1 Financial Equality: A Preliminary Theoretical and Legal Background
Since the commitment to gender equality made in 1995 at the United Nations (UN) Fourth World Conference on Women,1 “gender mainstreaming” has become an important international strategy to advance women’s equality (see also Chapter 3 of this volume). According to the UN Economic and Social Council (ecosoc), “[m]ainstreaming a gender perspective is the process of assessing the implications for women and men of any planned action, including legislation, policies or programmes, in all areas and at all levels” [emphasis added].2
As highlighted by several international instruments,3 equality of women is a goal for all policies and sectors, including the economic and financial ones. Among others, the Convention on the Elimination of All Forms of Discrimination against Women (cedaw)4 requires parties to take appropriate measures “in particular in the political, social, economic and cultural fields […] to ensure the full development and advancement of women”.5 Moreover, several (non-governmental) declarations and documents have stressed the need to empower women’s economic rights. For example, the Montreal Principles
Women’s economic empowerment was listed as a global priority in the 2015 G7 Leader’s Joint Declaration, where they “[…] reaffirm [their] commitment to continue our work to promote gender equality as well as full participation and empowerment for all women and girls [… and] to overcome discrimination […] and other cultural, social, economic and legal barriers to women’s economic participation”.8 Two years later, in 2017, the priority theme for the 61st session of the UN Commission on the Status of Women (csw)9 was “Women’s economic empowerment in the changing world of work”.10 The background document for the preparatory meeting in the Asia-Pacific region made it very clear that “[t]here is an urgent need to analyse […] the role of fiscal policy in upholding the right to life for girls and women”.11 Overall, we find several references and commitments to advancing the economic empowerment of women and to adopting the “gender mainstreaming” approach in the economic and fiscal discourse.12
But what do we mean by economic empowerment of women? A report prepared for the International Center for Research on Women has developed
In the financial sector, in particular, economic empowerment can be achieved by promoting financial inclusion, meaning the possibility to access, and actively and effectively use, all the relevant financial services, such as bank accounts, loans, and insurance.14 One tool that has been used to promote economic empowerment of women in the fiscal policy framework is the so-called “gender budgeting”,15 which allows fiscal authorities “to ensure that tax and spending policies and/or public financial management instruments address gender inequality and the advancement of women in areas such as education, health, and economic empowerment”.16 As underlined in one of the expert papers prepared for the 61st session of csw, “[g]ender budgeting is ideally a fiscal innovation that translates gender commitments into fiscal commitments”17; however, “[a] tremendous amount of confusion exists on the concept of gender budgeting […]”.18
Indeed, particular stress has been laid on the need to enhance the capacity building of national governments so that they can adequately address the question of fiscal equality. In this regard, UN agencies and other international
Nevertheless, women’s financial inclusion still faces several barriers.21 Increasing women’s financial inclusion is not just a matter of providing the relevant financial instruments, it is also a matter of improving women’s skills and capabilities to use them effectively.22 In this respect, financial literacy, which provides individuals with the “knowledge, aptitude, and skill base necessary to become questioning and informed consumers of financial services”23 is an effective instrument to achieve financial equality and, consequently, strengthen women’s economic empowerment.24
In this chapter, we want to stress the overall need for a new narrative when it comes to financial equality. The following section illustrates what we mean by “new narrative” together with an overview of the most significant obstacles that women are still facing in the financial sector.
2 Financial Equality: the Need for a New Narrative
It is a fact that wealth is increasingly growing in the hands of women around the world. According to the statistics, women worldwide already hold more than 30% of global wealth,25 and will hold even more in the next couple of decades as a result of the wealth transfer down the generations.
