Post on 14-Sep-2018
Social Investor Meeting on
Responsible Inclusive Finance
Monday 18 June, 2018
Hosted by the Government of the Grand Duchy of Luxembourg -Ministry of Foreign
and European Affairs
Agenda• 9.30-10.25: Overview of key trends, opportunities, and challenges
• 10.25-10.40: Update on current topics for SPTF and SIWG
• 10.40-11:00: Coffee Break
• 11.00-12.00: SPI4 and ALINUS
• 12.00-13.00: Assessing S&E performance of SME finance
• 13.00-14.00: Lunch
• 14.00-15.00: Coordination with broader initiatives and linking to SDGs
• 15.00-16.00: Over-indebtedness and Lenders Guidelines
• 16.00-16.20: Coffee Break
• 16.20-17.20: Joint session with InFiNe on Green Finance
• 17.20-17.35: Conclusions & Plan for Day 2
Agenda• 9.30-10.25: Overview of key trends, opportunities, and challenges
• 10.25-10.40: Welcome and update on current topics for SPTF and SIWG
• 10.40-11:00: Coffee Break
• 11.00-12.00: SPI4 and ALINUS
• 12.00-13.00: Assessing S&E performance of SME finance
• 13.00-14.00: Lunch
• 14.00-15.00: Coordination with broader initiatives and linking to SDGs
• 15.00-16.00: Over-indebtedness and Lenders Guidelines
• 16.00-16.20: Coffee Break
• 16.20-17.20: Joint session with InFiNe on Green Finance
• 17.20-17.35: Conclusions & Plan for Day 2
• One of the most active working groups of the SPTF..
• …with a growing number of investors joining and committing to our
shared objectives - ~400 members from 133 organizations.
• We work together to advance responsible investment in inclusive finance. Together, we:
▫ Raise awareness and create ownership among investors of ongoing initiatives and developments in SPM
▫ Identify areas of concern in responsible inclusive finance
▫ Take collective action in areas where it can help the market develop in a positive and unified direction
Welcome
5
1. Harmonizing SPM due diligence and monitoring through common tool of SPI4 ALINUS
2. Evaluating client protection risks and service adaption in fintech investments (CDC-SPTF fintech webinar series, IFC/CDC/Goodwell Guidelines for Investing in Responsible DFS)
3. Aligning efforts with broader impact investing sector(WEF, GIIN, IMP, UNPRI)
4. Assessing S&E performance of SME finance
5. Green Finance
6. Other areas of priority: preventing over-indebtedness(guidelines, MIMOSA), outcomes management (working group), harmonizing covenants (“reasonable covenants”), pricing transparency (data platform), and responsible exits
Current priorities of the SIWG
6
We’ll be discussing updates on most of these today
• 2017: Zurich (March), Mexico (May)
• 2018: India (February)
• We also meet several times throughout the year via webinars in areas of common interest to group members
In-person meetings: 2x a year
7
Agenda• 9.30-10.25: Overview of key trends, opportunities, and challenges
• 10.25-10.40: Update on current topics for SPTF and SIWG
• 10.40-11:00: Coffee Break
• 11.00-12.00: SPI4 and ALINUS
• 12.00-13.00: Assessing S&E performance of SME finance
• 13.00-14.00: Lunch
• 14.00-15.00: Coordination with broader initiatives and linking to SDGs
• 15.00-16.00: Over-indebtedness and Lenders Guidelines
• 16.00-16.20: Coffee Break
• 16.20-17.20: Joint session with InFiNe on Green Finance
• 17.20-17.35: Conclusions & Plan for Day 2
Update onSPI4-
ALINUS
Photo: A. Alvarado
The common social
data collection tool
for ALigning
INvestors
due diligence with
the
Universal Standards
June 18, 2018
Luxembourg
Cécile Lapenu and
SIWG members
Agenda of the session
• Progress on implementation of ALINUS
• Feedback from the field (eMFP Action group surveys)
• New resources to support users (e-learning on ALINUS)
• Next steps for SPI4: Go Digital!!
• Testimonies from practitionners
Agenda of the session
• Progress on implementation of ALINUS
• Feedback from the field (eMFP Action group surveys)
• New resources to support users (e-learning on ALINUS)
• Next steps for SPI4: Go Digital!!
