We know that the impacts of the climate crisis are not being distributed equally. Whether you’re looking at New Orleans or Nigeria, women — and especially women of color — are disproportionately bearing the consequences of climate-related natural disasters, including migration, food insecurity, job insecurity and violence.
So, it makes sense that when investing in climate solutions we should be paying attention to gender, race and ethnicity, both when it comes to who is deploying capital (on investment and fund management teams, at investment committee level, as individuals), and when it comes to who it is being deployed to (ownership of firms and funds, employees, customer base, who is in the supply chain).
We risk investing in products that don’t meet the needs of the people they’re trying to serve.
If we don’t, we risk investing in products that don’t meet the needs of the people they’re trying to serve, and in founder teams that don’t fully understand the problems they’re working to solve. We also risk failing to develop and scale the solutions and innovations we need to solve the climate crisis.
The good news is that a growing suite of investors is approaching climate finance with a multi-pronged climate, race, ethnicity and gender lens.
A wealth of opportunity
In the public markets, Adasina Social Capital’s JSTC ETF screens publicly listed companies on a mix of climate, gender, racial and economic justice criteria. The fund was founded by Rachel Robasciotti, a queer African American woman, who developed the fund’s criteria in conversation with movement leaders on the issues Adasina is seeking to impact with its investments. Robasciotti believes that these movements provide “early indicators of material risks in public markets.”
CNote and Calvert Impact Capital, two funds that invest with community development financial institutions (CDFIs), offer investors the opportunity to invest in climate solutions while funding historically excluded entrepreneurs, whether they have $20 or $20 million to deploy.
In the private markets, 48 of the 206 gender-lens vehicles surveyed as part of Project Sage 4.0 reported that climate and race/diversity were either among their core priorities or one of several strategic components of their investment process. (See my column last month for more information on the Project Sage report.) These include Nordic Impact Funds, which combines a gender- and racially balanced team with an intentionality about investing with a gender lens and investing in local entrepreneurs rather than white expat founders, and Korea’s Envisioning Partners Climate Solutions Fund, which has a woman-led fund management team and a focus on finding diverse-led companies in the United States and Asia.
And whether it’s Tinia Pina at Re-Nuble, Sara Menker at Gro Intelligence or Lisa Dyson at Air Protein, women of color founders are using their insights and intelligence to develop creative climate solutions that are finding traction in the marketplace.
Change is afoot
On the field-building side, in October, VC Include launched its Climate Justice Initiative for Diverse Emerging Fund Managers, which offers catalytic investment for fund managers with a climate focus from immigrant and underrepresented minority backgrounds. Also launched in 2021, Chloe Capital’s Diversity in Climate Tech program aims to support the growth of people of color and women founders on the forefront of clean energy innovation, via a mix of education, human capital and financial capital.
And in February, my organization, GenderSmart, launched its Justice, Equity, Diversity and Inclusion (JEDI) Investing Toolkit to help allocators and investment influencers sharpen their gender and racial/diversity lenses in their investment process.
Time for action
How you bring a gender and racial equity lens to your own climate investments depends on where you sit in the investment chain.
It may mean addressing the makeup of your investment team, with the understanding that diverse teams make better decisions — and are going to be better equipped to spot risks and market opportunities when it comes to climate change. It may mean asking questions of the advisors, fund managers or entrepreneurs you work with to make sure gender and racial equity are part of their climate investing agenda. (GenderSmart’s JEDI Investing Toolkit includes resources to help with this.)
If you’re a founder or corporation working in the green space, it may mean looking critically at your company’s leadership, supply chains and customer base, and making sure that good green jobs are going to women as well as men — and especially to women of color.
Bringing gender, race and diversity into our investment decision-making process isn’t just an add-on when it comes to solving climate change. It is an essential part of our toolkit for ensuring we spot the best solutions, forge a just transition and make full use of the collective intelligence and innovation of humanity we need to solve this crisis.
With so many ways of applying these lenses and so many opportunities across the investment spectrum, there is no excuse for climate investors not to bring gender, race and diversity into their decision-making process. If we don’t, we risk leaving not just money — but also essential solutions — on the table.
March 15, 2022 at 03:15PM