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

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 created the world’s first
gender-lensed impact-investing security to be listed on a stock exchange. The
Impact Investment 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?

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 create a billion livelihoods by 2030, which is pretty close. How far have you come in meeting this goal? How can businesses help you reach your goal?

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 the 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 the 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 Initiatives.

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 — and 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?

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
the 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?

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?

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?

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.