• Testimonies from practitionners
MIV/DFIs using ALINUS
• Full use (direct or aligned indicators)
ADA/LMDF, AFD, Alterfin, Blue Orchard, BNP Paribas, Cordaid,
European Investment Fund, Gawa, GCAMF, Incofin, Oikocredit,
Pamiga, Proparco, Sidi, Stromme MF/EA
Testing/strategic planning
BOPA, Deutsche Bank, DID – Development International
Desjardins, European Investment Bank, FAS, Gojo & Company,
GrassRoots, Symbiotics, Triple Jump, Verdant Capital
• Awareness raising
In contact with CERISE/SPTF for strategic discussions
15
10
17
International/National Networks using
SPI4/ ALINUS• Networks using SPI4
8 International: ACEP, Advans, CIF West Africa, Microcred, Opportunity Intern’l, Oxus, Pamiga, Vision Fund7 National: Amcred Brazil, Copeme Peru, FinruralBolivia, MCPI Philippines, PMN Pakistan, RadimArgentina, RFD Ecuador
• Networks in training/awareness or using
reduced network option3 International: AgaKhan, Grameen Foundation, CICM, etc.9 National: AMA Albania, AMFA Azerbaijan, AMFI Kyrgistan, AMFOT Tajikistan, ASOMIF Nicaragua, CMF Nepal, LMWG Laos, RedFasco Guatemala, UCORA Armenia, etc.
15
12
54
85
174184
230
20
40
60
80
100
120
140
160
180
200
2014 2015 2016 2017 Untilapril2018
Numbers of completed SPI4
April, 2018
520 SPI4 audits completed
30% filled the green index
88 different countries
389 questionnaires in SPI4 database
67% are accompanied self-assessments
+970 people trained in SPI4 (CERISE & SPTF)
109 qualified auditors
15 investment funds using
Growing use of SPI4
10 underway74 pipeline
Use of SPI4 today
Agenda of the session
• Progress on implementation of ALINUS
• Feedback from the field (eMFP Action group surveys)
• New resources to support users (e-learning on ALINUS)
• Next steps for SPI4: Go Digital!!
• Testimonies from practitionners
Making Microfinance Investment Responsible
MIR Action group – Feedback from surveysSurvey (direct/online) conducted Q1 2018
Investors (12), networks (8), FSP (22), SPI4 auditors (80)
What users like most?
What users like the least?
Call for action
• Common language, intern’lrecognition (credibility)
• Role of n’l networks in raising awareness
• Learning by doing (audit process)
• Concrete resources, comprehensive framework
• Benchmarks on Univ. Standards
• Funding facilities, targetedto most needed regions
• Low awareness in someregions (e.g. SEA exceptCambodia, CAC + Brazil)
• Overwhelming for somelevels (tool, implementation, smallorganizations) VS. advanced FSP remain on confort zone; standardization smoothesspecificities
• Not seen as strategic by some Boards or Management teams
• Quality of assessments
• Continuing awareness, support in implementation, quality control
• Engagement of regulatorsand investors (incentives for FSP)
• Information on facilities (and support extended)
• Platform to share experienceand practices
• Integrate with Risk Management and other key management issues (HR, product, MIS, etc.)
Agenda of the session
• Progress on implementation of ALINUS
• Feedback from the field (eMFP Action group surveys)
• New resources to support users (e-learning on ALINUS)
• Next steps for SPI4: Go Digital!!
• Testimonies from practitionners
Agenda of the session
• Progress on implementation of ALINUS
• Feedback from the field (eMFP Action group surveys)
• New resources to support users (e-learning on ALINUS)
• Next steps for SPI4: Go Digital!!
• Testimonies from practitionners
Build a fully-fledged data-based management
system by leveraging internet technologies
• Put client well-being at the center of strategy and operations of FSP (and later, social enterprises)
▫ Go farther: Build a user-friendly web-app to guide FSPs as they conduct their assessments and define annually their social statements
▫ Go broader: FSPs to use SPI4 on a regular basis, helping refocus the sectors’ activities around the clients needs and adaptation of products
SPIWAPP - a user-friendly, online application▫ A web app as a one-stop tool for data collection related to SPM
for field organisations
▫ A powerful engine to store and explore the data on SPM for each FSP
▫ Innovative data visualization to produce meaningful social dashboards
▫ A web app development based on iterative and agile methodology to adapt to the needs of the FSPs and SPI4 users
▫ An interface enabling foreseen in-house content development and minimum maintenance costs
CERISE is looking for partners to support its digitaltransformation, so that together we can build a common good for the financial inclusion ecosystem
Agenda of the session
• Progress on implementation of ALINUS
• Feedback from the field (eMFP Action group surveys)
• New resources to support users (e-learning on ALINUS)
• Next steps for SPI4: Go Digital!!
