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Finance & Investment
A Defiant Optimist:
How One Woman Has Reshaped Finance to Fight Global Inequality

“By valuing and giving a voice to [women of color], and recognizing their potential as solutions and stabilizers, impact investing is a powerful way to build systemic resilience … and reduce the negative impact of climate change on everyone.” — Durreen Shahnaz

If we want to solve the climate crisis, we must empower women; just ask the United Nations, Project Drawdown and SB Brands for Good — all of which have highlighted gender equality and women’s empowerment as key elements in creating a flourishing future. Giving young women and girls an education and support in family planning, and bolstering women-run businesses have been determined to be fundamental to adapting to our changing planet and reversing global environmental destruction.

Only in recent years has the finance world begun to come around to this idea — leading to the rise of inclusive impact platforms such as CNote, which focuses on driving capital to female-fronted enterprises; and Empower Co’s W+ Standard, which enables investors to quantify the benefits of women’s empowerment. Mechanisms such as these have slowly driven uptake on solutions; but the divide between much-needed capital and the communities who need it most remains vast.

To tackle this disparity, Bangladeshi-American entrepreneur Durreen Shahnaz founded Impact Investment Exchange (IIX) and created the world's first gender-lensed impact-investing security to be listed on a stock exchange. IIX and its Women’s Livelihood Bond series successfully bridge the age-old gap between finance and sustainable, equitable development. Unique in the impact-investing space, they build pathways to connect the Wall Streets of the world with the backstreets of underserved communities by measuring and unlocking investment capital, and pushing impact investing from the margins to the mainstream. Their activities focus on three key pillars: promoting gender equality; driving climate action; and building vibrant, resilient communities. Now in its sixth issuance, the Women’s Livelihood Bond Series has mobilized over US$128 million and is empowering +1,300,000 women across Asia-Pacific — all without a single loss since its creation.

I recently had the chance to sit down with Shahnaz, and hear more about her journey as a leader in impact investing and shifting the status quo as a woman of color in finance — a field still primarily dominated by white men — and doing so to benefit the remaining 99%. She also recently published her first book, The Defiant Optimist: Daring to Fight Global Inequality, Reinvent Finance, and Invest in Women.

What led you to create the Impact Investment Exchange, and how do you measure its impact? What challenges have you faced along the way?

Durreen Shahnaz: As a Bangladeshi who firsthand experienced the War for Independence and Liberation in 1971 as a three-year-old, I grew up learning about power dynamics — I have mentioned this in my book as a journey of life, as I drew a parallel between people and power. Three million people were killed, a genocide; and I [saw] my mother put together the family's leftovers. Hence, I understood early in life that those with power control the system. One of the powers is the financial system; and that’s how I decided to embark into this field and understand how to use this power to develop people and women in the 1990s.

The creation of IIX was really part of my journey to make finance good — which began when I began working on Wall Street in 1989, and there were few women and people of color. I was told I was the first Bangladeshi woman to make it to Wall Street. I took my learnings and came back to Bangladesh, which was unheard of — as most people see Wall Street to be a pinnacle of success in finance. But I wanted to make the most of my education and experience, not at a conventional bank; so, I found a bank giving loans to rural women called Grameen Bank. This was a very early stage at Grameen — which went on to win the Nobel Prize [for its efforts to create economic and social development] in 2006. It was a complete contrast for me — from New York to rural Bangladesh, making a difference in the lives of so many women by giving them financial access to empower themselves and change their lives and their families. Every time a rural Bangladeshi woman would find her name on a document, sign for a loan, and then have tears in her eyes — I would realize how much incredible impact this work has. It was remarkable for me that, at the age of 25, I could link the world of finance with development and others.

Fast-forward, I was in Singapore — teaching about impact through finance at the National University of Singapore — and my research focused on measuring impact. That also helped make the foundation for IIX. From my research work in 2009, I was invited to visit the Rockefeller Foundation and discuss a social and development problem that is difficult to solve. Once I gave my presentation, they asked me to go back and set up the Impact Investment Exchange. That monetary support pushed me towards setting up IIX and making the impact I made.

As far as measuring impact is concerned, we have a very robust fintech platform that assesses the value of the social impact made on the lives of the people we support. From this, we also set up the Women’s Livelihood Bond — recognizing the need for a gender lens in impact investment. This was the first ever gender-focused bond in the history of finance — and a significant milestone for me. We have put more than $300 million in the market with no loss; because we are passionate about what we do.

While it seems easy to say it, it has not been so easy — and my book really sheds light on many of the hurdles I’ve faced in my journey. I would also like to add that each of us has a greater purpose in life; and it is not just about us but the thousands we may be influencing and representing.

There were many moments when I wanted to give up. However, I still pushed through; and the biggest difficulty I’ve faced is in the development sector, where there is a donor and receiver — and the donor gets to dictate how the receiver should function. Unfortunately, it is a cycle of power that hasn’t worked so far. The power dynamic has not been sincere to any cause in development.

