The United Nations predicted in 2022 that “without investment, gender equality will take nearly 300 years.” Investment is critical to advance gender equality, and the 2X Challenge, announced that it has exceeded its ambitious US$15 billion target for 2021-2022. It mobilized gender lens investments totaling US$16.3 Billion from 2021-2022, benefitting 473 businesses across Asia, Africa, Central and Eastern Europe, Latin America and the Caribbean.
First launched at the G7 Summit 2018 as a joint commitment by the Development Finance Institutions (DFIs), the 2X Challenge has now become a flagship initiative under an independent organisation, 2X Global, which has seen the interest broaden from DFIs to a diverse group of capital providers. “The 2X Global membership has increased from 20 DFIs and MDBs to over 100 capital providers globally within just a year. The growth in private sector investors who have joined 2X Global has been particularly strong,” says Jessica Espinoza, CEO of 2X Global and Chair of the 2X Challenge. The US$16.3 Billion investments mobilized represents 116% increase from previous years, when they have raised US$11.3 billion from 2018-2020.
Driving forces behind the global gender finance initiative: (left) Jessica Espinoza, CEO of 2X ... [+]
The growth may have been accelerated also by events unfolding in the past two years, including the Ukraine war and the climate crisis. One example is Horizon Capital, a private equity fund in emerging Europe including Ukraine. Their latest fund, Horizon Capital Growth Fund IV has been awarded ‘2X Flagship Fund’ status, which means they are committed to both improving gender diversity within the fund manager and also to investing with a gender lens to build gender-smart portfolios using a set of criteria covering employment, consumption, leadership and entrepreneurship.
“We pride ourselves in Horizon Capital being a trailblazer in Central and Eastern Europe – raising the first and largest fund for Ukraine since the full-fledged invasion and equally important, this fund being the first and only 2X Flagship Fund in our region and only one of 2 woman-founded and woman-led in an industry managing $10 trillion where senior women comprise circa 12%”, says Lenna Koszarny, Founding Partner and CEO, Horizon Capital.
The women-founded and -led private equity firm invests in fast-growing tech and export-oriented companies in Ukraine and the near region. Horizon Capital raised $254 million in investment capital as well as tens of millions of dollars in humanitarian aid for the country, prior to final closing in September. Anchor investments by select 2X member DFIs played a crucial enabling role.
Being a 2X Flagship Fund “is of great value to us as it aligns our investors and team around clear gender-smart investing objectives,” continues Koszarny. “We have seen the outsize role of women in Ukraine throughout this most challenging time in the country’s history – in government, politics, civic society, defending the country - as well as in the business community leading companies driving Ukraine’s ongoing economic and business resilience. The fast-growing IT sector has seen a surge of women-founded companies and women joining tech, a figure that has tripled over the past decade.”
On the climate crisis, research has shown the nexus between climate and gender finance. For example, refugee women, who make up the majority of climate refugees, could generate up to $1.4 trillion to annual global GDP if employment and earnings gender gaps were closed to meet the national levels of hosting countries. 2X Global has a Gender and Climate Taskforce, and an example of a gender-smart climate fund is Ecoenterprises Partners III, a women-owned and led fund that invests in women-owned and led afforestation, reforestation, aquaculture, ecotourism and sustainable agriculture and forest management businesses in Latin America.
SHARM EL SHEIKH, EGYPT - NOVEMBER 12: Protesters, including women indigenous activists, demonstrate ... [+]
“When women earn more income, they save more and invest in basic needs including housing, healthcare, education, and in small businesses, bringing benefits to their own households,” says Scott Nathan, CEO of the U.S. International Development Finance Corporation (DFC). The business case for gender equality seems to be increasingly accepted among investors. With more investments, the world will get closer to closing the gender gap.
