Women’s Livelihood Bond: empowering women and girls in developing countries

On behalf of its pension fund clients, APG has invested USD 30 million (December 8, 2023) in a bond that provides access to capital for women entrepreneurs across a number of Asian and African countries. By empowering women, this investment aligns with APG’s clients’ ambitions to tackle gender inequality wherever they invest, all over the world.

Women’s economic empowerment is a central component of achieving gender equality. Globally, women often face disproportionate challenges in accessing capital. For example, the UN notes that women predominate in the world’s food production (50-80%), but own less than 10% of the land. Providing access to capital ensures women can establish, sustain, and grow businesses.

Five countries, six sectors

The Women’s Livelihood Bond (WLB) aims to empower underserved women. These are women in developing markets who are typically excluded from financial markets or face other forms of gender-based discrimination due to structural and cultural barriers to financial access. The WLB was developed by Impact Investment Exchange (IIX), a Singapore-based impact investor that focuses on supporting women and girls in underserved communities in the Global South. The WLB6, their sixth and largest issuance to date, was launched last week and raised USD 88 million. Proceeds from the bond aims to positively impact approximately 800,000 women and girls across five countries in Asia and Africa. The funds raised will be used to promote the growth of women-focused businesses and sustainable livelihoods and directed towards six sectors: agriculture, water and sanitation, clean energy, affordable housing, SME lending, and microfinance.

Gender lens, climate lens

The inaugural WLB was issued in 2017 as the first gender-lens, impact investing security listed on an exchange. This bond series, launched under the Orange Bond Initiative, aims to unlock US$10 billion by 2030 to achieve its goal of empowering 100 million women and girls worldwide who are typically excluded from financial markets and/or face other forms of gender-based discrimination. These are, for example, women who have low incomes, live in rural areas where opportunities and financial access are limited, or face cultural barriers based on race, ethnicity or religion.

The WLB6 is at the intersection of gender equity and climate action, two important themes that align with APG’s clients’ sustainable and responsible investing priorities. All of the bond’s proceeds will advance SDG 5: Gender Equality, and 25%-30% of the proceeds will also contribute to SDG 13: Climate Action. Example investments include a financial institution focused on farm lending primarily (95%) to women, and a lender specializing in small and medium-sized solar projects. The capital of APG’s fund clients will help meaningfully scale the impact of these organizations, providing a clear and intentional link between the investment and its outcomes.

According to Senior Credit Analyst, Ben Rosado, the investment aligns well with APG’s pension fund clients’ responsible investing ambitions. “At APG, we actively seek investments that contribute to achieving the Sustainable Development Goals (SDGs). The WLB6’s strong focus on contributing to gender equality while also investing in climate-related projects, combined with a government-backed partial guarantee from the Swedish International Development Cooperation Agency (Sida) and support from U.S. International Development Finance Corporation (DFC), provides a favorable risk return profile that generates both value and impact.”

Monitoring and reporting

IIX utilizes an impact assessment framework to assess borrowers and track their performance. Responsible Investment Credit Analyst, Lee Anne Hagel, who has been closely involved in the transaction, is impressed with IIX’s track record when it comes to reporting on its activities. “As investors in this bond, it is crucial that we have transparency – detailed information on the activities our investment is funding and what is achieved in concrete terms. IIX uses pre-determined financial and social metrics, collects input from the end beneficiaries, and proactively verifies the impact data. In addition to annual financial reporting, we will also receive semi-annual impact reports on the individual borrowers we are lending to and on our investment as a whole.”

Click here to read the press release.