As part of our ESG series, Francesca Bugg looks at the recent action framework created by Women in Finance Climate Action Group (WFCAG). The framework aims to assist women in the finance industry in their endeavours to address the issue of climate change and the transition to net zero. It also explores the importance of “integrating a gender lens into climate investments” and what part climate litigation may play in ensuring gender equality in climate action.
Climate change is one of humanity’s most significant threats, and leveraging capital is crucial to finding solutions. Yet according to the WFCAG, women are significantly under-represented in climate policy, climate decision-making and climate finance.
The WFCAG framework, developed alongside Aviva and the 30% club, helps investors understand the integration between gender and climate change, ensuring women have key roles in financing climate change solutions. Women need to be valued as key innovators in climate investments to improve gender equality and better assess the gender responses to climate-based investments. Studies have shown a 1% increase in the share of female managers within a firm leads to a fall of 0.5% in CO2 emissions. In addition, an increased representation of women in parliament leads to reduced C02 emissions via more stringent climate change policies.
Recent improvements in available data give a better understanding of the correlation between climate change and the disproportionate impact on women. The report highlights that in a climate disaster, women are 14 times more likely to die or find themselves injured, and in the wake of a climate disaster, they are less likely to access relief and assistance.
Implementing change in corporate governance
The framework developed by WFACG encourages companies to define and target outcomes that address gender-related issues, identifying specific actions such as gender-balanced representation in key climate finance decision-making roles, aiming to mitigate the impact climate change has on women. It provides guidance on how companies can incorporate measures to monitor progress and provides a list of rules and best practices financial institutions are encouraged to follow in assisting women in the switch to a low carbon economy.
Furthermore, as organisations are confronted with more climate-related obligations, there could be a correlating increase in enforcement action by regulators, employee whistleblowing and shareholder/customer legal action over potential failures to meet such obligations. For example, Deutsche Bank’s asset management unit DWS has recently been subject to allegations of greenwashing, exaggerating the sustainability of its investments in its marketing material, including its prospectus. It is crucial directors are aware of and meet all environmental requirements as they navigate this new space in order to avoid risky and potentially expensive claims.
Women in climate change litigation
There has been an increasing trend for claimants to use litigation as a tool to bring about a change in corporate and government policy by challenging business and government action in the courts.
Women can be seen leading the fight against climate change globally, highlighted by the following cases:
- In Maria Khan v Federation of Pakistan, petitioners argued that the government’s inaction in the light of the disproportionate impact of climate change on women violates women’s rights to equal protection under the law, and
- In Union of Swiss Senior Women for Climate Protection v. Swiss Federal Council, the first climate case to be reviewed by the European Court of Human Rights, a group of women filed claims arguing they are disproportionately hurt by their government’s failure to curb greenhouse gas emissions. The case is still pending.
While there has not yet been an analogous claim in the UK, given the innovative use of existing laws by activist groups in recent climate change litigation, it seems only a matter of time before a company’s actions will be challenged on the basis that they disproportionately harm women. Further, given that women are more likely to be negatively impacted by climate change, it is possible the recent trend of bringing actions against large corporations for mass torts could see more women claimants.
Recent cases have confirmed that English-domiciled parent companies may be liable for overseas acts of subsidiaries doing environmental harm overseas (for example, Vedanta  UKSC 20, a claim by Zambian villagers regarding the discharge of toxic matter by a mine operated by a Vedanta subsidiary). As it is clear women are more disproportionally affected by similar harms, they are likely to make up a higher proportion of claimants in future matters.
Aviva’s Group CEO, Amanda Blanc, said:
“Private capital is key to mobilising the trillions of dollars required over the next three decades to limit warming to 1.5 degrees. And yet the global private finance sector does not currently have the tools or incentives in place to evaluate and improve the impact of climate finance on gender equality. We need more data to measure the impact of specific climate investments or project financing on women and girls. We hope that this Framework will provide financial institutions with the tools they need to begin measuring and delivering greater gender equality when pursuing net zero action.”
The framework is a step in the right direction in encouraging companies to create a tangible plan that promotes gender equality. An increase in female representation as change-makers in climate investments will positively impact women affected by climate change.
It will be interesting to keep a keen eye on how the redistribution of gender at board level affects the litigation landscape and potential environmental claims. Will women’s climate claims increase, and what measurable impact will women at board level have on climate policy?
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