Women face several barriers to financial participation and access to capital. And in many countries, financial equality is still very new: let us take for example Switzerland, where it has been barely 35 years since married women were first allowed to open bank accounts without the consent of their husbands.27 Accordingly, the financial empowerment of women in the country is also still in its infancy. And, according to the 2019 “ubs Investor Watch. Own your worth” report, although 80% of daily household financial decisions are taken by women, only 23% take the lead on long-term financial decisions. Moreover, 8 in 10 women still believe their male partners know more about money than they do.28
Although it is true that companies are increasingly implementing policies aimed to foster equal opportunities,29 significant gaps in pay and funding remain.30 In this respect, it is worth noting the report “Women’s Empowerment
Overall, there is a need for a new narrative when it comes to advancing financial inclusion and equality: it is not enough to address the issue with businesses solutions of “pink marketing” (marketing targeting female clients), “pink products” (offerings targeting female clients) or “pink teams” (female teams focusing on female clients). Instead, there is an immediate need to reconsider the entire value chain of the business, to make it more appealing (and functional) for women: both outside-in (making it attractive for female clients to engage with businesses) and inside-out (making it more attractive for women to join, grow and remain within organisations).32
Promoting and improving gender equality policies in the financial and business sectors is not only a social and moral issue, but can also have a significant positive impact on boosting gross domestic product (gdp) growth. According to the 2020 European Investment Bank’s report “Funding Women Entrepreneurs”, promoting gender diversity ‘could lead to a potential increase of 26% of the annual global gdp and US$ 160 trillion of human capital wealth’ as well as improving business performance by 15%.33
When creating a new narrative on financial equality, three main questions arise: what would the financial industry look like if it focused on women? What is the true cost of pay gaps and funding gaps? Isn’t it time for fewer words and more action?
Thus, gender equality represents one of the biggest challenges and opportunities for every country. The following sections highlight the barriers women are currently facing and the steps that can be taken to boost financial literacy and, consequently, financial equality.
3
What are the main barriers to gender equality? The five most common are: (1) pay gaps – the long-term impact of lower earnings on wealth gaps and pension gaps; (2) career discontinuity – when women take time off to care for family members; (3) flexible work – particularly in Switzerland, where the percentage of women working part-time is higher than in other European countries;34 (4) longevity – if women live 5 to 7 years longer than men, statistically, their (more modest) wealth has to last longer, impacting their quality of life; and (5) and risk appetite – aggregate statistics show that women tend to sit on more cash and fixed income investments than men do, which means they compound their wealth over decades at a low interest rate.35
A simulation of a lifetime wealth curve was carried out in the 2017 study “ubs Wealth management research: Taking action”. The study showed how the cumulative impact of the above-mentioned factors can prevent women from being able to accumulate the wealth needed to sustain their longevity.36
The overall picture is not very encouraging: according to the “Global Gender Gap Report 2020” of the World Economic Forum, ‘it would take 257 years for women and men to reach pay parity’.37 This should be coupled with the findings of the ubs research, which shows that a 10% gender pay gap alone can lead to a 38% gender wealth gap, while a 20% pay gap can lead to an 85% wealth gap.38 For example, in Switzerland, the pay gap between male and female full-time employees stands at 19%, according to the Federal Statistical Office.39
In light of this analysis, we need to reflect on the broader meaning of risk when we talk about women and financial participation. Conventional notions of risk relate to stock market risk or volatility; and a lack of financial confidence
The above-mentioned ubs report shows that a woman’s life ‘circumstances, financial confidence, and attitude to investing can actually make it harder for her to achieve her financial goals’.40 And indeed, one factor that has been consistently underestimated is the role that gender can play in the investment decision-making process.41 Women and men build up and invest their wealth differently; accordingly, finding the right investment approach can make a big difference by improving women’s financial well-being as well as their quality of life.42 For example, women tend to make investments in businesses that have a meaning and purpose for them.43
There are several steps than can be taken to reduce the impact of the gender pay gap on women’s wealth: focusing more on the financial goals of women, and defining and recommending portfolios accordingly; and, above all, helping women feel more confident about investing.44
This leads to the issues of financial literacy and financial equality, which are discussed in the following section.
