PayPal commits $100m to financial inclusion for gender equality
What’s happening? PayPal Holdings has pledged at least $100m to improve gender equality after joining the Generation Equality initiative for the Economic Justice and Rights Action Coalition. Its five-year plan involves investments of $100m into female-led or female-focused companies and a $1m project to increase awareness and incentivise donations to equality organisations. It also plans to back technical and advocacy platform Data2X to improve its gender data and will ask its own global staff to volunteer for gender equality charities. The company will also spend $7m backing microloan partnerships for women entrepreneurs and ensure its own strategies meet or pass best practice. (IBS Intelligence.
Why is financial inclusion important? Failing to provide marginalised groups with access to financial services creates barriers to how easily they can live independently. It also excludes them from the economy and means nations lose out on their potential economic contribution. A study in 2020 calculated that the US economy could have generated an additional $16tn over the past 20 years, had the racial gap between Black and white Americans been closed, while $13tn in business revenue was lost over the same period because Black entrepreneurs were denied access to credit.
Unfortunately, as a result of the Covid-19 pandemic, much of the progress on the financial empowerment of women has been reversed. Due to the global lockdowns, stay-at-home orders, and the closure of many public facilities, responsibility of care has overwhelmingly fallen to women, many of whom have had to leave their jobs to become full-time caregivers for children or other dependents. Job cuts in sectors that are typically occupied by women have also been a factor.
Poverty among women is expected to grow by 9% over the next year and young women and girls growing up in the developing world during this time are also more likely to bear the brunt of the widening education gap. The greater pressure on women will also affect the amount of non-profit social work done to bolster the global economy, of which women make the largest contribution.
The World Economic Forum announced last year that the pandemic had reversed progress to close the global gender gap. In 2020 it was estimated that it would take 100 years to reach gender equality – this has now risen to 136 years, and could continue to rise due to the fallout from Covid-19.
As PayPal’s President and CEO Dan Schulman has said “Women make up the overwhelming majority of the world’s unbanked and underserved adults, and the economic and social impacts of the Covid-19 pandemic have only exacerbated these disparities.”
What’s being done? In developing nations, increased financial independence for women has been a key focus. Chetna Gala Sinha is credited with founding India’s first bank for, and by, women, which provides microfinancing to increase entrepreneurship among rural Indian women, typically the poorest 1% of India’s population. In Kenya, women have been the focus of environmental entrepreneurship schemes to combine conservation action for the nation’s fragile mangrove ecosystems in exchange for microloans towards their small businesses.
In more economically developed countries, gender-equal access to financial services isn’t the main concern. Instead, focus has been on improved gender empowerment in business, particularly at board and executive level..
More detail – Alongside all of its external work, PayPal will also incorporate an annual assessment into its business reporting to review its gender equality standards and the effectiveness of internal policies at fostering improved diversity and inclusion. Adopting diversity as an index for business performance is becoming increasingly popular among corporates – the ECB recently announced efforts to improve gender diversity at board level through new assessment criteria, and the Carlyle Group – among others – has tied CEO pay and bonuses to company diversity goals.