Building Back Fairer: Gender-just recovery needs Financial Sector action!
International Women’s Day is a day to celebrate the strides taken towards a more gender equal world, but more importantly to spotlight where much more needs to be done. Gender is a powerful determinant of economic opportunity, and although women’s economic opportunities have improved in recent decades, the Covid 19 pandemic has widened the poverty gap for women and exacerbated the inequalities that still remain. The policies and practices of financial institutions, both as employers and as key actors in financial systems can play a significant role in closing this gender gap.
Across the globe, women are more likely to live in poverty, carry out regular unpaid work, receive a lower salary, and hold fewer senior positions than their male counterparts. 1.1 billion women are still excluded from formal financial systems, and gender disparity is wider in developing economies.
The Fair Finance International network promotes responsible and sustainable investment practices worldwide, and we assess and hold financial institutions accountable for their gender equality policies and practices. Considering the needs and aspirations of women in their investment policies and practices would not only benefit women and society at large, it also benefits financial institutions, as the economic inclusion and empowerment of women is crucial for long term sustainable equitable development.
Our network’s research however shows financial institutions still have major gender blindspots. Fair Finance Asia reports that financial institutions in the Asian region have been slow to recognize the unique challenges faced by women and in particular, the fact that these issues are often compounded by cultural norms, poverty, and ethnic discrimination. Fair Finance Netherlands’ report ‘From glass ceilings to factory floors: Dutch banks’ actions on gender’ evaluated the activities of seven Dutch banks in promoting gender equality in their own workplaces and in their clients’ and investees’ supply chains, and found them seriously lacking. For example, despite the mining sector being notorious for violations of women’s rights, the report found that ING and ABN Amro invest 2 and 1.7 billion euros respectively in three mining companies, without holding them accountable for their women’s rights practices.
Gender-just investment policies and practices in the financial sector are all the more important following the disastrous economic impact of the ongoing COVID-19 pandemic. The financial sector can help mitigate its negative impacts, as we outlined in a joint statement at the start of the pandemic in 2020.
Whilst on a global level, extreme poverty has been decreasing over the past two decades, the pandemic has caused job-losses on a massive scale and has exacerbated inequality. According to UN Women, the pandemic-induced global poverty surge is set to widen the gender-poverty gap. It is projected that this year, the ratio of women between the ages of 25 and 34 living in extreme poverty will be 118 for every 100 men of the same category, and this ratio could rise to 121 women for every 100 men by the end of the decade. 47 million more women worldwide will fall into extreme poverty in 2021. Indeed, 40% of all employed women work in the industries hardest hit by the pandemic, compared to 36.6% of men (tourism, manufacturing textiles and garment industries).
Financial Institutions should require that companies and businesses receiving investments provide adequate support to women workers, including protection, compensation, and benefits. Companies financed should include clauses on the compliance with gender and women’s rights criteria in their contracts with subcontractors and suppliers. Fair Finance Sweden’s 2019 report ‘Broke in Bangladesh’ highlighted that Swedish banks investing in fashion companies such as H&M do not require them to ensure that employees of their suppliers are guaranteed a living wage. H&M is the world's second largest fashion company and the largest purchaser of clothing produced in Bangladesh, where 80 percent of the employees in the textile sector are women.
Fair Finance coalitions have also marked some progress however. Fair Finance Norway in a recent assessment of Norway’s major Pension Funds reported an average score of 73% on Gender Equality. Fair Finance Germany found in their 2020 assessment of major German banks that policies on Gender Equality were ‘the biggest catch-up’, though on average the banks only achieved only a 39% score and most banks had few or no gender guidelines for financing and investment. In February this year Fair Finance Brazil reported similar findings, noting improvements on Gender Equality, even though the average score remains low. In summary some steps forward are being taken but more needs to change.
It is time for Financial institutions and the financial sector at large to consider the direct impact investment policies and practices have on the socio-economic situation of women worldwide. Major improvements are needed on gender-just financial policies and practices, so that societies can recover strongly and equitably from the impact of the global pandemic. Now is the time to build back fairer.
Fair Finance International’s key recommendations:
Financial Institutions do not invest in companies that score below 20% in the Corporate Human Rights Benchmark
Financial institutions conduct gender specific impact analyses on projects and companies under consideration for financing.
Financial institutions and the companies they finance have clear gender-sensitive, zero tolerance policy commitments towards all forms of gender-based discrimination in employment and occupation, including on pay and conditions, psychological harm and verbal, physical and sexual harassment.
Companies financed by financial institutions have policy commitments to mitigate labour rights and human rights violations as a result of gender.
Companies financed by financial institutions collect and analyse gender‐disaggregated data for assessing and addressing human rights impacts.
See more work of Fair Finance International here.