Structuring climate finance to benefit women and alleviate poverty

Tackling climate change requires large-scale financial investments into adaptation and mitigation activities.

Known as “climate finance” under the U.N. Framework Convention on Climate Change, the idea of mobilizing funds from countries in the global north into local, national or international environmental efforts in the south, is embedded into the U.N. Paris Agreement on climate change.

Yet not much research has yet explored the potential impact or ways countries manage these contributions as they trickle down to the national level. As a result, scientists with the Center for International Forestry Research (CIFOR) decided to study five national financing mechanisms in Indonesia to learn more about the way gender inclusiveness was incorporated.

Using a comparative analysis strategy, they examined programs funded through the country’s national budget tagged across seven themes, which include climate change mitigation, adaptation and gender responsiveness.

Their findings, presented in a new report and two info-brief publications, demonstrate that rather than indiscriminately churning money into climate-savvy programs and expecting big returns, goals are best met when the disparate needs of both women and men are taken into consideration to leverage positive results.

Working under the premise that climate change affects people in different ways, the research recognizes that climate finance, gender and poverty are inextricably intertwined.

“Climate finance can result in actions that can either alleviate or exacerbate gender equity and poverty, we well know that the poor are disproportionately affected by the impacts of climate change” said Houria Djoudi, a senior scientist at CIFOR. “Finance mechanisms that fund climate action should be designed to enable, rather than hinder marginalized populations – notably women and the poor ­– in facing climate change.”

Through this lens, the scientists, supported by the U.N. Development Programme (UNDP), explored how climate finance can contribute to gender transformative change and sustainable pro-poor co-benefits over the long term at national and sub-national levels. Meeting the targets laid out in the U.N. Sustainable Development Goals (SDGs), which embrace these principles, was also a critical point of investigation for the scientists.

“All available potential is needed to reduce climate change as part of efforts to achieve the SDGs by 2030,”  said Muhammad Didi Hardiana, head of the Innovative Financing Lab at UNDP Indonesia. “Programs that do not challenge the status quo reinforce marginalization and inequality, but also represent a loss of much needed human potential. We cannot afford to leave women, the poor and their potential behind.”

In rural areas, women’s livelihoods are often dependent on climate-vulnerable agriculture, forestry and water. In addition, gender-related restrictions hinder women, particularly the poorest, from owning or accessing key assets — which include land, credits, information and technology — to prepare for and adapt to climate change. These factors demonstrate that climate finance needs on the one hand to address a range of vulnerabilities and on the other to avoid unintended negative consequences for women and the poor.

“The research provides guidance on how to move forward with innovative financing solutions that can help mitigate climate change and challenge marginalization of vulnerable groups in Indonesia,” said Debi Nathalia, technical associate for Public Climate Finance at the lab. “We hope the continuation of joint efforts in gender-responsive climate budgeting between civil society, the government and UNDP will not only benefit Indonesia, but also offer a leading example for other countries in the Asia-Pacific region.”

CIFOR researchers Stibniati Atmadja and Hiasinta Lestari, studied these mechanisms by reviewing technical documents, theses, reports, blogs, newspaper articles and social media accounts to understand how they work. The researchers wanted to understand how they are designed and implemented from a gender equality and poverty reduction perspective.

Lestari conducted in-person, semi-structured interviews with 20 national level key informants, representing 10 government units.

In general, they learned that good policies and guidelines can help mainstream gender awareness in ministries, agencies and financial mechanisms.

The challenge is that those responsible for implementation have differing views on gender equality and do not necessarily understand why it matters, Atmadja said.

“Some interviewees think that the mechanisms are gender sensitive, because anyone — regardless of gender — can get financing if they fill the requirements — that’s a big ‘if’ — these requirements are easier to meet if one is experienced in business, owns property and has a savvy social network to link up with financial institutions. In theory, women and men are on a level playing field and can equally meet those requirements. In reality, the field isn’t level. It’s harder for women.”

A paucity of studies and publicly available datasets on who climate finance recipients really are and who they really benefit means that informed data analyses can be difficult to achieve, she said, adding that key informant interviews and field observations suggest fund recipients are men.

In one study, researchers found that only 1 percent of recipients of a loan for delaying timber harvesting were women, but gender-disaggregated data is too scarce to understand the true picture, Atmadja said.

“The monitoring system to measure the impact of financed activities in terms of gender or poverty status must be improved,” she said. “A better system would enable financial mechanisms to demonstrate they did good job in ensuring women and the poor benefit, and learn from successes and mistakes.”

Djoudi and CIFOR scientists Nining Liswanti and Ade Tamara are conducting further research to monitor for change.

“Our findings demonstrate that a dominant narrative in the climate change arena is that ‘what’s good for community is good for women,’ but our results show that the needs and roles of women are different, and their access to assets are restricted which affect their vulnerabilities,” Djoudi said.

Scientists also observed that when women were not informed or involved from the beginning of a given climate change action the result was a negative impact for the sustainability of the actions and the climate finance investment.

“We learned that women were not involved in decision making, which meant that tree and plot selection (for planting) wound up disturbing rather than helping their daily activities,” Liswanti said, adding that the result was a lack of incentive to keep and tend the trees. “The broad consequence was that long-term adaptation and mitigation benefits were jeopardized, increasing the potential for such risks as landslides and erosion, among others.”

Gender responsive budgeting is an approach that has been gaining currency internationally over the several past years. Researchers generally define a gender-responsive budget as one that is empathetic to socially differentiated needs and contributes towards equality.

Effectively making gender-responsive budgets work for women is a central aspect of which provides a set of indicators for integrating, monitoring and evaluating gender in the context of climate change financing and interventions.

“This framework will particularly help and guide efforts to improve capacity building to make climate finance work for women,” Djoudi said.