What Are The Climate Solutions That We're Leaving On The Table? Ask Women Entrepreneurs. Unlocking the full potential of climate solutions requires empowering women-led small businesses.
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Small and medium enterprises (SMEs) stand at the forefront of the private sector's efforts to tackle climate change.
Although individual SME contributions to global greenhouse gas emissions are modest, on aggregate, they account for 50-60% of global emissions.
Smaller businesses also face capital constraints as well as a lower capacity to absorb business failures, making them more risk-averse to shifting their business operations to adopt lower-carbon practices.
Women own at least one-third of all SMEs in developing countries, but they face even greater barriers in accessing capital and markets. This leads to fewer opportunities for women to adapt their businesses to climate change or implement greener practices, such as increasing energy efficiency, or effectively managing waste.
Some smaller businesses are also embedded in global supply chains, playing a significant role in reducing the scope three emissions of large companies, or those emissions indirectly produced up and down corporate value chains. Diverse and inclusive supply chains offer opportunities for smaller businesses to perform essential services, while at the same time contributing to corporate resilience and responsible business practices.
Globally, however, less than 1% of procurement purchases made by large companies go to women-owned businesses, leaving them out of opportunities to participate in the decarbonization efforts of larger businesses.
Finally, high-growth potential SMEs are a source of innovation, incubating new climate solutions that could be at the center of driving sustainable economic development. However, women's exclusion from venture capital and early-stage startup support is equally alarming: just 7% of venture capital (VC) supports women-led businesses in emerging markets, and less than 10% of climate tech VC funding globally goes to female founders. This constrains women from starting and scaling businesses that could be transformative for addressing climate change.
These gaps have implications for both gender equality and climate change. As outlined in latest research by the International Finance Corporation (IFC), supporting women in green and climate-related businesses could drive more sustainable impact. One reason for this is that women's proximity to the impacts of climate change equips them with unique insights.
We see women building businesses that improve farming yields, drive last-mile electrification, and contribute to environmental preservation, leading to lower carbon emissions, or improving climate resilience, while simultaneously addressing the needs of their families and local communities.
Related: Regenerative Tourism Needs Women In Leadership To Activate Solutions For Change
Women-led firms also perform better on environmental, social, and governance (ESG) metrics, and their representation in leadership positions is linked to better track records of adopting environmentally friendly practices. Women also influence 80% of buying decisions, giving female founders comparative advantages in developing and selling green services and products that appeal to end consumers.
In sum, if women entrepreneurs had equal access to markets and capital, they could drive greener business practices, increase competitiveness, and enable climate-responsive innovation.
Beyond the research, examples of women-led startups accelerating green impact are already emerging. In the MENA region, Guadaluna Chaer leads LUXEED Robotics, the first chemical-free weeding robot in the region. The technology has the potential to eliminate herbicide use to increase the quality and yield of farming crops, tackling one of the trickiest sectors for carbon abatement.
In Iraq, Basima Abdulrahman founded KESK, the country's pioneering initiative tackling green construction. Combining the latest energy-efficient technologies and materials with traditional building methods, KESK is rethinking how building services and products are constructed and maintained to reduce their environmental footprint.
In Tunisia, Mejda Khaled runs AGARUW, a textile startup addressing the 31,000 tons of pre-consumer textile waste produced in the country each year. The firm operates an online marketplace promoting recycled and ecofriendly products, while also creating its own fashion products from recycled materials.
Guadaluna, Basima, and Mejda are not alone, but they still represent a minority. The sectors that attract the most climate capital are also the sectors where women are most underrepresented in business leadership. As global efforts to confront climate change are activated, we have a unique and time-bound opportunity to mobilize more climate capital to support women-led businesses.
As part of the efforts to advance gender equality and address climate change, IFC has launched She Wins Climate, a new initiative that will support women entrepreneurs in the green economy. Building on She Wins Arabia, which has supported over 150 women-led startups and 40 funds and accelerators in the MENA region, She Wins Climate now turns to women entrepreneurs with climate solutions on a global scale.
By partnering with local entrepreneurship support organizations to deliver trainings, mentorship, and financing opportunities across select markets, IFC aims to increase women's participation in developing the next generation of disruptive climate solutions. At scale, these solutions could be game-changing in how we address climate change. What climate solutions are we leaving on the table because of unequal financing and business support for female founders? Stay tuned.
Related: When Women Win: How The Middle East Is Showcasing Female Success Across Entrepreneurship And Tech
