Development Finance

Are we overlooking the untapped potential of women of colour in sustainable finance?

Shaping a financial landscape that truly represents and empowers women of colour.

Shaping a financial landscape that truly represents and empowers women of colour. Image: Pexels.

Claudia Ukonu
Growth Lead, UpLink, World Economic Forum
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Development Finance

This article is part of: World Economic Forum Annual Meeting
  • Despite progress on diversity, equity, and inclusion, women (particularly those of colour) are underrepresented in executive roles.
  • Sustainable finance aims to address global challenges, so diverse representation is critical to its success.
  • We've identified five actionable strategies to help unlock transformational change and the potential of women of colour.

Gender, diversity, equity, and inclusion (DEI) initiatives have become integral to corporate strategies, with the global market for DEI estimated at $7.5 billion in 2020 and projected to more than double to $15.4 billion by 2026. Despite this progress, a stark reality persists: women, particularly those of colour, continue to be significantly underrepresented in executive roles. This disparity is not merely a consequence of the gender gap but is further exacerbated by the scarcity of women, especially women of colour, in the pipeline ready to ascend to these senior roles.

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The Fortune Global 500, highlights a mere 2% of these businesses are led by women of colour CEOs, with only 5.8% or 29 women occupying the role of CEO on the global list. The evidence is clear: companies with women CEOs have consistently outperformed their male-led counterparts by an average of 1.0 percentage point on RoA (return on assets) metrics over the past decade.

Yet, often, these challenges are compartmentalized, with gender and race viewed in isolation, neglecting the intersectionality of these factors and other contributors to the lack of representation. The venture capital (VC) industry stands as a glaring example of this homogeneity, where a mere 8% of investors are women, and racial minorities are severely underrepresented, with only 2% of VC investors being Hispanic and less than 1% black.

Companies with female CEO tend to have higher RoA.
Companies with female CEO tend to have higher RoA.

Sustainable finance: recognizing untapped potential

In sustainable finance, an area designed to address global challenges, diverse representation is paramount to ensuring financial strategies promote justice, equity, and sustainability across diverse communities and regions. Even with the increased investments in DEI initiatives, the crucial question persists: are we genuinely recognizing and harnessing the untapped potential of women of colour?

Here, we delve into five actionable strategies to unlock transformational change:

1. Cultivating inclusivity: breaking down cultural barriers

Hong Kong continues to strengthen its position as the leading green and sustainable finance hub in the region. The total amount of outstanding green and sustainable debt issued in Hong Kong, which includes green bonds and loans, reached $80 billion in 2022, reflecting a significant increase of 40% year on year, according to CBI (Climate Bond Initiative).

Jenny Lee, Deputy Secretary General at Hong Kong Green Finance Association (HKGFA), emphasizes the importance of integrating cultural awareness into sustainable finance. In striving for a transition to net-zero carbon emissions, Lee highlights the need for actions that are inclusive, fair, and just. Companies with diverse leadership have shown they outperform others, underscoring the business value of inclusivity.

Culturally attuned organizations, as noted by Lee, excel in creating inclusive governance structures and designing investment business strategies that not only help mitigate the structural changes impacting the workforce and communities - as hard-to-abate and high-polluting sectors transition to net zero - but also unlock new possibilities for economic growth and responsible production. This approach aligns with long-term sustainability goals and shareholder value.


What's the World Economic Forum doing about diversity, equity and inclusion?

2. Leaders as allies: driving tangible change

UpLink Top Investor, Rekia Foudel, Managing Partner at Barka Fund, an impact fund dedicated to African entrepreneurs addressing urgent climate and environmental challenges, passionately emphasizes the crucial role of leaders as allies against systemic biases. Actively championing inclusivity, Foudel underscores the need for leaders to advocate for and implement diversity and inclusion policies, fostering a culture that embraces inclusivity and proactively working to diversify leadership teams. This commitment aligns with recent findings from a BlackRock report, revealing that companies with more gender-balanced workforces consistently outperform their peers by 29% annually. Foudel's insights, coupled with this data, illuminate the tangible benefits of leadership actions in creating genuinely inclusive workplaces.

3. Empowering entrepreneurs and investors: fuelling the engine of change

A BCG study reveals that equitable investments in women-founded startups could have generated an additional $85 million over five years. In the vibrant landscape of impact investing, Fiona Chin, Vice President of ESG at Templewater, a Hong Kong-based alternative investment firm, champions the transformative power of investments led by women of colour. These investments empower women entrepreneurs by providing crucial resources, mentorship, and business networks. Chin's insights highlight a commitment to fostering gender equality, economic empowerment, and social mobility. As women of colour achieve success as impact investors, their visibility becomes a catalyst, inspiring a positive cycle of empowerment and representation in Asian markets.


What's the World Economic Forum doing about the gender gap?

4. Unleashing opportunities: Goldman Sachs' One Million Black Women Initiative

Goldman Sachs pioneers change with its transformative One Million Black Women initiative, committing $10 billion in direct investment and $100 million in philanthropy. Addressing persistent gender and racial biases, the initiative strategically allocates funds across key life stages – healthcare, education, housing, and small businesses – aiming to positively impact 1 million Black women and narrow opportunity gaps. What sets this initiative apart is its foundation in the stories and experiences of Black women, gathered through nationwide listening sessions. In just two years, One Million Black Women deployed over $2.1 billion in investment capital and $23 million in philanthropy, impacting 215,000 Black women – a testament to Goldman Sachs' commitment to equality and providing opportunities at critical life junctures.

finance industry black workers racial equity women of colour

5. Fostering cooperation: uniting for inclusivity

Promoting cooperation among financial institutions is paramount in fostering a culture of inclusivity and diversity, particularly for women of colour in sustainable finance. By sharing best practices, collaborating on research, and establishing industry-wide initiatives, financial institutions can collectively contribute to breaking down barriers and creating more opportunities. Lee, Chin, and Foudel offer concrete examples of cooperation, guiding us toward a more inclusive future which include:

  • Data sharing initiatives.
  • Collaborative mentorship programmes.
  • Industry-wide workshops and conferences.
  • Joint advocacy for policies.
  • Cross-institutional diversity committees.

As we explore the power of cooperation, our journey concludes, but the call to action echoes louder than ever – a call to collectively shape a financial landscape that truly represents and empowers women of colour. The path to recognizing and harnessing the untapped potential of women of colour in sustainable finance requires collective effort and actionable strategies. The time for change is now, and each action taken today contributes to a more equitable and prosperous tomorrow.

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Related topics:
Development FinanceDavos AgendaGender InequalityDiversity and Inclusion
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