change Agents
As we celebrate International Women's Day, let's recognize the vital role of women in driving sustainable development and economic empowerment. Women-led businesses and initiatives are catalysts for positive change, championing diversity, equity, and inclusion across industries. By empowering women economically, we unlock their potential as change agents and foster more resilient and inclusive economies in order to reduce poverty and improve livelihoods.
Combatting Greenwashing and Modern Slavery
In our journey towards sustainability, we must remain vigilant against greenwashing and modern slavery in ESG projects. Greenwashing, the practice of conveying a false impression of environmental responsibility, undermines the integrity of sustainable finance. Similarly, modern slavery remains a pervasive issue in global supply chains, demanding robust due diligence and accountability measures. By prioritizing transparency, accountability, and ethical practices, we can mitigate these risks and uphold the integrity of ESG initiatives.
Take Action: Redefining ESG Practices
As professionals in the sustainable finance space, we have a collective responsibility to drive meaningful change. Here are a few actionable steps we can take to advance sustainable finance and combat greenwashing and modern slavery:
1. Educate Ourselves: Stay informed about ESG best practices, emerging trends, and regulatory developments to make informed investment decisions.
2. Engage Stakeholders: Foster dialogue and collaboration with stakeholders to promote transparency, accountability, and ethical standards in ESG projects.
3. Support Women Entrepreneurs: Invest in women-led businesses and initiatives that prioritize sustainability, diversity, and social impact.
4. Advocate for Change: Advocate for stronger regulations, industry standards, and reporting requirements to combat greenwashing and modern slavery.
The intersection between addressing economic disempowerment and sustainable finance can be explored through:
In addition ,key economic initiatives in sustainable finance industry include:
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Women-led initiatives can address economic empowerment in micro, small and medium-sized enterprises (MSMESs) through various strategies:
Zhang et al. (2022) gathered firm-level data from small and medium-sized enterprises (SMEs) across 39 countries to assess the influence of environmental assurance on financial development, considering firms' gender composition, revealing a positive correlation between ecological assurance and financial accessibility. Notably, while firms' gender composition appears to shape leadership characteristics, with female leadership exhibiting significant traits, despite these qualities, female ownership does not appear to significantly impact financial accessibility in the presence of environmental assurance. This indicates that enhancing financial accessibility with a gender-oriented approach could be a crucial step towards advancing environmental assurance. Zhang (2023) expanded this research by collecting a substantial sample of 7870 privately owned firms from 28 countries to compare instances of green washing between female-led and male-led firms. Surprisingly, the findings revealed that female-managed firms are not inherently less likely to engage in green washing practices. Wang et al. (2022) used data from 2010 to 2020 to examine a sample of Chinese-listed businesses, investigating how stakeholder orientation may mediate the relationship between women on boards and environmental innovation. The findings revealed that women on boards may improve environmental innovation by focusing on stakeholders, which highlights the mediating role of stakeholder orientation in how women on boards affect environmental innovation. Espinosa-Méndez and Inostroza Correa's (2022) study examined whether the gender of a company's CEO influenced SMEs' financial success in Chile; a rising South American economy. Using multiple regression models to examine 188 SMEs in 2017, the authors demonstrated that female CEOs boost company performance, asserting that policymakers and stakeholders seeking to encourage women in corporate leadership should consider these conclusions. Lari et al. (2022) investigated Qatari women's political and economic power struggles due to social and cultural barriers. Linking patriarchal cultural beliefs to personal traits, the authors highlighted the necessity of interventions and constructive actions to promote gender equality and women in leadership positions.
Here are a few successful case studies of economic empowerment of women through sustainable finance initiatives:
Founded by Nobel laureate Muhammad Yunus, Grameen Bank pioneered microfinance and has empowered millions of women in Bangladesh by providing them with access to small loans for starting and growing their businesses. The bank's model of group lending and social collateral has been widely replicated globally, leading to significant improvements in women's economic status and social empowerment.
Launched in 2008, this initiative provides women entrepreneurs from around the world with access to business education, mentoring, and networking opportunities. Through partnerships with local universities and business schools, the program has supported thousands of women-owned businesses, helping them to create jobs, increase revenues, and contribute to economic growth in their communities.
3. Women's World Banking (WWB)
WWB is a global network of microfinance institutions that focuses on serving women entrepreneurs in underserved markets. By providing financial services tailored to women's needs, such as savings accounts, loans, and insurance products, WWB has empowered millions of women to build assets, increase household incomes, and improve their families' well-being.
4. IFC Banking on Women Program
The International Finance Corporation (IFC), a member of the World Bank Group, launched the Banking on Women program to support financial institutions in developing countries to better serve women entrepreneurs. Through capacity building, technical assistance, and investment, the program has helped financial institutions to design and implement gender-responsive products and services, resulting in increased access to finance for women-owned businesses.
IFC’s?Banking on Women?business has helped catalyze sustainable financial services for women and women-owned SMEs in emerging markets globally including through the landmark?Women Entrepreneurs Bond?with Bank of Ayudhya in Thailand; through advisory services collaboration with partners such as?Ghazanfar Bank?in Afghanistan and?Stanbic Bank?in Kenya; and through investing in partners in Brazil such as?Banco Santander,?Itau Unibanco, and?Banco Daycoval.
