Whether you’re assessing your existing portfolio or devising a new gender and climate investment strategy, there are several key questions to ask regardless of theme or sector. How and where are climate funds backing women and racially/ethnically diverse entrepreneurs? How diverse is the investment team at the fund? Where are the good green jobs going and is there a diverse enough pipeline of talent in key transition sectors? What percentage of investee teams, and especially leaders, are women or from marginalized backgrounds?

It’s not just about equity. Analyzing data from 2,000 listed companies in 24 industrialized economies over a 10-year period, BIS found that a 1 percentage point increase in the share of female managers leads to a 0.5 percent decrease in CO2 emissions. And a lack of diversity at the fund level can mean missed investment opportunities from outside of traditional networks.

A 1% increase in the share of female managers leads to a 0.5% decrease in CO2 emissions.

Within existing portfolios, investors have the opportunity to work with fund managers and their investees, or with companies in direct investments, to drive more inclusive processes in service of improved climate outcomes and financial returns. One foundation in our network, for example, deploys both philanthropic and impact investing capital to climate solutions, and integrates gender and racial/ethnic equity throughout the investment cycle, including by coaching portfolio companies and funds to get more gender-smart. In their pilot study of SMEs and clean energy value chains with the Shell Foundation, Value for Women found that implementing a holistic gender inclusion strategy across entrepreneurs’ market research, product design, value proposition, sales, marketing, customer segmentation and human resources could impact sales by up to 85 percent.

There are also numerous reports and frameworks available. GenderSmart’s own foundational report in this space brings together data, benchmark projects and tools to demystify gender-smart climate finance, and to inspire more investors to join us. Most recently, the 2X Collaborative Gender-Smart Climate Finance Toolkit (another COP26 launch) includes step-by-step guidance and tools for investors from due diligence to exits, and a separate section on data and measurement. Examples include sustainable transportation, energy, agriculture, affordable housing and water infrastructure.

Growing investor pressure to improve ESG metrics in policy and regulatory frameworks are driving a broader definition of sustainability that looks for social as well as environmental impact. Investors at the cutting edge of climate finance understand that environmental and human factors are inextricably linked.It’s time for the rest of us to translate that understanding to our investment portfolios.

Read the full article about private climate investment by Suzanne Biegel at GreenBiz.