There is an increased awareness and recognition in Pakistan about gender inclusion and diversity in the workforce and leadership. From advocacy to leadership positions, the focus must now shift to exploring the connection between gender and investing.

Financial inclusion in Pakistan stood at merely 21 per cent in 2017, with only 7pc being female. In 2019, the workforce comprised 73.89 million out of which only 27pc was female. As Pakistan makes an effort to economically recover from the pandemic, this is the right time to embrace a gender-inclusive capital market as a norm and not just as a compulsion. The mandatory female representation on boards of listed companies has attempted to ‘break the glass ceiling’. However, with mere approximately 250,000 accounts for stock trading, the participation of women in capital markets as investors, if any, is abysmal.

The lack of diversity and depth of products in the capital market is also a deterrent to access to markets. With a growing number of economically empowered females, it is the right time for capital markets in Pakistan to harness and enable access to gender-inclusive policy and products.

Gender bonds can be a win-win situation for increasing depth in the capital market as well as an inclusive supply chain

Specifically, capital markets need the push towards a ‘gender lens’ for financial and social impact. This concept denotes increasing women’s access to capital, promoting workplace equity and creating products and services that improve the lives of women. Recently, the State Bank of Pakistan unveiled its Banking on Equality Policy on similar lines. Therefore, capital market stakeholders ie regulators, stock exchange, corporate entities, investors and shareholders also need to focus on the nexus of gender and investing. Specialised products are required to cater to the untapped female population and financial returns for investors and issuers other than through conventional means.

In this perspective, it is the right time for Pakistan to issue gender bonds for enabling access of women to capital markets. Being a fixed-income financial product, the nature of gender bonds is of a social impact bond supporting advancement, empowerment and equality of women. These bonds attract environment, social and governance (ESG) cautious international investors thereby increasing depth in the market and are subject to the same legislative requirements as applicable to traditional bonds.

These bonds rely on International Captial Market Association’s Social bond Principles, the United Nations’s Sustainable Development Goals or UN Women’s Empowerment Principles as reference. Turkey, Singapore, Australia, Indonesia, Kazakhstan and Mexico have issued gender bonds.

For Pakistan, there are multiple opportunities to make an impact through gender bonds. For instance, instead of the conventional isolated model of corporate social responsibility prevalent in the corporate sector, gender bonds can bridge the gap of social impact with financial gains. Moreover, gender bonds can be a win-win situation for increasing depth in the capital market as well as an inclusive supply chain. For instance, a company engaged in manufacturing can issue gender bonds for investing in women inclusive supply chain. The gain in profitability from the supply chain already has a cushion for generating a return on bonds for investors.

Similarly, bonds focused on connecting companies directly to the women-led agricultural-based entrepreneur for their input and eliminating the middlemen can effectively bridge the gap of the corporate sector with the agricultural sector and reap a financial return for both participants in the supply chain as well as the investors. A leap ahead would be if companies offer gender bonds with

customised rates of investing and returns exclusively to women investors to break the inertia of gender imbalance in the capital market.

Likewise, endless opportunities and the benefit of synergies exist waiting to be explored through gender bonds. The condition of strengthened disclosures and accountability as prevalent for the traditional bond will continue to be enforced. Holistically, gender bonds will be instrumental in embracing the ESG standards and reporting, another need for the capital market to attract international investment.

A way ahead for harnessing gender mainstreaming would be to demand thematic investment for gender bonds by investors based on ESG metrics of reporting. Greater demand will also instigate innovation. Secondly, data that support gender analyses for potential investors is required to show the direction ahead. Thirdly, expertise is required to connect gender analysis with financial analysis. Finding ways to connect gender experts with financial institutions will yield optimum results.

Pakistan cannot afford to underutilize an asset as valuable as women that account for 49pc of Pakistan’s population. It is therefore important to keep the momentum growing for encouraging women for financial inclusion and access to capital. Gender bonds will encourage entities to synergise for contributing to GDP and remove disparity in access to capital markets by women. All stakeholders must step up to shatter the glass ceiling for enabling economic upliftment by men and women in equilibrium.

Published in Dawn, The Business and Finance Weekly, , March 15th, 2021