BlueOrchard is the latest impact investor to join 2X Collaborative, the industry body which provides support and promotes gender lens investment and has just merged with GenderSmart
BlueOrchard is among the latest batch of financial institutions to join 2X Collaborative, the gender lens investment industry body, whose rapid membership expansion reflects growing interest among both public and private investment institutions in lending that targets women’s empowerment.
2X Collaborative’s membership has expanded to some 40 organisations, which include development finance institutions (DFIs), multilateral development banks (MDBs) and private sector investment managers. The body builds on the 2X Challenge gender lens initiative launched at a G7 summit in 2018.
BlueOrchard is seen as a valuable addition to the ranks. The Zurich-based impact investment manager’s acquisition by Schroders Group in 2019 added to its financial clout and reach, both of which are seen as contributing to 2X Collaborative’s drive to bring further private sector institutions into its fold.
The investment manager already has a strong focus on gender lens investing. BlueOrchard says the proportion of female end clients across all of its strategies was around 80% in December 2021.
“We are really excited that big players like BlueOrchard are coming on board, because they are a leader in the impact investing field in terms of mobilising private capital. So, it sends a strong signal,” Jessica Espinoza, 2X Collaborative’s chief executive officer, told Impact Investor.
“I think BlueOrchard will play a crucial role as a member by helping us to really bring 2X and gender lens investing into the financial mainstream and across asset classes,” she said.
Maria Teresa Zappia, BlueOrchard’s chief impact and blended finance officer, also saw this as a key part of the impact investor’s role in 2X Collaborative. “Gender, diversity, and inclusion are central to our work, and we look forward to playing an active role within the Collaborative and promoting the ‘mainstreaming’ of investments with a gender perspective,” she said on announcing BlueOrchard’s membership.
$15bn funding target
2X Collaborative oversees the 2X Challenge, a G7-backed initiative to promote lending that specifically benefits women. The 2X Challenge initially set out to mobilise $3bn of investments by DFIs and MDBs in 2018-20 that qualified under its criteria, but it surpassed that figure.
By end-2020, the DFIs and MDBs had invested almost $7bn of their own capital and mobilized further funding from other investors as part of the process, bringing total capital invested meeting 2X criteria to $11.4bn, according to 2X.
The industry body is now targeting a further $15bn of eligible lending in 2021-22. It is also considering expanding the Challenge to including private sector-led lending as well as that by DFIs and MDBs.
Lending is eligible under the Challenge if it furthers entrepreneurship among women, increases representation of women in senior management and decision-making roles, increasing the proportion of women in the workforce and opportunities for their advancement, or supports development of products and services that benefit women as consumers. The make-up of the overall portfolio of financial intermediaries is also considered.
Toolkit available, certification on the agenda
Knowledge sharing within the investment practitioner community has enabled 2X Collaborative to produce a “toolkit” on best practice for gender lending across sectors and thematic areas. One theme generating considerable member interest is gender and climate change, which includes, for example, support for women smallholder farmers, whose businesses are often major pillars of communities in areas affected by climate change, Espinoza said.
2X Collaborative has also extended its reach by helping to develop metrics enabling investors to assess the extent and type of gender lens lending being made. These are being incorporated into impact investing frameworks such as the Global Impact Investing Network (GIIN) IRIS+ benchmarking database.
“Integration into the GIIN IRIS+ framework, has really helped to ‘mainstream’ gender lens investing in the impact investing space. So, all impact investors already using IRIS+ are now also using 2X,” said Espinoza.
Now 2X Collaborative plans to develop a gender lens certification framework for the investment industry.
“What we want to do as a next step is to co-create with the broader industry what 2X certification should look like, so that it’s an industry endorsed mechanism. We see a strong role for the private sector to co-shape that with us,” said Espinoza.
2X already has the first seed funding in place to start the process and has identified different target audiences for certification, including corporates and SMEs, funds, financial institutions, and products such as gender bonds and sustainability-linked loans, as well as institutional investors themselves.
Merger with GenderSmart
2X has also bolstered its role as the go-to industry body for gender lens investment by merging with another pioneering organisation GenderSmart. The merger was announced in June, with more details due to be released to coincide with a GenderSmart summit being held in London in October.
“2X and GenderSmart have been partners for a long time. We have had joint programming, we’re running working groups together, we’re collaborating closely for the GenderSmart Investing Summit. It just makes a lot of sense,” Espinoza said.