What is Gender Finance?

Gender Finance integrates gender considerations into financial systems and investments. It’s about:

  • Finance for Women: Creating equitable access to financial services for women.

  • Women in Finance: Building diverse teams in the financial sector and leveraging their unique strengths to enhance decision-making and innovation.

The Case for Gender Finance

Gender Finance isn’t just about equality - it’s about driving growth, resilience, and impact.

Key Highlights:

  • Unlocking Economic Potential: Closing gender gaps could add $12 trillion to global GDP.

  • Boosting Performance: Diverse teams in finance outperform their peers by up to 21% in profitability.

  • Driving Innovation and Growth: Companies with gender-diverse leadership are 25% more likely to outperform their peers.

How Gender Finance Works

Gender Finance operates on two interconnected pillars: improving access to financial services for women and fostering gender diversity within the financial sector.

Both aspects work together to create more inclusive, innovative, and resilient financial systems.

Finance for Women

  • Women-led businesses often receive a fraction of the available funding due to structural biases and limited networks.

    • Gender Finance Initiatives: Venture funds, microfinance programmes, and targeted loans ensure women have equal opportunities to scale their businesses.

  • Traditional financial products may not address the unique needs of women, such as flexible repayment terms for entrepreneurs.

    • Examples: Savings accounts with no minimum balance, insurance policies catering to specific life events, and training programmes paired with financing.

  • Empowering women with financial knowledge helps them make more informed decisions and growth their wealth.

    • Case Study: Programmes like SheCounts teach budgeting and investment basics, leading to increased savings and economic empowerment.

Women in Finance

  • Women hold only a small percentage of executive and board roles in finance. Increasing this representation improves governance, risk management, and innovation.

    • Example: Companies with 30% or more women in leadership roles are more likely to see above-average profitability.

  • Gender finance includes breaking biases in hiring and promotion, ensuring women have equal opportunities to climb the career ladder.

    • Examples: Initiatives like the “30% Club” work with firms to set and meet diversity targets.

  • Women in finance benefit from structured support networks, helping them navigate career challenges and opportunities.

    • Example: Global mentorship programmes, like the CFA Institute’s Women in Investment Management help retain and promote female talent.

  • Teams with gender diversity consistently demonstrate better decision-making and creative problem-solving.

    • Example: Mixed-gender teams have been shown to improve innovation by up to 50% compared to homogenous groups.

Gender Finance is most impactful when these two pillars - Finance for Women and Women in Finance - are pursued simultaneously. For example:

  • A bank offering women-specific loan products can amplify its impact by employing a gender-diverse team to design and market these services.

  • Investment firms funding women-led businesses often find their returns increase when women are involved in decision-making.

Why Gender Finance

The case for gender finance is both compelling and urgent, with evidence highlighting systemic gender gaps, the business benefits of diversity, and the opportunities for targeted action. We explore the key reasons why gender finance is a critical priority.

  • Globally, women face persistent challenges in accessing and thriving within the financial sector:

    • Funding Disparities: Women-led firms receive less than half the funding that male-led companies do, despite delivering twice the revenue per dollar invested. Female entrepreneurs face a staggering credit gap of USD 1.5 trillion globally, even though women are statistically lower-risk clients.

    • Financial Inequalities: In European OECD countries, women aged 65+ receive pensions that are, on average, 25% lower than men’s, reaching over 40% in countries like Luxembourg, Germany, and the Netherlands. Women’s longer life expectancy underscores the need for enhanced financial planning and security.

    • Underrepresentation: Women-led startups account for only 11% of scale-ups in the EU, compared to 23% in the United States and 20% in the UK, reflecting systemic barriers to entrepreneurial financing.

  • Diversity is not just a social imperative—it’s a business advantage:

    • Companies with higher gender diversity are 36% more likely to achieve above-average profitability.

    • Teams with greater gender diversity are 73% more likely to innovate.

    These statistics underline the importance of fostering gender equality within financial institutions, benefiting both societal progress and business performance.

  • To close these gaps, targeted action is essential:

    • Data Collection: Understanding barriers through accurate, gender-disaggregated data is critical to designing effective policies and initiatives.

    • Policy Development: Governments and companies must develop and implement strategies to address disparities and foster inclusion.

  • Emerging sectors such as green and digital finance present significant opportunities to empower women:

    • Innovative financial instruments can help address gender biases in loan applications, particularly in countries with entrenched biases.

    • These sectors foster job creation and promote gender parity, creating new pathways for women to access finance and professional opportunities.

The Luxembourg Women in Finance Charter (the WiF Charter), for Luxembourg financial institutions, was launched in March 2023. It is a commitment by more than 70 signatories and representative bodies to improve gender balance and inclusivity across Luxembourg’s financial services sector.

In 2023, half of all employees within the WiF Charter signatories were women, and 28% of senior managerial roles (board, executive committee/C-suite or senior management level) within the signatories were held by female employees. 93% percent of WiF Charter signatories had set a target regarding female representation at the board, executive committee/C-suite or senior management level.

Challenges in Gender Finance

Limited Access to Capital

Women-led businesses and entrepreneurs often struggle to access the funding they need to thrive.

Women-founded startups received only 2% of global venture capital funding in 2022.

  • Bias in Investment Decisions: Investors often perceive women as higher risk or less capable of scaling businesses due to unconscious biases or outdated risk models.

    Smaller Professional Networks: Women entrepreneurs frequently have less access to networks that facilitate capital-raising opportunities.

