LuxSE releases market study on gender-focused bond market

Following the launch of its previous market studies on the sustainability-linked bond market and the level of EU Taxonomy-related disclosures at bond levels in 2022, LuxSE today launched its latest market study – this time shining a spotlight on the nascent gender-focused bond market. The study, created by the sustainable finance experts at LuxSE and entitled ‘Linking gender and finance : An overview of the gender-focused bond market’, analysed data on 169 outstanding listed green, social, sustainability and sustainability-linked (GSSS) bonds identified via the LGX DataHub, which allocate all or a portion of their proceeds to financing projects or set clear objectives that contribute to gender equality and women’s empowerment.

“Gender inequality is jeopardising the ongoing transition to a more sustainable and inclusive world. By analysing the current state of the gender-focused bond market, our objective is to foster awareness of the role that gender finance plays in advancing gender equality in our economies and societies. Through this study, we provide essential market insights and information which may encourage issuers and investors alike to consider including a gender component in their financial strategies and investment decisions,” comments Laetitia Hamon, Head of Sustainable Finance at LuxSE.

A snapshot of the market

In the context of the study, the sustainable finance experts at LuxSE’s Luxembourg Green Exchange (LGX) analysed the available data and pre- and post-issuance documentation of all gender-focused bonds listed worldwide as of February 2023. Even if gender-focused bonds are a new area of sustainable finance, the study suggests that gender-focused bonds account for almost 2% of all listed GSSS bonds today. Sustainability-linked bonds (SLBs) are a particularly popular instrument for issuers looking to include a gender dimension in their financing strategy and currently 6% of all listed SLBs include a sustainability performance target linked to advancing gender equality.

The study also suggests that Sovereign, Supranational and Agencies (SSA) issuers are dominating gender-focused bond issuances today with 66% of issuances, while corporate issuers account for 15% of gender-focused bond issuances and financial institutions represent the remaining 20% of issuances.

According to the study, European issuers are leading the way in the field of gender finance. When supranational issuers are excluded from the calculation, 59% of gender-focused bonds, representing 80% of the amount raised through such bonds globally, originate in Europe.

The study analyses the different types of gender-focused bonds which exist in the market today, as well as the types of projects financed, and highlights areas of improvement in terms of the current state of disclosure, reporting and sustainability performance targets.

Joining forces for more impact

In May 2022, LuxSE and UN Women signed a Memorandum of Understanding (MoU) to strengthen their cooperation and promote joint initiatives to advance financing for gender equality and women’s empowerment across the world. The first step of this cooperation saw LuxSE add a dedicated gender-focused bond flag to all debt securities displayed on LGX which raise financing for projects advancing gender equality. In this way, investors who wish to support projects that empower women and girls can easily identify investment products that contribute to this important goal. Currently, around 50 gender-focused bonds are flagged on LGX.

This market study is the next step in the initiatives undertaken by LuxSE to proactively raise awareness of gender finance and gender-lens investing among market participants and beyond.

In parallel, UN Women has today released a complementary case study series, entitled : ‘Innovative Financing for Gender Equality via Bonds’, as part of the 1st anniversary of the signing of the MoU. These carefully selected case studies provide readers with detailed examples of how issuers are currently leveraging the sustainable bond sphere to bridge the gap between finance and the advancement of UN Sustainable Development Goal 5 - Achieve gender equality and empower all women and girls.

D^r. Jemimah Njuki, Chief, Economic Empowerment at UN Women said : “Sustainable bonds are innovative ways to finance equality policies, programmes and strategies. The market and in-depth case studies provide evidence on how gender equality objectives are integrated in bonds, and tracked and reported. It is critical that bond issuers and investors mobilise capital to effectively improve the lives, livelihoods and wellbeing of women and girls.”

Coming soon : LGX Academy course on gender finance

In the context of the new market study, the sustainable finance experts at the LGX Academy are preparing to debut a brand-new course on gender finance. The 2-hour session, which will take place in June, will give participants a deeper understanding of the scope and state of the gender-focused bond market, with concrete takeaways on the current challenges and opportunities, as well as actionable recommendations for both issuers and investors wishing to contribute to gender equality through their financial strategies and investment decisions.

For more information on this course, please visit our dedicated webpage.