• Testimonies from practitionners
Testimonies from other users
• EIF : Customized ALINUS
• ADA : Implementation for due-diligence
• EIB : How to mitigate social risks and keep manageable DD on the microfinance business line?
Development and Implementation of EIF Social Score for Microfinance Operations
Development of EIF social scoring model Social performance management at EIF
▪ Support from CERISE on the development and implementation of EIF’s social performance assessment tool
▪ Objectives : Development of a pragmatic SPM approach, drawing from international experience and European context
▪ Challenge: Aligning to the universal standards in social performance assessment while addressing the specific socio-economic challenges of European markets and EIF investment strategy
36
➢ USSPM➢ Alinus/SPI-4➢ EU CGC➢ EaSI DA➢ EU context
➢ Identification and selection of key qualitative/ quantitative indicators
➢ Preliminary model
based on SPI-4
➢ Pilot test with a sample of FIs, incl.
feedback survey
➢ Adjustment & recalibration
➢ Improved guidance
➢ Case study
➢ Re-appropiation of
model – change of tool format
➢ Leveraging on
extensive work achieved with Cerise
PreliminaryMapping WorkshopI
Development
&PilotWorkshopII
Validationprocess Implementation
Development and Implementation of EIF Social Score for Microfinance Operations
Development of EIF social scoring modelKey consideration
▪ Development of a pragmatic social performance measurement approach
▪ Consistency with the current standards, i.e. USSPM, ALINUS, EU CGC
▪ Endorsement and alignment with sector best practices (“do not reinvent the wheel”)
▪ Relevancy and calibration to the objective of the mandate and EIF strategy
▪ Availability and accessibility of data: limiting unnecessary additional reporting
burden
▪ Objectivity of selected indicators, leaving limited room for subjectivity
▪ Balance between qualitative and quantitative indicators (process vs. outcomes)
▪ Self assessment based: easy to collect and verify, hereby adding minimum
additional work during the due diligence
▪ Building internal know-how and expertise in terms of social performance
management
▪ Independence of the tool
37
Development and Implementation of EIF Social Score for Microfinance Operations
Implementation of EIF’s social scoring tool Balancing social processes and outcome
38
• 12 qualitative indicators accounting for 60% of total score
• 10 quantitative indicators accounting for 40% of total score
• 22 criteria
3 9
• Promoting SP is a goal that has been integrated in ADA’s strategic and action plan.
• Alinus is the tool we decided to use both for the investment process (LMDF) and Capacity Building projects
• 2017 we benchmarked with Cerise database 32 partners that have completed a SPI4
ADA&LMDF experience in using SPI4-Alinus_strategy
4 0
ADA&LMDF experience in using SPI4-Alinus_2017 results
• ADA/LMDF average score is equal or higher than the Cerise database
• In SSA average score is higher for dimensions 1,2,3 and 6
• Cooperatives/unions and small size MFIs recorded higher score for all the dimensions
0
20
40
60
80
1001
2
3
4
5
6
Average score by dimension
Average score Cerise-SPI4 database (N=184)Average score ADA(N=32)
Benchmarks by SSA region
Table 4: average score of SSA MFIs compared to peer group (SSA region of CERISE database)
SSA MFIs(ADA partners)
SSA MFIs(CERISE
database)
Number of MFIs7
60
1- DEFINE AND MONITOR SOCIAL GOALS
65% 50%
2- COMMITMENT TO SOCIAL GOALS
48% 37%
3- DESIGN PRODUCTS THAT MEET CLIENT'S NEEDS
56% 49%
4- TREAT CLIENTS RESPONSIBLY
60% 58%
5- TREAT EMPLOYEES RESPONSIBLY
57% 58%
6- BALANCE FINANCIAL AND SOCIAL PERFORMANCE
73% 66%
Total 60% 53%
0%
20%
40%
60%
80%
100%
1- DEFINEAND
MONITORSOCIALGOALS
2-COMMITMENT TO SOCIAL
GOALS
3- DESIGNPRODUCTSTHAT MEET
CLIENT'SNEEDS