    Lack of Tailored Financial Products: Many financial products are not designed with the needs of women-led businesses in mind.

    • Missed opportunities for economic growth, as women-led businesses tend to deliver higher returns on investment.

    • Slower progress in achieving inclusive economic systems.

  • Gender-Lens Investing

    • Increase the allocation of capital to businesses advancing gender equity or led by women.

    Tailored Financial Products

    • Develop loan and credit products suited to women’s needs, such as flexible repayment terms or lower collateral requirements.

    Capacity Building

    • Establish programmes that provide women entrepreneurs with access to mentorship, financial literacy training, and investor networks.

Underrepresentation in Leadership

Women remain underrepresented in senior roles across the financial sector, limiting diverse perspectives in decision-making.

Globally, only 24% of senior leadership roles in finance are held by women.

  • Bias in Promotion Practices: Men are often favoured for leadership roles due to perceptions of assertiveness or competence.

    Lack of Mentorship and Sponsorship: Women often lack access to senior leaders who can champion their career advancement.

    Cultural Barriers: Organisational cultures may inadvertently exclude women, particularly in male-dominated sectors like finance.

    • Reduced creativity and problem-solving in organisations.

    • Slower adoption of inclusive financial practices.

  • Diversity Targets: Implement measurable targets for gender representation in leadership roles.

    Structured Mentorship and Sponsorship: Establish programmes that connect women with senior leaders for guidance and advocacy.

    Inclusive Leadership Development: Provide tailored leadership training for women to build skills and confidence for executive roles.

    Transparency and Accountability: Publicly track and report progress on diversity initiatives.

Systemic and Cultural Biases

Biases ingrained in financial systems and workplace cultures perpetuate gender disparities.

Loan applications, for example, favour male applicants due to outdated creditworthiness criteria.

  • Historical Gender Imbalances: Finance has historically been male-dominated, embedding biases in systems and cultures.

    Stereotypes: Outdated views about women’s capabilities, leadership styles, or risk tolerance persist.

    Lack of Awareness: Many organisations fail to recognise or address the subtle ways bias influences decisions.

    • Homogenous decision-making, leading to missed innovation opportunities.

    • Persistent exclusion of women from roles and services they are well-qualified to occupy.

  • Bias Awareness Campaigns: Conduct organisation-wide training to uncover and address unconscious biases.

    Process Audits: Regularly review recruitment, promotion, and decision-making practices to ensure equity.

    Inclusive Work Policies: Introduce flexible work arrangements and caregiving support to level the playing field.

    Leadership Commitment: Foster cultures where leaders visibly support diversity and inclusion initiatives.

Lack of Gender-Disaggregated Data

Reliable data is essential for identifying disparities and measuring progress, but it remains scarce.

Only 13% of global financial institutions report gender-disaggregated data on their clients.

  • No Mandates for Data Collection: Few financial institutions are required to collect gender-disaggregated data.

    Resource Constraints: Collecting and analysing data by gender can be resource-intensive, leading organisations to deprioritise it.

    Lack of Awareness: Decision-makers often overlook the importance of data in uncovering and addressing inequalities.

    • Incomplete understanding of the financial needs of women and other underrepresented groups.

    • Ineffectiveness in targeting or scaling gender equity initiatives.

  • Mandating Reporting Standards: Require financial institutions to collect and disclose gender-disaggregated data.

    Collaborating with Research Partners: Partner with universities or NGOs to study gender impacts in finance.

    Leveraging Technology: Use digital tools to streamline data collection and analysis.

    Building Awareness: Educate stakeholders on how gender-specific data drives better decision-making and outcomes.

Gender Finance in Action

  • Luxembourg Women in Finance Charter

    The Luxembourg Women in Finance Charter aims at promoting gender diversity within the Luxembourg financial sector. It constitutes a commitment made by its Founders, signatories and representative to foster increased gender equality and inclusivity across the financial services landscape. This initiative serves as a foundational framework to advance women’s involvement across all tiers of financial service organisations in Luxembourg.

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  • SheInvest

    SheInvest is an initiative to boost gender equality and female economic empowerment. The aim is to mobilise investments that an benefit millions of women across Africa with better access to finance and by making sustainable infrastructure services and products work for them. This initiative was launched simultaneously at the Africa Investment Forum in Johannesburg and at the EIB headquarters in Luxembourg.

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  • 2X Challenge

    The 2X Challenge was launched at the G7 Summit 2018 as a bold commitment of development and multilateral finance institutions to invest in the world’s women. Since then, the flagship initiative has raised gender lens investments totaling US$33.6 Billion.

    The next round of the 2X Challenge is now open to public and private capital providers. This collective commitment aims to unlock at least US$20 billion over three years and encourage gender and climate investments.

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  • UNEP FI and UN Women - Target Setting for Banks

    UNEP FI and UN Women have released guidance to support the significant role banks have in closing the gender gap. It provides clear, actionable steps for banks to prioritise women’s empowerment in the workplace, marketplace and community.

    The guidance shares how banks – using their workplace policies and practices, business strategies and portfolios, as well as financial products and services – can foster healthy and prosperous societies for all.

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  • Bloomberg - EU Women in Finance Initiative

    Bloomberg’s EU Women in Finance initiative brings together leaders from across the European Union to promote gender diversity and inspire the next generation of female leaders to consider careers in the financial sector. Working with senior decision-makers, the program aims to make the world of finance more accessible to women and other under-represented groups.

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