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Gender Bonds Get New Rules to Spur Sales in ESG Boom

Gender-focused bonds remain relatively rare even as the market for sustainable debt grows at a record pace.

Gender Bonds Get New Rules to Spur Sales in ESG Boom
Customers in an outdoor restaurant. (Photographer: Eva Marie Uzcategui/Bloomberg)

In the rush to sell ethical bonds to tap surging investor appetite, there’s a gender gap.

The market for debt linked to sustainability targets has boomed since the pandemic, yet less than 12% this year is aimed at addressing inequalities between men and women. The International Capital Market Association is trying to spur more with new guidelines published Tuesday, including types of potential projects and gender-based targets.

“We believe that bond markets have tremendous untapped potential to fund the advances in gender equality, which are so essential for sustainable economic development,” said Bryan Pascoe, chief executive of the ICMA, which has the most widely-used voluntary guidelines in ethical debt markets.

Gender-focused bonds remain relatively rare even as the market for sustainable debt -- including green and social bonds -- grows at a record pace. There has been $305 billion worth of debt sales linked to sustainability performance indicators this year, with just $35.1 billion including targets for female staff, empowerment or women in management and on boards, according to data from BloombergNEF.

There are signs that companies around the world are increasingly willing to link their borrowing costs to gender equality, particularly in the loan market, as they face pressure to lift women in management. The ICMA sets out examples of potential initiatives to be funded by bonds, including:

  • Provide coaching, leadership and mentoring programs to strengthen the pipeline of female talent
  • Update workplace facilities to be more family friendly such as providing childcare facilities or breastfeeding rooms
  • Improve awareness of and accessibility to services that prevent and respond to violence against women and girls, including sexual harassment
  • Create a dedicated portfolio of responsible financial offerings tailored to benefit women such as loans, mortgages and insurance products

Worldwide, women only make 77 cents for every dollar earned by men, according to the website of UN Women, which co-produced the guidelines together with the International Finance Corporation. The pandemic has disproportionately hurt women, widening the gender gap, the guide said.

“While investor appetite for products that address social issues is growing rapidly, sustainable finance markets have struggled to keep up with demand,” said Makhtar Diop, managing director at the IFC.

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