The other problem I have faced is misogyny — but the only way I survived was to push back. Also, it was becoming a mother that pushed me to make a system where every single person in the system is valued and respected. I wanted to leave the world a better place for my children, so I am thrilled. I would think that I set off to boil the sea's water — but now it is lukewarm, and some change has been made.

IIX aims to positively impact 100M women, girls and gender minorities by 2030 — which is pretty close. How far have you come in meeting this goal? How can businesses help you reach your goal?

DS: I’m glad you asked — this is why we created our Orange Bond initiative. When the Women’s Livelihood Bond was doing really well, I was curious to know why anyone else wasn’t doing what we were doing — it was not happening in the private sector. So, along with some partners in the US and Australian government; a law firm, Shearman & Sterling; and our banking partner, ANZ Bank came together to create this asset class called Orange Bond — as orange is the color for SDG 5: Gender Equality. This initiative was significant for us to ensure that not only do we create more gender equality within communities, we also ensure we focus on projects for climate action related to gender. After creating this, I spoke about Orange Bond at several conferences. The immediate feedback I got was to create an “Orange Seal,” so companies can use this as a label when meeting their Diversity, Equity & Inclusion (DEI) targets. This was a great idea to get investment companies and financial organizations focused on being a gender-centric economy. Now we have Orange Labels cascading from the Orange Bond Initiative.

As far as our goal is concerned, we are expected to exceed a billion livelihoods impacted and will surpass the target — as it is not just us: It is an entire financial ecosphere working with IIX that is enabling us to meet our goal faster.

Orange capital can be in bonds, loans, funds and grants — which are expected to align with three overarching principles:

  • Gender-positive capital allocation

  • Gender-lens capacity & diversity in leadership

  • Transparency in the investment process & reporting

Can you share some examples of the work IIX and its Women’s Livelihood Bond have done in the Global South? How is it making the desired impacts on the ground?

DS: There are many examples, but one stands out in the Philippines. There is a co-op called NWTF (Negros Women for Tomorrow Foundation, Inc) based in Negros Occidental, where the main crop is sugar. When I was running my first company, I received a box with all these stamps, including a very heartfelt letter explaining what NWTF does for the local women. The letter also stated that the people in Negros were dying of starvation because of an ongoing famine; and that the main crop, sugar, was no longer being produced. The box included some photo frames these women made, and the letter requested that we sell them to make money for the people. I teared up reading this letter and told them that of course, we could sell them for them — which we did. Fast-forward 20 years later, when I created Orange Bond, I reached out to NWTF — now a thriving microfinance organization. They remembered me; and I asked them to join the bond. They started off so small — but now they are connected to Wall Street.

There are many other examples worldwide where we have helped women build their businesses and stand up on their feet — in turn, helping the communities they depend on thrive. These women's impact is possible because they are given the right resources to take their businesses and initiatives forward.

With climate change impacts on the rise globally, women and other marginalized communities are expected to be the most affected. How can impact investing protect them or at least reduce their hardship?

DS: Yes, environmental and social challenges disproportionately impact the Global South, women and marginalized communities. Ironically, women, particularly indigenous women and those in the Global South, lead climate action — but face underrepresentation in environmental decision-making processes at all levels, despite their pivotal role. To go full circle, 80 percent of those displaced by climate change are women — exacerbating systemic shocks experienced by the entire economy.

By valuing and giving a voice to these demographics, bringing them into the financial system, and recognizing their potential as solutions and stabilizers, impact investing is a powerful way to build systemic resilience. In fact, inclusive financial systems actually reduce the negative impact of climate change on everyone.

You wrote an article for Business Insider that focused on decolonizing impact investing for the greater good. How can businesses maximize their presence and influence in the Global South without focusing on prescriptive solutions?

DS: Representation in decision-making and leadership is crucial. Imagine a table where every stakeholder is welcome — from the woman at the last mile, striving for economic empowerment; to the investment banker on Wall Street, driving financial progress. Each individual's work, voice and unique perspective is valued at this inclusive table. True inclusion comes from co-creating solutions that respect the agency and experiences of all at the table.

As leaders and shapers of our modern world, I believe businesses have the power and responsibility to revamp existing structures — to build inclusive tables and extend an invitation for everyone to have a seat. Financial markets need to go beyond token representation and a superficial check-box approach to realize the benefits of meaningful equity and inclusion.

What advice do you have for young women starting their careers in investing and sustainability?

DS: Embrace your vision, uniqueness, passion and personal experiences. Embrace your whole self. The world is growing to be ready for you, so take your place. Join forces and collaborate; allies will help you when hurdles emerge — as they do, inevitably. Remain creative, resilient and persistent; hurdles direct your path to success. Broaden your mind to see the learning in all opportunities. Harmonize your personal values with professional endeavors, and find your North Star. Passion, resilience and common sense will get you everywhere. Seek guidance from those who came before you; remember, your journey is transformative. Your dedication has the power to reshape industries, uplift communities and change the world. Stay true to who you are. Stay bold, stay passionate; and together, let's create a world for all of us.