4- TREATCLIENTS
RESPONSIBLY
5- TREATEMPLOYEES
RESPONSIBLY
6- BALANCEFINANCIAL
AND SOCIALPERFORMANC
E
Average of SSA & ADA:
Average of Most recent audit & SSA & ADA:CERISE database
Benchmarks by legal form: Cooperative/creditunion
Table 7: average score of Cooperative/ Credit Union MFIs compared to peer group (Cooperative/ Credit Unionof
CERISE database)
Coop/creditunion MFIs
(ADA partners)
Coop/creditunion MFIs
(CERISE database)
Number of MFIs 6 45
1- DEFINE AND MONITOR SOCIAL GOALS
72% 48%
2- COMMITMENT TO SOCIAL GOALS
62% 38%
3- DESIGN PRODUCTS THAT MEET CLIENT'S NEEDS
69% 54%
4- TREAT CLIENTS RESPONSIBLY
77% 61%
5- TREAT EMPLOYEES RESPONSIBLY
70% 56%
6- BALANCE FINANCIAL AND SOCIAL PERFORMANCE
79% 67%
Total 71% 54%
0%
20%
40%
60%
80%
100%
1- DEFINE ANDMONITOR SOCIAL
GOALS
2- COMMITMENTTO SOCIAL GOALS
3- DESIGNPRODUCTS THATMEET CLIENT'S
NEEDS
4- TREAT CLIENTSRESPONSIBLY
5- TREATEMPLOYEES
RESPONSIBLY
6- BALANCEFINANCIAL AND
SOCIALPERFORMANCE
Average of Cooperative/ Credit Union & ADA:
Average of Most recent audit & Cooperative/ Credit Union& ADA:CERISE database
Benchmarks by scale: small
Scale (Gross Loan Portofolio, in USD) Small Africa, Asia, ECA, MENA < 2 millionLAC< 4 million
Table 8: average score of Small MFIs compared to peer group (Small MFIs of CERISE database)
Small MFIs(ADA partners)
Small MFIs(CERISE database)
Number of MFIs 6 68
1- DEFINE AND MONITOR SOCIAL GOALS
72% 53%
2- COMMITMENT TO SOCIAL GOALS
67% 40%
3- DESIGN PRODUCTS THAT MEET CLIENT'S NEEDS
67% 52%
4- TREAT CLIENTS RESPONSIBLY
77% 63%
5- TREAT EMPLOYEES RESPONSIBLY
83% 59%
6- BALANCE FINANCIAL AND SOCIAL PERFORMANCE
84% 68%
Total 75% 56%
0%
20%
40%
60%
80%
100%
1- DEFINEAND
MONITORSOCIALGOALS
2-COMMITMENT TO SOCIAL
GOALS
3- DESIGNPRODUCTSTHAT MEET
CLIENT'SNEEDS
4- TREATCLIENTS
RESPONSIBLY
5- TREATEMPLOYEES
RESPONSIBLY
6- BALANCEFINANCIAL
AND SOCIALPERFORMAN
CE
Average of Scale:Small & ADA:
4 4
ADA&LMDF experience in using SPI4-Alinus_ challenges
• Alinus is an extensive tool to promote and rise awareness among MFIs
• High added value for investors in order to benchmark and communicate
• High interest of MFIs but most of them still demand support to implement it
• Sharing results with the MFI is one of the most valuable result (think about an Alinus report)
• Facilitating the filling of ALL the components• Small MFIs are still reluctant…
Agenda• 9.30-10.25: Overview of key trends, opportunities, and challenges
• 10.25-10.40: Update on current topics for SPTF and SIWG
• 10.40-11:00: Coffee Break
• 11.00-12.00: SPI4 and ALINUS
• 12.00-13.00: Assessing S&E performance of SME finance
• 13.00-14.00: Lunch
• 14.00-15.00: Coordination with broader initiatives and linking to SDGs
• 15.00-16.00: Over-indebtedness and Lenders Guidelines
• 16.00-16.20: Coffee Break
• 16.20-17.20: Joint session with InFiNe on Green Finance
• 17.20-17.35: Conclusions & Plan for Day 2
Assess E&S in SME finance institutions
May 2018
Lucia Spaggiari, Business Development Director, MicroFinanza Rating
4 7
"The bigger is the enterprise, the more you need to understand the enterprise in addition to the entrepreneur." Matthew Gamser, CEO of the SME Finance forum
Scope
SME finance institutions
Fund
Assess SME finance institution's ESMS
Small enterprises Medium enterprises
Environment Employees Clients & community
Manage SMEs' E&S risks (ESMS)
Inve
sto
rSM
E fi
nan
ce
inst
itu
tio
nSM
EPrimary focus
Indirect focus
STATUS. In spite of the cumulative risks and impacts of multiple small / medium enterprises, E&S in SME financing largely undermanaged: • Upscaling MFIs (small enterprises) rarely have an ESMS in place.• Downscaling banks (medium enterprises) often have an ESMS in
place, sometimes on paper, sometimes in use. Usually SMEs are classified as low risk, without further assessment.
