Women and green finance: a Q&A with Hogan Lovells' Sharon Lewis
Lewis spells out the synergies between the different parts of ESG targets, and why now is a crucial time to realise that women can make a real difference in designing the world’s post-Covid-19 recovery
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Senior reporter Alice Tchernookova talks to WIBL member Sharon Lewis about women's involvement in green finance and the Covid-19 recovery.
Sharon, as we come out of a year and a half of worldwide crisis post-Covid-19, what difference can women make?
I think there's a role for women in green finance that could be forgotten. Post-pandemic, looking at the EU, Europe and the world more generally, there's a focus on building back better or resetting. Part of that building back better is ensuring that we achieve a net-zero economy. But at the same time, there's a big focus on a just transition and not leaving anybody behind. That is when then you are going to be hitting ESG.
What are the synergies between gender equality and ESG targets?
First of all, it's a very hot topic. And because everybody sees it this way, men are very interested in it. If you look at the line-up for COP26, there are a lot of men, but it's really important that - just like with STEM [science, technology, engineering, and mathematics] or fintech, or any other of these hot areas – women really make sure that they are present.
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The other important consideration is thinking about green finance with a gender lens. If you think about the mitigation of risk while ignoring gender, that can actually create market risk, operational risk, even reputational risk, and companies and funds can fail. Women are a minority group that represents 52% of the population. If you have gender-blind infrastructure projects that ignore the needs and norms of women – safety, design structure, etc. – and are only looked at through the eyes of a man, they are not necessarily going to be as good as if they had also been thought about by a woman. Women have been very absent from project infrastructure, but there is an opportunity for women to become involved
How does that translate in practice?
It's several-fold. First, a gender lens impact is integrated in an investment process: in the design structure, due diligence, compliance, risk, legal documentation. And also into the design, implementation, and monitoring of projects: identifying product-specific gender differences in barriers-of-access projects, for example.It's several-fold. First, a gender lens impact is integrated in an investment process: in the design structure, due diligence, compliance, risk, legal documentation. And also into the design, implementation, and monitoring of projects: identifying product-specific gender differences in barriers-of-access projects, for example.
What is the point of actually creating something without thinking about the end user? We ought to at least incorporate them in the project. Thinking about green and where green is going to – it's going to a net-zero economy. Therefore, a lot of the money that is going to drive that is about having a suitable infrastructure to actually reduce our carbon consumption. Having electric cars, for example, is not sufficient: it's also about the way they will be driven and used by people.
Why is it that women are not more present in infrastructure projects – is it linked to the typical gender split in financial services?
It is de facto, but it’s also broader. Women have been increasingly present in banks and in law. There's the whole debate about getting through the glass ceiling and in that respect, we are seeing progress. Regarding infrastructure projects, however, women have not been as present. This goes back to education and training in part. But there are things that can be done within the workforce: showing gender diversity at the board and decision-making levels. While it's generally important, it's also essential in the context of the economic reset, thinking about the future and what we want the world to look like. It's very important that women are part of the decision-making decisions around this.
You previously touched on the fact that while it is important to invest not just for financial returns, but also with consideration towards the benefit to women and girls. Can you give some examples of those benefits?
It's really important to look at the opportunity. With agenda-based leadership, decision-making and investment processes, you are going to be thinking about the risk return and the investors-taking too. Most investors today, I think, do think that diversity and inclusion is important, and are going to look at that when making their investments. Diversity actually will help innovation in these sectors. Women in distribution channels, marketing, sales, will also bring their own edge. As consumers, women make 80% of the household-buying decisions worldwide: surely, they should be considered when thinking about this area.
Can you share some more thoughts on the connections that you see between Covid-19 recovery, climate change and gender equality?
There is quite a lot of intersectionality between the E, the S and the G in ESG. Some parts are very distinct, but I do think that empowering women, investing in women and bringing them into the E has a ripple effect on communities and business - and therefore, on the S and the G.
In collaboration with the 2X Challenge, Hogan Lovells recently launched an initiative called Aurora: the gender lens project, which aims at increasing gender lens-awareness and engagement amongst investors and financial institutions. The idea is to create a playbook of gender lens definitions, precedent clauses and shared principles for equity and debt transactions, and to use our legal skills to help mobilise capital and advance women's economic empowerment and gender equality.
Are these issues that are discussed enough within companies, or that there is enough awareness of?
I think companies are focused on diversification and on ESG - on the E particularly. But it can be quite siloed. Diversity and inclusion policies can be focused on making sure that your workforce is diverse, thinking about your policies and making sure that people feel included, but you might not bring the various aspects of ESG together and fail to see the connections that exist between them.
Why do you think that now is a particularly good time to increase awareness on this?
We've all seen that Covid-19 has had a disproportionate effect on women and girls, given their so-called "traditional" roles. It has exacerbated existing inequalities. But the pandemic has given people and governments time to reflect, in many ways. A lot of lessons can be applied. As we think about these opportunities, we must make sure that women are not forgotten.
Looking at the finance as a whole, women are now making their mark much more than they did. Many men have moved on to private equity and the like. But in the private equity, startup and entrepreneurial spaces, women once again were very late in coming. And when they when they arrived, it was more difficult for them to get funding. If we replicate this in the context of coming out of the pandemic and of climate change, it could be very easy for women to be left behind once again. Now is the time to make sure they aren’t.