4 Financial Literacy and Financial Equality: Where Do We Stand?
Financial literacy, namely the “ability to use one’s knowledge and skills to effectively manage financial resources”,45 is important for everyone, not only for those working in the financial sectors, but also for the consumers of financial products to help them know how best to save and invest their money.46
Together with the low rate of financial literacy, we should also consider the semantics around money and financial matters. Indeed, the language normally used by ‘investors, finance professionals and the media’ is still biased against women.54 For example, a study conducted at the London Business School highlighted that women wishing to start an investment plan are usually asked mainly “about the potential for losses”, while men are asked “about the potential for gains”.55
Also, the media is biased against women in its publications on financial matters.56 In a linguistic study of 300 articles, Starling Bank highlighted huge discrepancies ‘in the way men and women are spoken to about money’. Around 65% of financial articles in women’s magazines define ‘women as excessive spenders’; on the other hand, in articles aimed at men, 70% emphasise the concept that making money is a masculine ideal.57 Thus, there is a need for a new narrative to overcome the biased semantics around financial matters, which affect women’s access to capital and women’s involvement in managing money and investment.58
Turning to the question of how engaged women are in financial matters, it is worth recalling that, according to the 2019 ubs “Own Your Worth” report, most married women worldwide tend to leave financial decisions to their male spouses. This is mainly because of “historical and social precedents to
The findings highlight that women tend to focus more on short-term financial responsibilities and tasks, such as the daily household expenses. Only 23% of women are reported to have a say on long-term ‘financial planning decisions like investing and insurance’ (and this seems most common in Hong Kong and Switzerland). There are many reasons for this, including women’s belief that their male spouses know more about finance (82%), or are generally the ones earning more in the family (78%) or because women have never been encouraged (58%) or even discouraged (56%) from being involved in long-term financial planning and investing.61
Women often only grasp the risks of not getting involved in long-term financial management decisions when they divorce or are widowed: statistics show that 76% of widows and divorcees wish they had been more involved in long-term financial planning, while 77% urge others to become so.62 Indeed, when women are actively engaged in making long-term financial decisions with their male spouses, they feel more positive about their future financial security.63
Another noteworthy finding is that the involvement of women in long-term financial decision-taking is less today than for the previous generation.64 According to the 2019 ubs report, nearly 60% of women under 50 years old defer long-term financial decisions to their male spouses, compared to 55% of women over 50 years old.65
Accordingly, finance needs a profound transformation; in particular, the narrative around financial participation should be focused on life goals, purpose
Financial literacy should be on school curriculum for all age groups, from primary through university. This will enable a new narrative to be built up around finance – and reaching financial equality – starting from the younger generations, as discussed further in section 5.
5 Building up a New Narrative around Money for the Younger Generations
Financial education needs to begin at a young age, especially for girls, to build up financial confidence as early as possible.68 In 2015, a study from the University of Washington revealed that by the age of 5 years, ‘children have a sense of self-esteem comparable to that of adults’,69 and money habits are largely shaped by the age of 7 years. This is why it is important to start a conversation about finance with children quite early.70 Research shows that pay gaps start with pocket money: by the age of 10 years, many girls are already facing pocket money pay gaps that range between 10% and 30%.71 And this is
Financial literacy can and should start at home, by teaching children the value of money, the ways in which they can start earning and, importantly for girls, training them to negotiate their pay for a given job. Financial training should also include teaching children that every financial decision has an impact on our world. In this way, they will soon learn that every spending decision or investment decision they make has a social and environmental impact.72 It is essential to bear in mind that “when spending your pennies, you want to know where your money ends up, and which companies care: do they care about forests and oceans and seas? Do they care about saving the birds and the bees? […] By spending your money, you are using your voice”.73
6 Concluding Remarks
On 31 January 2002, the French Presidency of the Council of the European Union organized a high level conference on “The Economic Empowerment of Women: Key to substantive gender equality”, which gathered the EU ministers for equality along with the European Commissioner for Equality. This was one of the first conferences organized by the French Presidency at the very beginning of its 2022 semester, with the aim to “formulate concrete solutions to support women’s economic empowerment”.74
However, advancing women’s economic empowerment in the financial sector is not only a matter of making the full range of financial instruments available to women; it is also a matter of financial education. As this chapter has illustrated, we need a new narrative for financial equality to effectively address the barriers that women are still facing.
Indeed, finance has usually been a male-dominated field: it is quite telling to recall a research carried out in Sweden in 2018, based on interviews of finance professionals, where “interviewees pointed to a masculine and unwelcoming culture as the main reason for why there weren’t more women in certain fields of finance”.75
Starting to develop a new narrative around financial matters at an early age – both in the family environment as well as at school, with dedicated finance literacy programmes to be included in the relevant curricula since primary schools – can help to successfully address the gender gap and enable girls and women to build up and reinforce their financial confidence. Indeed, “[i]t’s time to make money equal”.76
Fourth World Conference on Women, Declaration, UN Doc. a/conf/177/20, 15 September 1995, para 24 <
UN General Assembly, Resolution A/52/3, Report of the Economic and Social Council for 1997, 18 September 1997 <
For a general review of the relevant international legal framework, see Christine Chinkin, ‘Women, Rights of, International Protection’ (2010) Max Planck Encyclopedia of Public International Law <
Convention on the Elimination of All Forms of Discrimination against Women (cedaw), unts 1249, adopted on 8 December 1979 and entered into force on 3 September 1981, 13.
cedaw, article 3.