• E&S regulation in SMEs: good and necessary starting point but not enforced enough in majority of emerging and developing countries.
RATIONALE. Since SMEs fall between MFIs' borrowers and large borrowers, we need an approach that is-between both worlds
Objective
✓Promote Environmental and Social Management Systems (ESMS) commensurate to SMEs, that support incremental improvement of SMEs E&S practices.
X Not only about exclusion
X Achieving alignment with good E&S practices requires a pragmatic approach
ESMS = Environmental and Social Management System
Risks but alsoopportunities
Principle 1: Modular
Modularity allows having a common ESMS framework applicable to FSPs financing very different types of SMEs.
SAME. ESMS framework, logic and process.
DIFFERENT. Definitions, depth of analysis.
E.g. E&S checklists will always be integrated in loan appraisals. But: the high risks checklist of an FSP financing small enterprises will be very basic compared to the one of an FSP financing medium enterprises
Principle 2: Commensurate
Opportunity.Use the ESMS to turn gaps into opportunities and prioritize measures with a positive impact on E&S, business performance and business capacity to meet loan repayments.
ESMS should be commensurate to:
✓E&S risks/impacts faced by the FI (driven by the borrowers’ activities, regional/local contextual risks)
ESMS should take into consideration:✓type of financing
✓leverage the FI has in obtaining mitigation measures from borrowers
✓E&S opportunities
SME finance institution: manage E&S (ESMS)
1. Define E&S policy
2. Classify loans by E&S risk category
3. Assess the SMEs risks and opportunities
4. Measures to improve SMEs
E&S
Monitor SME E&S progress
Report, analyzeE&S, review
ESMS
Determine ESMS approach
(individual/cluster)
Guidance for SME Finance Institutions
Guidance on how to set up an ESMS (selection of tools):
• FMO MFI and SME sustainability guidance e-learning tool (more suitable for small enterprises);
• CDC toolkit to categorize and manage E&S risk and opportunities (more suitable for medium enterprises).
Investor: assess SME finance
institutions’ E&S
1. Identify SME
2. Identify SME finance institutions
3. Classify SME finance
institutions by E&S category
4. Assess the Sustainable
performance of SME finance
institutions
5. Promotethe
improvementof the SME
finance institutions'
systems
6. Monitor the
improvement of SME finance
institutions systems
1. Identify SME
a. Common definition of SMEs for all investments in all countries
b. National definition of SME for all investments in the same country;
c. Adopt the definition of SME used by each investee;d. Adopt the definition provided by the fund investor
2. Identify SME finance institutions
a. Adopt a common definition of SME finance institution(e.g.: >50% outstanding portfolio in SMEs) and of MFI with a SME component (e.g. >20%-30% outstanding portfolio in SMEs).
b. Adopt the way investees define themselves
3. Classify SME finance institutions
a. Define E&S risk categories according to the % of the investee portfolio exposed to E&S risks, defined for example based on high risk sector and larger loan size. High risk sectors can be adopted from international sectoral matrix (e.g. FMO, CDC, see annex 3) or adjusted based on the country.
b. Define which E&S risk level will trigger an assessment of the SME finance institution ESMS.
High risk sectors: use international sectoral matrix(e.g. FMO, CDC) or adjust based on the country
4. Assess the sustainable
performance of SME
finance institutions
a. Assess the ESMS;
b. Assess the Sustainable performance (ESMS + other 6 dimensions)
c. Assess a customized selection from the Sustainable performance indicators’ list.
