- Women are disproportionately impacted by climate change yet are vastly underrepresented in industries key to the energy transition.
- Those same sectors are currently dealing with high labour shortages which might impede their ability to reach climate action targets: enhancing gender diversity and improving workplace culture in typically male-dominated workforces can help address those shortages and enhance opportunities for community and Indigenous partnerships needed for a successful transition.
- This International Women’s Day, we explain why Canada’s new Sustainable Jobs Plan can enable more gender-responsive climate action, and provide case studies of what investors can do to integrate gender Key Performance Indicators (KPIs)in investment analysis and encourage company action through engagement.
Successful climate action is gender-responsive
The impacts of climate change are not gender-neutral. According to the United Nations, women comprise 80% of over 50 million people worldwide that have already been displaced by climate-related disasters, and coupled with already existing inequities such displacement exposes them to higher rates of gender-based violence, harassment and mortality. With this dynamic in mind, the 2015 Paris Agreement made an explicit call to government signatories to centre gender equality and the empowerment of women in climate change mitigation and adaptation efforts. This means that the perspectives of women and gender-diverse populations closest to the risks must be integrated into the design and implementation of adaption and mitigation strategies to ensure strategy effectiveness and the equitable distribution of benefits that arise from socio-economic opportunities that the transition presents.
Research shows that developing a more gender-inclusive strategy on climate action can also expedite progress towards environmental goals. For example:
- Female political representation in national parliaments has been linked to more stringent climate change policies.
- Greater representation of women on corporate boards and in senior leadership roles has been correlated with better reporting on Green House Gas (GHG) emissions1 and reduced company CO2 emissions.
- Women’s participation in natural resource management at the local level contributes to better conservation and resource management practices.
Ensuring more equitable opportunities for women in leadership roles, workforce development, and community consultation is essential.
Yet, around the world, women remain vastly under-represented in the energy sector – one of the most critical to our transition success. The International Energy Agency reports that in 2020 women represented less than one-third of global employment in energy. And in Canada, women comprise 31% of domestic energy sector workers, with 27.4% representation in utilities, 18.7% in mining, quarrying, and oil and gas extraction, and 25% in clean energy (considerably lower by comparison with the global average of women in clean energy at 35%). Addressing such gender gaps can help ensure more efficient and effective climate action.
In focus: critical minerals and the mining sector
Labour shortages in key energy and related sectors threaten to derail Canada’s energy transition strategy. In a recent study, 71% of mining leaders say lack of talent is already a barrier to reaching production targets while 86% find it harder to recruit today than two years ago. Attracting women to the mining sector is a major part of the labour supply problem. Natural Resources Canada found that despite women comprising 48% of the Canadian labour force, they account for only 14% of the workforce in mining, up from 10% in 2001.
Closing the gender gap in mining could help address the industry’s labour crunch but it won’t happen without addressing workplace culture.
The 2022 report ‘Enough is enough’: sexual harassment against women in the FIFO mining industry, shone a bright light on gender-based violence and harassment in mining in Western Australia. The report helped raise awareness globally of the deep systemic nature of workplace violence against women in resource extraction and it also reflected disturbing patterns of wider community impacts already recognized in other jurisdictions. For example, in Canada the 2019 National Inquiry into Missing and Murdered Indigenous Women and Girls Report, the more recent report Responding to the calls for Justice: Addressing Violence Against Indigenous Women and Girls in the Context of Resource Development Projects by the Standing Committee on the Status of Women and other independent research studies, have all made strong links between resource development and disproportionate levels of violence against Indigenous women and girls. Addressing this problem is essential to enable the growth in mining required to achieve energy transition goals. Efforts are underway.
All this data is helping to drive change.
In 2018, the Mining Industry Human Resources Council published a case studies report highlighting important modifications to policies and procedures to address structural barriers to women’s equitable participation at six of the biggest mining companies operating in Canada. The Canadian Mining Association of Canada (CMA) has been urging its approximately 50 members to address workplace culture problems and is anticipated in March 2023 to launch a new voluntary disclosure protocol to improve transparency on how member mining firms are managing the material risk of gender-based violence within their organizations. And organizations like the First Nations led Keepers of the Circle is generating considerable positive impact for Indigenous women and gender-diverse people through offering support to industry and community partners to develop more inclusive employment and retention practices in resource development. As investors, we can encourage investee mining companies to leverage these best practices and continue to actively strive for better.
Canada’s Sustainable Jobs Plan sets out an initial framework that can advance gender diversity
On February 17, 2023, the federal government laid out its Sustainable Jobs Plan. It is an initial two-year roadmap and accountability framework to develop the workforce required to reduce Canada’s GHG emissions to 40% below 2005 levels by 2030, and reach net-zero by 2050.
- The creation of a Sustainable Jobs Partnership Council tasked with understanding the views of workers, industry, civil society, and other key stakeholders. The Council will provide independent and ongoing advice to the Canadian Government on how to create sustainable jobs and support workers and communities in the transition to a net-zero economy.