‘Montréal Principles on Women’s Economic, Social and Cultural Rights’ (2004) 26 (3) Human Rights Quarterly 760.
G20 Leaders Declaration, Los Cabos, Mexico, 19 June 2012, para 53 <
G7 Leadersʼ Declaration at the G7 Summit of 7–8 June 2015 <
The Commission on the Status of Women (csw) is the principal UN intergovernmental body exclusively dedicated to the promotion of gender equality and the empowerment of women. It was established by ecosoc resolution 11(ii) of 21 June 1946. See the official website at <
The 61st session of the Commission on the Status of Women took place from 13 to 24 March 2017. See the dedicated website at <
UN Economic and Social Commission for Asia and the Pacific (escap), UN Women, Regional preparatory meeting in the Asia-Pacific region for csw61, Background document (2016) 14 <
Christine Chinkin, ‘Gender and Economic, Social, and Cultural Rights’, in Eibe Riedel et al (eds), Economic, Social, and Cultural Rights in International Law: Contemporary Issues and Challenges (Oxford University Press 2014) 136.
Anne Marie Golla et al, Understanding and Measuring Women’s Economic Empowerment (International Center for Research on Women 2011) 4 <
Leora Klapper and Jake Hess, Financial Inclusion and Women’s Economic Empowerment (unhlp 2016) 2 <
Janet G. Stotsky, Using Fiscal Policy and Public Financial Management to Promote Gender Equality. International Perspectives (Routledge 2020) 30.
Lisa Kolovich, ‘Gender Budgeting: How Fiscal Policy Can Promote Gender Equality’, in Lisa Kolovich (ed), Fiscal Policies and Gender Equality (International Monetary Fund 2018) 2.
Lekha Chakraborty, Expert paper for the UN Women Expert Group Meeting ‘Women’s economic empowerment in the changing world of work’ Geneva, Switzerland, 26–28 September 2016; egm/cww/ep, ‘Fiscal Policy Practices for Women’s Economic Empowerment’ (8 September 2016) 3 <
ibid 13.
Kolovich (n 16) 7.
ibid 1–2.
Klapper and Hess (n 14) 2.
Mark Napier et al, Promoting Women’s Financial Inclusion: A Toolkit (dfid UK 2013), 17 <
Carolynne Mason and Richard M S Wilson, ‘Conceptualising Financial Literacy’ (2000) 7 Loughborough University Occasional Paper 5.
Jodi Jarecke et al, ‘Financial Literacy Education for Women’ (2014) 2014 (141) New Directions for Adult and Continuing Education. Special Issue: Financial Literacy and Adult Education 38.
This will rise at a compound annual growth rate of 5.7% to US$ 97 trillion by 2024, according to Boston Consulting Group (bcg). See Anna Zakrzewski et al, ‘Managing the Next Decade of Women’s Wealth’ (bcg Publications, 9 April 2020) <
See GenderSmart, ‘Unlocking Women’s Wealth: An Interview with Mara Harvey’ (GenderSmart Blog, 19 November 2020) <
In 1985, the new Swiss Marriage Law, introducing legal equality between women and men within marriage, was ratified by referendum. See Claudia Kaufmann, ‘Marriage Law Revision. Occasion for Hope?’ (1986) 9 (1) Women’s Studies International Forum 35.
See ubs, ‘UBS Investor Watch. Own your Worth’ Global insights: What’s on Investors’ Minds. Volume 1 (2019) 7, <
Equileap’s report on implementation of gender policies by companies, for example, shows that there was an overall improvement in performance among companies ranked in Equileap’s Global Top 200 in 2018 compared to 2017. See Equileap, Gender Equality. Global Report & Ranking (Equileap 2018) <
ubs (n 28).
United Nations Global Compact, Business for Social Responsibility, Women’s Empowerment and Business: 2020 Trends and Opportunities (2020) <
GenderSmart (n 26).
See Surya Fackelmann and Alessandro De Concini, Funding Women Entrepreneurs. How to Empower Growth (European Investment Bank June 2020) 7 <
See Switzerland, Federal Statistical Office, Swiss Labour Force Survey: Labour Market Participation 2010–2018 (23 April 2019) <
See ubs, ‘Taking Action. How Women Can Best Protect and Grow Their Wealth’ Women and Investing UBS Wealth Management (October 2017) 4 <
ibid.