5. Promote the ESMS improvement
a. Agree on E&S Action Plans to improve the ESMS based on the assessment;
b. Investor leverage to promote improvements depends on the type of financing (debt / equity; short / long term) and TA to support the ESMS development
6. Monitor the ESMS improvement
a. Monitor the improvement of SME finance institutions ESMS during the course of the loan or at loan renewal
Thanks
Lucia Spaggiari, Business Development Director, MicroFinanza Rating
How we Manage ESG Issues
74
responsAbility’s ESG POLICY
Available on our website:https://www.responsability.com/sites/default/files/2017-09/ESG%20Policy.pdf
a System Based on International Standards
• Implemented by Investment Teams w/ support
• Content based on International Standards
75
ESG ASSESSMENT @ responsAbility
ESG Policy ESG Guidelines ESG Scorecards & Tools
Progressive Throughout the Investment Process
76/6
ESG ASSESSMENT @ responsAbility
Cr
ed
it A
na
lysi
s /
Inv
estm
ent
Com
mit
tee
Compliance with Exclusion List and
Reputational CheckCategorizeCounterpart
y on E&S Risk
MediumE&S Risk
Validate ESG Assessment
DefineESG Action
Plan
Monitor ESG Performance
Evaluate Anti-Money Laundering and Governance
Practices
Check HR / Labor Practices
Record Key
Findings
Evaluate
Client Protection
HighE&S Risk
LowE&S Risk
Assess Environmental & Social Practices
76
Depth and Length Defined by Risk LevelOUR ESG ASSESSMENT IS ALSO MODULAR
MediumE&S Risk
HighE&S Risk
LowE&S Risk
Governance Client Protection Social Environment
& other sources
77
responsAbility Investments AG | Josefstrasse 59 | 8005 ZürichTel. +41 44 250 99 30 | Fax +41 44 250 99 31 | info@responsAbility.com
© 2018 responsAbility Investments AG. All rights reserved.
Agenda• 9.30-9.45: Welcome remarks
• 9.45-10.25: Overview of key trends, opportunities, and challenges
• 10.25-10.40: Update on current topics for SPTF and SIWG
• 10.40-11:00: Coffee Break
• 11.00-12.00: SPI4 and ALINUS
• 12.00-13.00: Assessing S&E performance of SME finance
• 13.00-14.00: Lunch
• 14.00-15.00: Coordination with broader initiatives and linking to SDGs
• 15.00-16.00: Over-indebtedness and Lenders Guidelines
• 16.00-16.20: Coffee Break
• 16.20-17.20: Joint session with InFiNe on Green Finance
• 17.20-17.35: Conclusions & Plan for Day 2
• Overview of Initiatives: UNPRI Market Maps, EIL, Navigating Impact Project
• Introduction to Navigating Impact Project: Overview of key participants and work involved
• Introduction to Panelists
• Q&A
Agenda
8 1
As impact investing continues to grow, several
initiatives are working to help investors navigate
the different investment opportunities
SPTF is coordinating efforts with these initiatives to help shape the tools and resources being developed on financial inclusion
8 2
Why is SPTF involved and how is this
relevant to you?
8 3
• Share the experience of financial inclusion
▫ Collaboration, working towards common objectives
▫ Development and implementation of standards, common audit and monitoring tools, advancement of outcomes management work, etc
• Financial inclusion is a large sector of impact investment and can help pave the way of less-mature sectors – seen as “example”
• Ensure coordination with broader impact investment initiatives – as prioritized by many of you
• Opportunity to shape frameworks and tools that can be used by asset owners and investors throughout the broader investments sector
8 4
• Created by the GIIN to help investors select impact strategies and adopt metrics that indicate performance toward their goals
• Developed in consultation with industry experts, impact investors, and standards setters
• First three themes were developed in house:
▫ Affordable housing in developed markets
▫ Clean energy in emerging markets
▫ Smallholder agriculture in emerging markets
• Partnership with SPTF to develop the financial inclusion theme recognizing the leadership and expertise of our members in this sector
For more info, visit: https://navigatingimpact.thegiin.org/
Overview of Navigating Impact
Evidence mapped by outcome/impact
“Starter kit” of 5-10 core metrics
Additional metrics for more targeted IMM
Financial Inclusion : ~50 collaborators
8 8
• Alterfin – Caterina Giordano
• Best Seller Foundation - Christian Wandel
• Blue Orchard – Lisa Sherk & Nadina Stodiek
• CERISE – Cecile Lapenu & Jon Salle
• CGAP – Mayada El-Zoghbi
