Harnessing Gender Lens Investments for Sustainable Influence and Inclusive Finance

Authors: Joana Silva Afonso – Gabriela Erice García.

On Could fifteenth, e-MFP joined forces with FinEquity and held a webinar on how you can operationalise Gender Lens Funding (GLI) approaches in inclusive finance aiming to have interaction traders and monetary companies suppliers (FSPs) within the quest for a extra equal society. The session was moderated by FinEquity’s Nisha Singh and counted with contributions by Christina (CJ) Juhasz, Chief Funding Officer and Managing Accomplice of Ladies’s World Banking Asset Administration (WAM) and Veronika Giusti Keller, Head of Influence Administration at BlueOrchard Finance. Through the webinar, Juana Ramírez, a marketing consultant member of e-MFP, introduced a brand new e-MFP initiative, the Gender Lens Investing Motion Group[1]. On this weblog, we share the important thing messages from the session and the decision to observe and be a part of the actions of the brand new e-MFP GLI Motion Group.

The emergence of Gender Lens Funding (GLI), a class of funding that recognises gender-based disparities and directs capital to handle them, is a crucial and welcome development – investing in girls is a great monetary choice that has potential spillover advantages to the family. Regardless of the rising proof on the enterprise case of investing in girls, gender gaps persist, and it may take a projected 135.6 years to realize full gender fairness[2]. Traditionally, the monetary inclusion sector is well-known for serving girls. Nonetheless, what’s now clear is that the purpose of inclusion should transcend simply entry and focus extra on utilization and advantages for ladies in order that they are often socially and economically empowered.

WAM and BlueOrchard are affect traders which are pioneers within the gender lens funding house. All through the webinar dialogue, CJ and Veronika shared the methods, instruments and options that, as fairness and debt traders, respectively, they’ve developed to meaningfully operationalise GLI inside their funding processes, and tackle the challenges to make sure that their investments create constructive change.

In June 2023, BlueOrchard launched a brand new GLI funding technique, with the mission of advancing financial and social resilience of weak populations, notably girls, indigenous teams and different underserved teams in Latin America and the Caribbean. This technique stands on 3 pillars:

1. Investments in FSPs providing gender, variety and inclusion (GDI) services and products: to make sure elevated availability of merchandise for ladies that tackle their particular wants;

2. GDI efficiency on the goal investees: the main target is on the FSPs themselves and their very own position in selling gender, variety and inclusion practices; and

3. GDI knowledge and reporting: to enhance the general knowledge availability and reporting capability to raised perceive the GDI wants and improve the event and implementation of GDI merchandise.

The brand new GLI technique makes use of an modern blended financing strategy, with funds from private and non-private traders permitting for various layers of threat and return. Along with financing, the technique additionally features a technical help facility.

The targets of the technique are applied utilizing BlueOrchard’s B.ImpactTM Framework, which is complemented by a gender score device that permits them to evaluate and observe investees’ efficiency on the three pillars of the affect technique. Based mostly on B.Influence, BlueOrchard tracks the FSPs’ GDI efficiency, and assesses how they’re evolving on their journey from no gender lens in the direction of a gender sensible establishment.

Ladies’s World Banking established WAM and launched its first fund in 2012, following the outcomes of a examine that confirmed that when MFIs reworked into for-profit establishments, there was a 20% drop in girls being served within the first years after transformation.

WAM has developed its Gender Lens Investor toolbox to use GLI all through the entire investing course of:

1. Figuring out funding alternatives, together with standards akin to gender variety throughout the establishment, girls owned/led enterprise served or the availability of services and products that empower girls to make sure investing in FSPs which have the capability to serve girls with significant companies and create jobs;

2. Finishing up the due diligence and documentation processes, checking ‘the place’ are the ladies throughout the FSP (from discipline employees to the unbiased board) and amongst its girls prospects (i.e: are girls largely receiving group loans, smaller loans or have they got equal entry to SME and extra significant loans), in addition to together with gender commitments within the shareholders settlement akin to establishing gender targets, gender reporting together with gender disaggregated knowledge, taking part in gender research and creating  gender plans;

3. Monitoring and reporting actions together with gender disaggregated knowledge, with administration and board being knowledgeable of those knowledge and understanding its implications, and when planning to exit an funding, enquiring concerning the gender insurance policies of the consumers.

Accountability, which on this sense means with the ability to attribute obligations and having mechanisms in place to trace efficiency, is essential to attaining gender objectives. Fairness traders like WAM can embody gender clauses of their shareholder agreements and are a part of the strategic conversations and choices taken by their investees. CJ highlighted that, whereas difficult, it is very important create penalties and rewards, together with administration KPIs and incentives akin to inventory choice programmes or bonus (if doable) in addition to vesting on a efficiency foundation. In contrast, for debt traders akin to BlueOrchard, the primary accountability device is the engagement letters. Veronika identified how these engagement letters permit for vital conversations with their investees and to obviously outline what are BlueOrchard’s affect expectations and the FSP’s commitments. They embody targets for every of the GDI technique pillars and they are often adopted by an Motion Plan or by ‘finest intention’ commitments.

