At COP27, Amazon and the U.S. Agency for International Development (USAID) announced a public-private partnership supporting women entrepreneurs focused on developing climate change solutions. Amazon will commit a total of $53 million to help accelerate women’s climate innovations. This includes $3 million toward the USAID partnership to launch the Climate Gender Equity Fund, a new climate finance facility designed to remove systemic market barriers for women and girls. USAID plans to match Amazon’s $3 million investment as well. Amazon will also invest $50 million directly in climate technology companies run by women through The Climate Pledge Fund.
"We all know that women and girls are disproportionately impacted by climate change. But in addition to that, women have a vital role to play in terms of climate leadership, both in terms of climate solutions, but also at all levels of leadership. Whether it's at the international level or the local level, we know that women are key community leaders and we need to have women at the table regarding climate solutions," told Leigh Anne DeWine, Director of Social Responsibility at Amazon.
Leigh Anne DeWine, Director of Social Responsibility at Amazon.
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The Climate Gender Equity Fund will focus globally and provide grants for businesses, NGOs, accelerators, incubators, and grassroots organizations working on women-led climate solutions. The Fund will also help women access the networks and technical skills they need to accelerate the development of their climate change technologies.
According to the United Nations (UN), the detrimental effects of climate change from landslides, floods and hurricanes have both a short and long-term impact on agriculture, food security, biodiversity, water resources and human health across the board. Women are often more vulnerable to the effects of climate change than men, mostly because they constitute the majority of the world's poor. They are also more dependent on natural resources for their livelihood. However, as DeWine pointed out, women are agents of change in mitigation and adaptation because of their vast body of knowledge. Their households' and communities' responsibility also strategically positions them to drive change. Women farmers currently account for 45-80 percent of all food production in developing countries, depending on the region. About two-thirds of the women labor force in developing countries, and more than 90 percent in many African countries, are engaged in agricultural work. This means that climate change impacting traditional food sources could mean a loss of harvest and income for women. The UN also found that women's health deteriorates more at times of food shortages than men's.
When it comes to funding, we know all too well that women receive a fraction of the money male founders accept. In 2019, women-led businesses received an all-time high of 2.8% of all VC funding. A staggering low number and yet one to be celebrated, although just temporarily. In 2020, the pandemic reduced that number to a mere 2.3% and 2021 saw another decline that brought the number below 2%. Poor funding is yet another way the pandemic drove a she-cession rather than a recession. Considering that only 12% of decision makers at VC firms are women and that of all partners at these firms, only 2.4% are female founding partners, it should not be surprising that women-led businesses are often overlooked. However, research consistently demonstrates real financial value in investing in women. According to First Round Capital, female-led startups generate 63% more returns than all-male founding teams. Studies show a 34% increase in profit margins, 16% return on sales, improved problem-solving capabilities, increased innovation and more when companies invest in women leaders. DeWine believes that sharing the success stories of the businesses benefitting from the Fund will be critical in driving more VC money toward women-led sustainable companies.
Looking at the numbers showing great return despite the poor funding, it is easy to see how this initiative will make a difference in an area where we must accelerate and scale quickly to maximize impact. The financial opportunity in sustainability is considerable, but we are still at a relatively early stage of overall investment. One of the challenges women in business often face is that it takes them longer to get to an opportunity which means they face more competition. This is why the Climate Gender Equity Fund launch is particularly timely.
Amazon's commitment to gender equity is broad. For example, the company is committed to the UN Women's Empowerment Principles and is a founding member of the Resilience Fund for Women and Global Value Chains. In addition, DeWine shared that the company's strategy on gender equity is based on research like that of the International Center for Research on Women, adding, "understanding the gender implications of sustainability and how our approach can have a positive impact on gender equity is very important to us."
There is still a lot of work that Amazon and USAID have ahead of them in defining how the grants will work. Still, proving the return on this early investment could act as a catalyst for more funding, fueling more sustainable and equitable businesses and solutions.