Green finance refers to the flow of investment from small to medium companies into the development and implementation of their own sustainable projects, environmental products and policies that contribute to the development of a sustainable economy. Examples of these practices include a company’s investment in switching to renewable energy for its office, or the financial department’s decision to account for environmental impact in its annual financial reports. These investments often require the involvement of different departments of a business, and women are likely to be involved in the decision-making process.
According to Catalyst, the number of women on a company’s board has a positive correlation with the level and quality of corporate social responsibility. There are two explanations for this correlation. The first one is that female leaders tend to have values that support corporate social responsibility. Second, a woman’s experience and knowledge, when voiced, can help managers consider the effects of strategic decisions on a wider range of stakeholders. Thus, if women can join and contribute their insights to the decision-making process, they can indirectly push corporations to fulfill their social responsibilities, including the responsibility to preserve the environment to ensure sustainable development of the company and of the community.
As the number of women entrepreneurs in America is among the highest in the world, American women can directly make an impact through implementing green finance projects within their companies. Additionally, the total American workforce comprises of nearly 38 percent women, according to an SME survey conducted in 2015, and this percentage is even higher among medium-sized businesses where it stands at 44 percent. The large percentage of female business owners and the fact that women constitute a large share of the workforce indicate that women’s individual and joint efforts can make significant impacts on furthering the practice of green finance. The same SME survey also reported that the majority of managers of small and medium-sized businesses are 25 to 35 years old. The young age of both male and female managers implies that they are more receptive to change and innovation. As a result, if young female managers become aware of their business’s social responsibility to protect the environment, they are likely to take initiatives to implement green finance.
Even though the role of women in business, and in green finance in particular, is promising, there are challenges unique to female managers and entrepreneurs. According to The Business Times, the first challenge on an individual level is a woman’s lack of skill in business management and lack of knowledge about capital. This leads to the fact that many female business owners have uncertainties about their businesses’ growth compared to a higher level of optimism about the growth of the national economy. When women leaders worry about keeping their company growing and thriving in a fast changing economy, sustainable goals that benefit the whole economy or society become a secondary concern. In addition, 71-77 percent of female business owners surveyed indicated that training in both business management and financial management are extremely helpful. Thus, there is a high need among women in business to sharpen their skills and knowledge. Furthermore, at the social level, perception and gender stereotypes hamper women’s involvement in the economy and specifically, in a corporate environment, which creates barriers for female leadership. In 2015, The World Bank identified stereotypes about professions that women can or cannot participate in and negative perceptions about women’s abilities to lead as factors that hinder women from reaching their full potentials in leadership and pushing corporations towards sustainable growth.
Potential solutions to address the challenges that women face include curated professional training and meaningful networking programs. A collective effort from the government, educational institutions, independent groups and corporations themselves can help women sharpen their skills and knowledge while creating a safe environment for women to connect with one another and share their experience. Education programs can also be open to participants of all genders so everyone can be aware of the unique difficulties that other genders face, which leverages knowledge and understanding, and encourages collaboration to break stereotypes and develop a sustainable economy through green finance practices. This mutual understanding is important as the decision-making process in corporations likely includes all genders. To enhance the adoption of green finance in corporations, the government can mandate the disclosure of Green Index in Stock Market exchange. The Green Index can directly influence investors’ decisions whether or not to invest in the company, which affects companies’ access to capital and growth opportunities. As a result, this top-down action can shorten adoption time as it creates more incentives for companies to initiate and implement specific plans to make their own growth more sustainable.
In the modern world, Green finance should be seen as a necessary strategy by all companies, regardless of their mission. Due to the reasons illuminated above, women have many tools that can help them rise a company’s ladder while promoting Green finance, but they will need support from the rest of society. Now that you know about Green finance, how are you going to make a difference?