Innovative Gender Bond Series Uplifts Rural Women to Drive Climate Action in Asia

Credit: Impact Investment Exchange (IIX)

By Christina Margaret Morrison and Natasha Garcha
BANGKOK, Thailand, Nov 22 2023 (IPS)

Rural women across Asia play a key role producing, processing, and trading agricultural products, and are often the primary users and managers of natural resources.

Despite this, discriminatory practices and stereotypes all too often limit their access to the technologies, information and economic opportunities needed to build resilience against environmental shocks and increase their incomes.

While women farmers are disproportionately affected by the adverse impacts of climate change compared with their male counterparts, they are also uniquely placed to promote meaningful change.

Research shows that if all women smallholder farmers received equal access to productive resources, their farm yields would rise by 20 to 30 per cent, and 100 to 150 million people would no longer go hungry.

Moreover, it is estimated that by improving the productivity of women smallholder farmers, we could reduce carbon emissions by up to 2 billion tons by 2050.

To unlock this potential, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the United Nations Capital Development Fund (UNCDF) partnered with Impact Investment Exchange (IIX) to support rural women entrepreneurs across the region to access affordable and well-regulated financial services through the IIX Women’s Livelihood BondTM (WLB™) Series.

The WLB™ Series, which was the world’s first gender-lens investing instrument listed on a stock exchange, is structured as a set of innovative debt securities that mobilize private capital to invest in a multi-country, multi-sector portfolio of women-focused enterprises that balances risk, return, and impact.

Growing substantially since its first issuance in 2017, the Series so far has impacted 1,300,000 women and girls across Asia and Africa and US$128 million has been mobilized.

Gender bonds such as the WLB™ Series have emerged in response to the growing movement to leverage innovative sources of public and private finance to tackle complex social challenges, providing a source of capital for projects and activities that yield positive social and environmental impacts, mitigate risk, as well as maximizing financial returns.

Through the WLB™ Series, IIX has been able to transform the financial system so that women, the environment, and underserved communities are given a value and a voice in the global market.

While most gender bonds focus on just the microfinance sector, the WLB™ Series recognises the role of in driving solutions to climate change, and achieving multiple crosscutting SDGs. In IIX’s most recent issuance, the US$50 million WLB5, the portfolio featured six different sectors, including clean energy and sustainable agriculture, among others.

Cambodian farmer and single mother of four, Lian, has been supplying rice to a WLB™ portfolio company for the past 6 years, through which she has benefited from access to training on sustainable agriculture, and low-cost organic fertilizers and seedlings.

To date, she has attended more than ten training programmes organized by the portfolio company on preparing soil and fertilizers for farming, plantation techniques and safe use of fertilizers. Previously, she only produced rice, but thanks to the training, she has been able to diversify her crops.

Equipped with advanced farming techniques, Lian has been able to increase her annual rice production by 83 per cent, and her annual income has increased by 70 per cent. With a stable income of US$2,939, Lian can now finance the education of her children, manage her household expenses without hardship, and feels empowered to make decisions for herself and her family.

Similarly, Chhorn has been supplying rice to a WLB™ portfolio company in Cambodia since 2016. Working with the borrower has enabled her to improve her crop yield and has integrated her into a formal agricultural supply chain.

Since attending trainings on sustainable rice production methods and organic fertilizers, her annual rice production has increased by 67 per cent. With her increased income, Chhorn has invested in more land for farming, increased rice production and generated further income increases.

Moreover, she has been able to renovate her home, buy a motorbike for her family, build savings, and support her children’s education.

Chhorn also experienced the health benefits of learning safe practices for using fertilizers. “My husband is also a farmer. Previously, we both used to feel allergic reactions and skin irritations from fertilizers. However, after attending the training on the safe use of fertilizers, we are better equipped to handle fertilizers, and now we do not face those health complications from fertilizer usage,” she explained.

Lien and Chhorn are among 639,887 women who have received loans through the IIX WLB™ Series. With support from ESCAP and UNCDF, the WLB2 and WLB3 raised US$12 million and US$27.7 million in private capital for women entrepreneurs, respectively, and reached close to 140,000 women by the end of 2022.

Building on the success of this initiative, IIX has since established the Orange Movement™, which featured at ESCAP’s Feminist Finance Forum in August 2023. The Orange Movement™ is set to unlock US$10 billion and empower 100 million more women like Lien and Chhorn.

The bonds in the WLB™ Series comply with the Orange Bond Principles, an innovative set of standards that ensure gender lens investing products are empowering women across sectors, integrating gender equality through the investment decision-making process, whilst also mandating impact confirmation and measurement to counter issues such as green and impact washing.

Through ESCAP’s Catalysing Women’s Entrepreneurship (CWE) programme, funded by the Government of Canada, to date, US$89.7 million in public and private capital has been leveraged to pilot, test, and scale innovative financing models such as the IIX WLB™ Series.

Christina Margaret Morrison is Consultant, ESCAP; Natasha Garcha is Senior Director, Innovative Finance and Gender-Lens Investing Specialist, IIX

IPS UN Bureau