Since its launch, the 2X Challenge has galvanised support for gender lens investing (GLI) across both Development Finance Institutions (DFIs) and institutional investors, claiming to mobilise US$11.4 billion for women and girls between 2018-2020. A new US$15 billion target was announced at the 2021 G7 summit and surpassed with US$16.3 billion being invested from 2021-2022. Building on this momentum, 2X Global announced their intention to develop a “2X Certification” for the GLI industry. Our team at Publish What You Fund joined some of the recent co-creation workshops for this mechanism. We have since drafted a working paper outlining our initial recommendations for improved disclosure of 2X investments recognising the importance of integrating transparency into the forthcoming 2X Certification.

2X Global (formerly 2X Collaborative and GenderSmart) are working to develop a certification mechanism in response to demand from GLI industry players to move beyond self-assessment toward third party verification, hoping to improve transparency and accountability. At Publish What You Fund we recognise the importance of investing in women and girls in closing gender gaps globally. Transparency of these investments, however, is critical both for holding institutions accountable to their gender commitments that are funded with public money and for understanding the impact of investments working to advance gender equality.

The push for more transparency is more than just an exercise in publishing more data. Reversing the damage of COVID 19 and accelerating progress to reach the SDG goals, especially during today’s global challenges, is a daunting hill to climb. With already scarce resources and huge needs, investments need to be as catalytic and effective as possible. Progress on SDG 5: achieve gender equality and empower women and girls, is far off track and further investment is crucial. What is very worrisome, however, is that we don’t know whether the billions that DFIs have mobilised are actually working. Without the data and the evidence to ensure we are being responsible fiscal custodians, Investments may be haphazard or, at worse, doing harm. Strong criteria, strategies, and results – which are transparent so that all may coordinate and learn – are essential if we are to make the necessary progress to closing the equality gap.

We need more transparency on 2X investments

We raised some of our concerns about the transparency of 2X investments in a recent blog. Many of the 2X investors, for example, don’t currently identify their qualifying 2X investments making it impossible to break down the US$11.4 billion claim. For those which do, not all identify the criteria by which the investments qualify. As such it’s not clear whether 2X is driving funding to firms owned, managed, or staffed by women, or whether it’s driving funding to firms which serve female customers. And despite being aligned with multiple impact investing metrics[1] it’s not possible to see how 2X investments are utilising these. For example, we could not find any investments which showed which of these metrics were being used as indicators, what the targets for these might be, and if there were any investment results.

Four ways to improve disclosure on 2X investments

With the co-creation process for 2X Certification underway, we have drawn insights from our DFI Transparency Initiative and our gender and women’s economic empowerment projects to draft a working paper outlining timely recommendations on disclosure practice for 2X investments. This includes recommendations on accessible and standardised reporting, disclosing how investments meet 2X criteria, and better reporting of impact data. Our recommendations fall into four overarching recommendations to improve the transparency of 2X investments, which are detailed in our working paper:

1. Improve disclosure of 2X Investments by making investments accessible via centralised reporting platforms
2. Investments made by 2X certified organisations need to disclose the rationale for their 2X investments and how investments meet criteria
3. 2X Investors should disclose gender strategies and targets at an institutional level
4. Investments made by 2X certified organisations need to disclose impact data

 We appreciate that this work is complex and there is a lot to be done, but we hope that this working paper can serve as a basis for discussions on setting minimum disclosure criteria for 2X investments. We understand from our experience developing the DFI Transparency Tool that developing specific and agreed criteria needs to be done collaboratively. We hope to do this in partnership with industry stakeholders and welcome feedback on these initial recommendations.

The opportunity to drive better disclosure

Alongside developing the detail of these recommendations, we hope to work with partners in thinking through how these disclosure principles and expectations relate to different organisations that 2X might certify (companies, funds, financial institutions), how we reconcile institutional level criteria with investment level disclosure, and the frequency of reporting, to name a few areas for further discussion.

The 2X Certification mechanism offers a real opportunity for 2X investments to lead the way in investment transparency and demonstrate what impactful funding looks like. As discussions around 2X Certification advance we will review and revise these recommendations and continue to contribute to the conversation on what 2X disclosure should look like, and the role certification can play in moving toward this.

As we work to develop a more comprehensive disclosure framework we welcome feedback and discussion with stakeholders. If you have feedback or would like to discuss any of the attached working paper, please contact Alex Farley via alex.farley@publishwhatyoufund.org.

Download the working paper here

[1] The 2X criteria and metrics are aligned with the GIIN’s IRIS+ indicators, HIPSO, UN Women Women’s Empowerment Principles (WEPs), and the OECD DAC Gender Equality Policy Marker.