See World Economic Forum, Global Gender Gap Report 2020 (World Economic Forum 2019) <
ubs (n 28) 5.
Switzerland, Federal Statistical Office, Wage Gap 2018 (2019) <
See ubs, ‘Taking Action. How Women Can Best Protect and Grow Their Wealth’ Women and Investing ubs Wealth Management (October 2017) 4 <
ibid.
ibid.
ibid.
ibid 16.
See Andras Horvai and Andrey A. Bokarev, ‘Financial Literacy – Helping Citizens Make Smart Financial Choices’ (World Bank – Opinion, 21 June 2018) <
See Leora Klapper et al, Financial Literacy Around the World. Insights from the Standard & Poor’s Ratings Services Global Financial Literacy Survey (2015) 4 <
See Jere R. Behrman et al, ‘The Effects of Financial Education and Financial Literacy: How Financial Literacy Affects Household Wealth Accumulation’ (2012) 102 American Economic Review 3, 300 and Annamaria Lusardi, and Olivia S. Mitchell, ‘The Economic Importance of Financial Literacy: Theory and Evidence’ (2014) 52 (1) Journal of Economic Literature 5.
oecd Member States established the International Network on Financial Education in 2008, with the aim of collecting relevant data and sharing experiences and good practices on financial literacy worldwide. For more information see the official website <
See the Financial Literacy survey prepared as part of the World Bank Financial Governance Consumer Protection in Financial Services Program, Alpha Research, Financial Literacy Survey (World Bank 2010) <
See, for example, the financial literacy survey prepared by the National Bank of Italy (Giovanni D’Alessio et al, ‘Financial literacy in Italy: the results of the Bank of Italy’s 2020 survey’ (Banca d’Italia – Questioni di Economia e Finanza. Occasional Paper No. 588, December 2020) <
Leora Klapper et al, Financial Literacy Around the World. Insights from the Standard & Poor’s Ratings Services Global Financial Literacy Survey (2015), 4, <
See the relevant data from Klapper et al (n 51) 8.
ibid 12.
ubs (n 40).
Dana Kanze et al, ‘Male and Female Entrepreneurs Get Asked Different Questions by VCs – and it Affects How Much Funding They Get’ (2017) Harvard Business Review <
ibid.
Starling Bank, #Makemoneyequal. Linguistic Analysis 2018 (February 2018) <
Mara C. Harvey, Women and Risk: Rewriting the Rules (Nicolai Publishing & Intelligence 2019).
See ubs, ‘UBS Investor Watch. Own your worth’ Global insights: What’s on investors’ minds.Volume1(2019)3<
See ubs, ‘UBS Investor Watch. Own your worth’ Global Insights: What’s on Investors’ Minds. Volume 1 (2019) 4 <
ibid 7.
ibid 12.
ibid 11.
ibid.
ibid 13.
James Chen, ‘Impact Investing’ (Investopedia, 2 March 2021) <
Anna Zakrzewski et al, ‘Managing the Next Decade of Women’s Wealth’ (bcg Publications, 9 April 2020) <
ibid 23.
Molly McElroy, ‘Children’s Self-esteem Already Established by Age 5, New Study Finds’ (Washington University News, 2 November 2015) <
ubs, Women’s Wealth 2030 Report (8 March 2021) 23 <
See, among others, Mara C. Harvey, Women and Risk: Rewriting the Rules (Nicolai Publishing & Intelligence 2019), 55; Hilary Osborne, ‘Boys Get More Pocket Money Than Girls, Halifax survey finds’ (The Guardian, 3 June 2016) <
See in this respect, Mara Harvey, A Smart Way to Start, followed by other four books in the series (A Smart Way to Save, A Smart Way to Spend, A Smart Choice to Make and A Smart Way to Start Doing Good, 2019), which are intended to build up financial literacy for kids. See for more information the official website <
Mara Harvey, A Smart Choice to Make,
French Presidency of the Council of the European Union, ‘Conference on Economic Empowerment, Key to Gender Equality’ (News, 31 January 2022) <
Mary King et al, ‘What Will It Take to Make Finance More Gender-Balanced?’ (Harvard Business Review, 10 December 2018) <
Anne Boden, ‘Why We Need to #Makemoneyequal’ (Starling Bank Blog, 13 March 2018) <
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