• Community Investment Management – Jacob Haar
• EDA Rural – Frances Sinha
• EVPA – Priscilla Boiardi & Alessia Gianoncelli
• FM BBVA - Stephanie Garcia Van Gool
• Gawa Capital – Luca Torre
• Grameen Foundation - Devahuti Choudhury & Bobbi Gray
• Grassroots – Anna Kanze
• ILO – Patricia Ritcher
• Innpact – Asish Sharma & Adriana Balducci
• IPA – Rebecca Rouse, Lisa Corsetto, Julie Peachey
• JPAL – Lucia Diaz-Martin, Clara Walsh
• MicroSave - Jennifer Shapiro, Akhand Tiwari, Bhavana Srivastava, Joyce Murithi & Anup Singh
• Microvest – Tanay Tatum-Edwards
• NMI – Lone Søndergaard
• Oikocredit – Mitzi Perez Padilla
• Opportunity International – Calum Scott
• Pacific Community Ventures – Daniel Brett
• Quona Capital – Allison Steitz & LizannFernandez
• responsAbility - Pedro Fernandez Diaz & Paul Hailey
• Triple Jump– Christophe Bochatay & Andres Van del Linden
• UNCDF – Heew Kim
• University of Zurich – Annette Krause
• Womens World Banking – Jaclyn Berfond
8 9
Financial Inclusion: 5 strategies
• Improve access and usage of responsible financial services for historically underserved populations1
• Improve financial health2
• Support creation of quality jobs and foster economic development3
• Increase Gender Equality Through Financial Inclusion4
• Improve rural prosperity 5
Panelist Institution Description
Caterina GiordanoInvests in microfinance and sustainable agriculture in Latin America, Africa, and Asia
Lone SøndergaardInvests in microfinance In South Asia, Southeast Asia and Sub-Saharan Africa
Stephanie Beatriz Garcia Van Gool
Non-profit that creates and consolidates MFIs in Latin America
9 0
Introduction to Panelists
Agenda• 9.30-9.45: Welcome remarks
• 9.45-10.25: Overview of key trends, opportunities, and challenges
• 10.25-10.40: Update on current topics for SPTF and SIWG
• 10.40-11:00: Coffee Break
• 11.00-12.00: SPI4 and ALINUS
• 12.00-13.00: Assessing S&E performance of SME finance
• 13.00-14.00: Lunch
• 14.00-15.00: Coordination with broader initiatives and linking to SDGs
• 15.00-16.00: Over-indebtedness and Lenders Guidelines
• 16.00-16.20: Coffee Break
• 16.20-17.20: Joint session with InFiNe on Green Finance
• 17.20-17.35: Conclusions & Plan for Day 2
Examining Over indebtedness : Triangulation approach
Reasons for heating up of markets and client issues
Institutional Level Approach MFIs with High Risks
‘Hotspots’ at state/district level
Market Level Approach
Institutional level: in high risk
areas, identify providers with high
exposures and weak policies and
procedures to prevent OID
Market level: identify high risk
areas
Client level: in high risk areas, survey
clients to identify reasons for OID and
priority issues
Each Rule is assessed by 3-4 criteria with benchmarks. For example:
Rule 10: Write Off Ratio:- More than 10% - Between 6 to 10% - Between 2 to 5%
- Less than 1%
Benchmarking: Based on pilot and historical data from industry
Market level rules
Rules (Applies for States/Districts)
Rule 1: Top 10 (% of total account to working population).
Rule 2: % of total account to total population.
Rule 3: Highest total account and HDI lower than national average.
Rule 4: More than 3+ loans.
Rule 5: % of clients with defaults on existing loans.
Rule 6: Lowest 5 (% of borrowers with first loans).
Rule 7: Portfolio growth versus client outreach growth.
Rule 8: Outreach & Portfolio growth versus branch and field staff growth.
Rule 9: PAR > = 30 days.
Rule 10: Write Off Ratio.
Rule 11: Refinancing loans.
Rule 12: % of loan rejection.
Criteria
If FSP more
than 50 %
branches in
hotspot
districts
If FSP has
between 25-50%
branches in
hotspot districts
If FSP has less
than 25%
branches in
hotspot districts
Repayment Capacity
Analysis and Credit
Bureau Check
Pass on all
indicators
Pass on all
indicators
Pass on 60% of
indicators
Managed Growth
and No Aggressive
Sales
Pass on all
indicators
Pass on 80% of
indicators
Pass on 60% of
indicators
GovernancePass on all
indicators
Pass on 80% of
indicators
Pass on 60% of
indicators
Internal AuditPass on all
indicators
Pass on 80% of
indicators
Pass on 60% of
indicators
Client EducationPass on all
indicators
Pass on 80% of
indicators
Pass on 60% of
indicators
Institutional level rules
In case FSPs are at risk they need to pass based on criteria defined
Mystery Shopping : Voice from the Field
• Develop survey using MIMOSA client
survey and MCWG (PRFI) Risk Study.