- The plan’s action items include labour market data collection, tracking and analysis to better understand current and future workforce supply, demand, and gaps. The plan references the need to motivate investors given that private capital and sustainable finance can incentivize business and industry progress towards climate action that ensures equitable benefits and opportunities to women and gender-diverse people. Defining specific labour targets to qualify industry for tax credits is identified within the plan as a key motivator to ensure more inclusive workforce development strategies. The plan also references the Sustainable Finance Action Council (comprised of Canadian financial institutions and pension funds) as tasked with leading the Canadian financial sector towards integrating sustainable finance into standard industry practice. Ideally, we will see increasing numbers of social KPIs, including gender-related KPIs embedded into sustainability bond or transition bond frameworks and reporting requirements to drive more inclusive prosperity going forward.
- Finally, the plan highlights the leadership role Canada is taking in several initiatives to advance gender equality in the global energy sector. These include the Equality in Energy Transitions Initiative and the Equal by 30 Campaign, both which encourage voluntary commitments by public-and private-sector organizations to work toward equal pay, equal leadership and equal opportunities for women and other marginalized groups in the international energy sector by 2030. A list of Canadian energy companies that are signatories to this initiative can be found on the Equal by 30 Campaign website.
Investors can promote more gender-responsive climate action
Assessing investments using social KPIs
At BMO GAM we evaluate KPIs to drive gender diversity within equity holdings.
Equities case study
Our BMO Women in Leadership (WIL) Fund targets mostly U.S. and Canadian companies based on gender representation on boards and in senior leadership alongside fundamentals. For the companies in the fund, there is an average 40% women on the board and over 50% have women in executive leadership roles. The fund also holds five energy-sector related companies2, one of which is Boralex (a Quebec-based renewable energy company) that signed onto the Equal By 30 Campaign in 2022. As part of the campaign, Boralex has made a commitment to hire minimum 35% women into new or replacement positions alongside ensuring more gender-responsive worker supports to achieve a more inclusive and gender balanced workforce by 2030.
The use of social KPIs within Fixed Income is another means by which investors can drive such commitments, but perhaps with even more clout given clearer financial incentives. In the draft paper Social KPIs Matter: Setting Meaningful Indicators for Sustainability-Linked Finance, the International Finance Corporation (IFC) promotes action on social data transparency and reporting, target-setting and committed leadership at the top. Investors can advocate for all the above to drive more gender-responsive climate action through engaging with internal stakeholders to promote integration of gender specific KPIs in sustainability linked finance, and through investment decision making and asset allocation.
The BMO Sustainable Bond Fund contains fixed income holdings for a sustainability linked loan issued by Enbridge Inc. in which there are social KPIs to achieve 28% racial and ethnic group workforce representation and 40% women on the board of directors by 2025. For both targets, the penalty is a respective step-up margin of interest of 5 basis points (one basis point is equivalent to 0.01%) applied from the first coupon date retroactively for the related interest period including the relevant notification date.
Engagement with investee companies to drive awareness and due diligence
- In line with the United Nations Guiding Principles on Business and Human Rights, conduct a full human rights risk assessment to understand the most material and salient risks with special attention to gender equality, both within operations and throughout the supply chain, and in downstream use of products and services.
- If applicable, consult the Corporate Human Rights Benchmark for the Extractive Sector and KPIs specific to managing impacts on women.
- Collect and disclose intersectional gender, race, and pay workforce data to understand gaps and inform strategy.
- Provide adequate resourcing and formal organizational structures and accountability for engaging internally and externally with women and gender-diverse people to gain clear understanding of context specific impacts from business operations and or barriers to employment.
- Disclose how perspectives of women and gender-diverse people are heard at the board and senior leadership levels and subsequently integrated into go-forward strategies for further collaboration, problem solving and monitoring with affected groups.
- Set hard targets for increasing gender diversity and disclose these and the strategy proposed for achieving them.
- Consider the role local procurement from women-owned businesses can play using the Local Procurement Reporting Mechanism to Report on Mining Sector Procurement from Women-Owned Businesses, if applicable.
- Engage with the federal Sustainable Jobs Partnership Council to facilitate collaboration in development of a more enabling ecosystem in support of gender-responsive climate action.
1 Charumathi, B., & Rahman, H. (2019, August 1). Do Women on Boards Influence Climate Change Disclosures to CDP? – Evidence from Large Indian Companies. Directory of open access journals. Australasian Accounting, Business and Finance Journal; Hossain, M., Farooque, O. A., Momin, M. A., & Almotairy, O. (2017, October 2). Women in the boardroom and their impact on climate change related disclosure. Social Responsibility Journal; Al-Najjar, B., & Salama, A. (2022, September 18). Mind the gap: Are female directors and executives more sensitive to the environment in high-tech US firms? Technological Forecasting and Social Change.
2 As at December 2022.
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