The XX Factor Guidebook

How to Align Financial Investments to Improve the Lives of Women & Girls

In 2017, the Center for High Impact Philanthropy published its first-ever comprehensive framework for philanthropic donors committed to improving the lives of women and girls called The XX Factor. For donors focused on impact, that framework provides an evidence-based playbook for generating the greatest impact for women and girls.

In this Guidebook, we show how our framework can be used not only to guide philanthropic funding decisions, but also to help investors align their financial investments with their goals of improving the lives of women and girls. Our guidance includes two main strategies for public equity alignment with the XX Factor framework: using available data for stock selection and engaging as a shareholder to influence the companies owned.

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A Typology of Investors Using an Impact Investment Lens

Below are examples of three types of investors who seek social data on companies—those who want to mitigate Environmental, Social, and Governance (ESG) risks; those who want to pursue ESG opportunities; or those who want to create positive, social impact. Communication and implementation of an investor’s portfolio is different for each type of investor.

WHY USE A SOCIAL
IMPACT LENS?

TO MITIGATE
ESG RISKS

TO PURSUE ESG
OPPORTUNITIES

TO CREATE
SOCIAL IMPACT

SOCIAL INVESTMENT LENS

FINANCIAL

VALUES

CHANGE

Social Investment Thesis

Investing in financially attractive companies that rate higher than their peers on social measures will generate higher and more consistent financial returns over time

Screening out bad actors and investing in companies that have higher alignment with my values will keep my investments from doing harm while at the same time performing well financially

Investing in companies that demonstrate a commitment to specific social practices will help solve important societal problems; may seek competitive or below market returns; may include a “laggards” portfolio for activist corporate engagement

Investment Policy Statement

Documents criteria for financial goals

Documents criteria for implementing my values and financial goals and the balance between them, as well as proxy voting guidelines

Documents criteria for implementing financial and social goals, and the balance between them as well as proxy voting guidelines

Shareholder Engagement

Might not be addressed

Ensure that my proxies are voted in alignment with my values; may outsource other forms of shareholder engagement

Vote my proxies and/or ensure they are voted in alignment with social goals; actively seek opportunities to engage in corporate dialogue, and submit shareholder resolutions

Key Strategies to Align a Public Equity Portfolio

Below are examples of strategies that investors can use to align their public equity portfolios with our XX Factor framework.

* November 7, 2018 — An earlier version of this file stated the following on page 21: “In 2017, Equileap began to publish 12 data points measuring the gender balance and equality in over 3,000 companies and eight additional data points on 1,000 of those companies.” The correct figure is 19 data points measuring the gender balance and equality.

Tara Health Foundation

This work was made possible through the generous financial support of Tara Health Foundation, and was done in collaboration with the Wharton Social Impact Initiative.