• Administer survey on field staff and
clients in the hotspot areas.
• Analyze results to inform priority issues.
➢ Survey will help understand drivers of OID,
such as the level of competition amongst
FSPs, capacity and commitment of field
staff, reasons for client default, stress levels
at client level and other issues that could
drive OID.
Platform for digitization of the OID Tool
Collect, clean and structure data to perform analysis through intuitive user
interface without writing a codeUnderstand data
Next steps
Roll-out and usage:
• Sa-Dhan – SRO
• Financial Service Providers
• Reserve Bank of India, SIDBI
Improvement of the tool:
• Identify priority areas
• Dig deeper on these areas – e.g., integration of lender guideline monitoring report (adapt Cambodia guidelines) for more details on multiple borrowing, refinancing, and loan to income
Can self-regulation work in overheating
markets?
Lessons from the Lender Guidelines project in
Cambodia
• SPTF Investor Working Group
• Luxembourg, June 2018
Boom Bust
102
SPTF IWG -Lu xembourg, June 2018
GDP
Credit
Ponzi Finance
Hyman Minsky Financial Instability Hypothesis
SPTF IWG - Lu xembourg, June 2018110
Independent monitoring:
Credit Bureau of Cambodia (dashboard)
Rating agencies (Smart certifications &
ratings)
SPTF IWG - Lu xembourg, June 2018111
Oversight & Sanctions:
Investors
Smart Campaign
Central Bank (?)
SPTF IWG - Lu xembourg, June 2018113
Lender GuidelinesL
G D
ash
bo
ard
CB
C/R
ate
rs
Inve
sto
rs/S
ma
rt
Agenda• 9.30-9.45: Welcome remarks
• 9.45-10.25: Overview of key trends, opportunities, and challenges
• 10.25-10.40: Update on current topics for SPTF and SIWG
• 10.40-11:00: Coffee Break
• 11.00-12.00: SPI4 and ALINUS
• 12.00-13.00: Assessing S&E performance of SME finance
• 13.00-14.00: Lunch
• 14.00-15.00: Coordination with broader initiatives and linking to SDGs
• 15.00-16.00: Over-indebtedness and Lenders Guidelines
• 16.00-16.20: Coffee Break
• 16.20-17.20: Joint session with InFiNe on Green Finance
• 17.20-17.35: Conclusions & Plan for Day 2
1 19
Agenda
→ Introduction InFine & SPTF
→ Panel discussion with → Triodos
→ Innpact
→ LuxFLAG
→ Discussion
Innpact – what we do
Investment Vehicle Design and
Structuring
Impact strategy and Methodology
STRUCTURING SERVICES
MANAGEMENT SERVICES
General Secretary -Board and
Governance Support
Fund Management Services
Independent Directorships
Investment Fund Advisory
Impact Investment Placement
INVESTMENT SERVICES
Triodos Investment Management
Exclusion list 61%
Green office procedure 39%
Green financial products 25%
Environmental training for
customers 18%
Donations for
environmental protection 11%
Triodos Green finance activities:• Investing in FIs that extend finance to entrepreneurs or activities that
create benefit to the environment or reduce harmful impact to the environment
• NpM Green Inclusive Finance working group• Current activities: developing a publication of case studies and a
paper on green indicator (Q4 2018)• Providing in-kind assistance to investees and organizing knowledge
sharing workshop on green finance
Environmental indicator -2017“Green Inclusive Finance comprisesfinancial services for the ultimate benefit of low incomepeople and communities, through such channelsas FIs, MSMEs,, cooperatives etc., in developingcountries and emergingeconomies, resulting in environmental benefits, whilemeeting societal needs and stimulatingsustainableeconomic growth.”
-NpM Green Inclusive Finance Working Group
Challenges & Needs
• What challenges have you encountered in mainstreaming green finance?
• And what do you need?
Source : www.ecobusiness.fund
Other funds with similar intermediaries approach :
managed by
1. Organic agriculture and agri-processing
2. Sustainable fishery and aquaculture
3. Sustainable forestry
4. Eco-tourism
• “Use of Proceeds” clause as part of loan
agreement with Financial Institution
• Disbursement only based on eligible
underlying loans
• Strong need of Technical Assistance