Gender-focused and climate finance solutions are at the top of IFC’s private sector development priorities. This year, IFC focused on abating the negative impacts of COVID-19 for companies, communities, and countries through initiatives like the?WCS COVID-19 Facility,?the?BOW-Global Trade Finance Initiative, and the?Base of the Pyramid Facility. Next year, IFC will continue expanding gender-lens approaches into its business areas, including MSME finance, climate finance, fintech and digital finance, housing and asset finance, insurance, trade finance, and capital markets through Gender Bond instruments.
5. Root Capital
Root Capital is a nonprofit social investment fund that provides financing and advisory services to small and growing agricultural businesses in developing countries. A significant portion of Root Capital's clients are women-led agricultural enterprises. By investing in these businesses, Root Capital has helped women farmers access markets, improve productivity, and strengthen their businesses' resilience to climate change and other challenges.
These case studies demonstrate the transformative impact of sustainable finance initiatives in empowering women economically, driving entrepreneurship, and fostering inclusive economic growth.
How to discuss economic empowerment of women within your family
Here are some ways to approach it today:
1. Share Information: Start by sharing information about the importance of economic empowerment for women, including its benefits for individuals, families, and communities. You can discuss how women's financial independence can lead to greater autonomy, decision-making power, and overall well-being.
2. Highlight Role Models: Share stories of successful women entrepreneurs, leaders, and professionals who have achieved economic empowerment. Highlighting these role models can inspire family members, especially young girls, to pursue their own economic goals and aspirations.
3. Encourage Education and Skills Development: Emphasize the value of education and skills development, particularly in fields that are traditionally male-dominated or offer higher earning potential. Encourage family members to pursue further education, training, or professional development opportunities to enhance their career prospects and earning potential.
4. Promote Financial Literacy: Discuss basic financial concepts, such as budgeting, saving, investing, and managing debt, with family members of all ages. Encourage open dialogue about money matters and provide guidance on how to make informed financial decisions that contribute to long-term economic empowerment.
5. Support Entrepreneurship: Encourage entrepreneurship within the family by discussing business ideas, sharing resources and networks, and providing encouragement and support to family members who are interested in starting their own businesses or pursuing entrepreneurial ventures.
6. Challenge Gender Stereotypes: Address gender stereotypes and biases within the family by promoting equality and fairness in all aspects of life, including education, career opportunities, and household responsibilities. Encourage family members to challenge traditional gender roles and expectations and to support each other in pursuing their economic goals and aspirations.
Gender stereotypes in sustainable finance can manifest in various ways, including:
1. Leadership Positions: There may be stereotypes that leadership positions within sustainable finance are more suitable for men, leading to underrepresentation of women in senior roles such as fund managers, executives, and board members.
2. Investment Preferences: Gender stereotypes can influence perceptions of risk and return, with women often perceived as more risk-averse investors. This can lead to biases in investment decisions, where women-led initiatives or projects addressing gender-related issues may be undervalued or overlooked.
3. Access to Capital: Women entrepreneurs and businesses led by women may face challenges in accessing capital, as stereotypes about women's financial literacy, business acumen, and leadership abilities can contribute to bias in lending and investment decisions.
4. Industry Focus: There may be stereotypes about the types of industries or sectors that are seen as more suitable for women's involvement in sustainable finance. For example, women may be disproportionately represented in sectors such as social impact investing or microfinance, while industries like renewable energy or technology are perceived as male-dominated.
5. Networking and Opportunities: Gender stereotypes can affect networking opportunities and access to professional development initiatives within sustainable finance. Women may encounter barriers to networking or mentorship opportunities, which can impact their career advancement and visibility within the industry.
6. Work-Life Balance: Stereotypes about gender roles and caregiving responsibilities can influence perceptions of women's commitment to their careers in sustainable finance. This can lead to biases in hiring, promotion, and retention practices, with women facing pressure to prioritize family responsibilities over professional advancement.
Addressing gender stereotypes in sustainable finance requires proactive efforts to promote diversity, equity, and inclusion within the industry. This includes challenging biases, promoting women's leadership and representation, fostering inclusive work environments, and implementing policies and practices that support gender equality and women's empowerment at all levels of the sector.
7. Lead by Example: Set a positive example of economic empowerment by demonstrating financial independence, responsibility, and resilience. Show how you prioritize financial planning, career advancement, and personal development, and encourage family members to do the same.
By initiating conversations about economic empowerment within your family and fostering a supportive and inclusive environment, you can help empower women and girls to achieve their full potential and contribute to a more equitable and prosperous future for everyone.
Let's harness the power of sustainable finance to create a more equitable, resilient, and sustainable future for all.
As you discuss and provoke questions today within your circles and communities, discuss how you can prevent greenwashing and modern slavery in your own teams and operations to maximise profitability and increase your social impact.?
Happy International Women's Day!
Sofia Ramoi
Director
SR Curio