Climate-related issues such as water scarcity, natural disasters and access to electricity have a disproportionate effect on at-risk female populations. Here’s what investors can do.
Submitted by Morgan Stanley
Climate change and gender equity are both top-of-mind sustainability topics for investors. More than 80% of asset owners surveyed currently invest to combat climate change or plan to do so, while close to half are investing, or planning to, in gender diversity, according to the Morgan Stanley Institute for Sustainable Investing’s latest Sustainable Signals report.
But many investors may not realize that the issues of climate change and gender equity are highly interconnected. Investors looking to address climate issues holistically, including funding a “just transition” to a low-carbon economy that is fair, inclusive and has decent work opportunities for everyone, should assess and consider targeting solutions at the intersection of climate-related issues and gender equity.
There are three specific areas in which interested investors can help tackle climate change and unlock opportunities for millions of women and girls worldwide:
How Investors Can Address Climate Change and Gender Equity
By assessing how their investments in climate-related issues might disproportionately affect at-risk female populations, investors have the potential to expand the breadth of their impact. One way for investors to do this is by considering what the Morgan Stanley Institute for Sustainable Investing calls “Scope 3” gender issues for companies, or the impact of a company’s operations on women and girls around the world.
For example, investments seeking to modernize grid infrastructure have a primary goal of enabling access to reliable and sustainable electricity to more people, while also reducing carbon emissions. But these investments also have the potential to reduce the time women and girls spend collecting solid fuels for the household, therefore providing more opportunities for paid work or education.
Framing a Gender Company's Footprint
Using a carbon emissions analogy, Scope 1 gender issues are relatively easy to track, but Scope 2 and 3 affect many more women worldwide.
*See chart above
Investors can use this framework above to map a company’s footprint on gender issues, while also identifying opportunities to invest on issues at the intersection of climate and gender, especially in the “Scope 3” category. In addition, institutional investors and self-directed retail investors can follow these best practices to address both gender equity and climate change in their investment strategies:
1Progress on Household Drinking Water, Sanitation and Hygiene, 2000 – 2020, WHO/Unicef joint monitoring programme. Progress on household drinking water, sanitation and hygiene, 2000-2020: Five years into the SDGs - UNICEF DATA
4 World Bank, Gender Dimensions of Disaster Risk and Resilience https://openknowledge.worldbank.org/bitstream/handle/10986/35202/Gender-Dimensions-of-Disaster-Risk-and-Resilience-Existing-Evidence.pdf?sequence=1&isAllowed=y
5 Natural hazards, disasters and violence against women and girls: a global mixed-methods systematic review. BMJ Global Health, May 2021 https://www.bmj.com/company/newsroom/natural-disasters-increase-triggers-for-violence-against-women-and-girls/
6 Supporting Just Transitions in India, March 2021, Climate Investment Fund Project_Report.pdf (teriin.org)
This material was published on March 7, 2023, and has been prepared for informational purposes only, and is not a solicitation of any offer to buy or sell any security or other financial instrument, or to participate in any trading strategy. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed in this material may not be appropriate for all investors. It should not be assumed that the securities transactions or holdings discussed were or will be profitable. Morgan Stanley recommends that investors independently evaluate particular investments and strategies and encourages investors to seek the advice of a Financial Advisor.
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