On accountability within the implementation of gender motion plans, CJ burdened that challenges may be exterior. Even when investees see the worth of hiring extra girls, cultural obstacles, security issues and different wants and preferences must be considered. Nonetheless, the price related to market analysis to determine these and determine the alternatives to rent girls employees is commonly excessive, and TA is due to this fact crucial, CJ and Veronika agreed. For Blue Orchard, it can be crucial that the investee has ‘pores and skin within the recreation’ and so the prices of TA are normally shared to be sure that the associate additionally has curiosity in being profitable.

The opposite ever-present problem pertains to assortment and use of gender disaggregated knowledge. Each CJ and Veronika highlighted that amassing this knowledge isn’t ‘rocket science’ and infrequently no new parameters are wanted – the establishment can use its present MIS. Complexity shouldn’t at all times be used as an excuse – generally it’s only a matter of together with a discipline for gender within the sign-up type template or gender disaggregating metrics for knowledge already being collected.

Nonetheless, the method may be extra sophisticated if traders are working with intermediaries or companions who aren’t amassing this knowledge, or when there may be intersectionality between completely different knowledge (i.e.: girls who’re additionally members of different minority teams), or when definitions aren’t clear or shared. Veronika pointed to the definition of ladies SMEs, for which BlueOrchard makes use of the 2X definition, which could not be aligned with the definition used of their companions’ MIS. Trying on the challenges related to knowledge, it’s  essential to make sure that knowledge and reporting necessities aren’t too burdensome for the investee, and to seek out the steadiness between displaying affect and sustaining the enterprise case.

The expertise of WAM and BlueOrchard underlines key parts for operationalizing GLI in monetary inclusion:

1. Be sure that the investees have a sustainability dedication that makes enterprise sense;

2. Arrange upfront the investor expectations and agree on what’s achievable – knowledge wants and requests should be mentioned and agreed through the funding transaction documentation course of, that is the second when administration can push again, and sincere conversations can happen;

3. Empathise with the investee (who already has vital knowledge necessities to adjust to laws) and ask for the related knowledge, which can really be used, and to the extent doable, outline and standardise knowledge necessities and KPIs;

4. Embody knowledge necessities within the covenants agreements to make sure accountability;

5. Use sampling and assumptions when knowledge isn’t out there;

6. Reap the benefits of TA to rent exterior consultants to conduct affect surveys with finish shoppers; and what’s already in place (and generally offering assist to ease a few of the knowledge assortment and reporting burdens) are place to begin.

There’s a enterprise case for GLI and there are answers (even when not at all times simple) to the primary challenges traders and FSPs encounter of their path to gender fairness.The e-MFP GLI Motion Group will facilitate a studying and collaborative house to determine finest practices, advance GLI and collectively enhance affect administration and measurement methods to make sure they’re inclusive and gender balanced. As a primary step, the AG will map the experience of e-MFP members and companions lively in gender finance to determine frameworks, merchandise and instruments, in addition to wants and challenges.

The authors thank Christina (CJ) Juhasz, Veronika Giusti Keller, Juana Ramírez and Nisha Singh for his or her feedback and contributions to the weblog.

[1] Motion Teams (AGs) are a possibility for e-MFP members to affix forces on particular tasks or actions on widespread areas of curiosity offering a novel cross-sector discussion board that allows constructive dialogue and cooperation.

[2] World Financial Discussion board World Gender Hole Index report, 2022.

Joana Silva Afonso is Monetary Inclusion Specialist at e-MFP, overseeing coordination and outputs of e-MFP Motion Teams, being a part of the content material workforce organising the European Microfinance Week and the European Microfinance Award, and overseeing coordination of the European Analysis Convention on Microfinance.  Since 2023, she is a Board member of the Social Efficiency Job Drive (SPTF). Earlier than becoming a member of e-MFP, Joana was an instructional researcher in the UK and Belgium. Her analysis centered on analysis methodologies in microfinance and consumer safety. She holds a PhD in Economics and Finance from the College of Portsmouth, UK and a masters in microfinance (European Microfinance Programme) from the Université Libre de Bruxelles, Belgium. Joana started her microfinance profession as a credit score officer on the NGO ANDC in Portugal.

Gabriela Erice García is Community Improvement Coordinator at e-MFP, the place she is answerable for managing the connection with members and companions, increasing the community outreach and fundraising. Previous to this place, she was Senior Microfinance Officer and was answerable for managing the European Microfinance Award and coordinating the European Microfinance Week programme. Gabriela joined e-MFP in 2013; beforehand, she labored on the Colombian microfinance financial institution Bancamia, the European Parliament in Brussels and the Workplace for Financial and Business Affairs of the Spanish Embassy in Belgium. She has a level in Enterprise Administration, a Grasp in Worldwide Enterprise Administration and a Grasp in Microfinance and Improvement.