Evaluating Social Impact

2nd International Symposium on Social Investment

Presented by Tes Pilapil, Regional Director Southeast Asia

13 October 2013Tokyo, Japan

Oikocredit – Who are we?

Oikocredit -worldwide cooperative society

established in 1975

International office in The Netherlands

“Oiko” is Greek for «house» home, family

“Credit” from Latin “credere”, to have faith

The oldest and one of the largest social investors in

microfinance worldwide

Our Experience• since 1975

• 100% private investment financed through sale of shares

• Diverse membershipo Churcheso Church-related institutionso Support associations (30 SAs in 13 countries)o Project partners

• Dual return: modest financial return andsocial return on investment

Facts & figures

• 859 partners in close to 70 countries

• 589 microfinance partners (of total number of partners)

• € 533 million outstanding

• € 105 million approved

• € 119 million disbursed

• 28 million clients reached by Oikocredit’s microfinance

partners*

• 36 regional and country offices

*at 31 December 2012

At 30 June 2013

Strategic Support to Social Enterprises

Strengthen partners’ capacities to

sustainably deliver VALUE to

clients/members

Development financing/Investments

Organizational development

Capacity Building

• Loans• Equity investment

• Risk management• Product

development• Market positioning• Social performance

• Management systems

• Staff development• Partners’ feedback • Risk management +

control

Clients/ Members /Disadvantaged groups

Strengthening the capacities of the social enterprises

Financial Results

Social Impact

• Governance

• Finance Management

• Risk Management

Balanced double or multiple-bottom line

Partners with strong capacities to deliver value in a sustainable way

Capacity Building

Sustainable value

creation

Product Development

Market Development&

Positioning

Risk Management

Social Performance Management

(SPM)

Social Performance

What is it?

Social Performance defined

The effective translation of an institution’s mission into practice in line with accepted social goals

Importance:

• Achievement

• Accountability

Social Return/Social Impact

Monitoring Social

Performance

Choosing the Right Partners

Accoun-tability of Partners

Capacity Building Support

Social Covenants

Feedback from

Partners

Partner selection

• Create jobs and income

• Cooperatives, financial institutions or small to medium

enterprises

• Women in management positions

• Environmentally sustainable and respect animal welfare

• Suitable management structure

• Are (or can soon become) financially sustainable

• Demonstrate a clear need for foreign investment

* Will never finance child labour, arms productions,

explosives or other dangerous materials

Partners’ outreach

Targeting methodology

Employment rates

Sustainability

Compliance with MF Client Protection Principles

Care for the environment

Products and services offered

To evaluate social impact, we collect data:

Tools - The Environment, Social and Governance (ESG) Scorecards

• Developed by Oikocredit in 2010

• Select the right partners by identifying strengths and weaknesses

• Monitors and tracks improvements in social performance management

• Starting point for dialogue among partners

• Evaluate the needs for capacity building support

• Areas for improvement as part of Social Covenant

• Red Flags

• Incentive: “Extraordinary Social Relevance” discounts

The Oikocredit ESG Scorecard

Domains Outreach and Inclusion

(15%)

Client Benefit and Welfare (40%)

Social Performance and Governance (30%)

Environment (5%)

Responsibility to Community and Staff (10%)

ESG Scores:

<45% Very Weak. Neglible attention to social performance

45% - 54% Moderately Weak. Initial efforts underway to address SP issues

55% - 64% Average. Covers minimum standards and key issues but needs for improvement

65% - 79% Strong - Very Strong. Shows strong social orientation and addresses all SP areas. Clearly reflects attention to double bottom line.

80% and higher Excellent. A clear leader in social performance showing many best practices

Tools -- Progress out of Poverty Index (PPI)

• Developed by Grameen Foundation for MFIs

• 10-question survey tool

• Enables MFIs to accurately select clients from their target group

• Provide insights into whether a client’s economic situation has changed

• Oikocredit promotes the implementation of PPI to ensure they remain committed to serving disadvantaged people

• Areas for improvement as part of social covenant

Tools - Microfinance Client Protection Principles (CCP)

• Are minimum standards that providers of financial services should adhere to

In Oikocredit:

• Basic CPP orientation for all Microfinance partners

• SMART Campaign

• CPP Assessment

• CPP in social covenant

The Client Protection Principles

Appropriate product design and delivery

Prevention of over-indebtedness

Transparency

Responsible pricing

Fair and respectful treatment of clients

Privacy of client data

Mechanisms for complaint resolution

Tools - Social Performance Indicators (SPIs)

Social auditing and assessment tool developed by the CERISE (French)

Framework for reviewing organization’s social strategy, processes and results of products and services

Uses indicators covering 4 dimensions:• targeting and outreach• benefits to clients• products and services• social responsibility

internal dialogue, policy reforms

How does it work? Example: CPP

Partner Selection

Social covenant

CPP Capacity Building Support

Monitoring

Due diligence

-Financial

-Social (ESG)

Strengths/Gaps in CPP Practices

Letter OR

Loan agreement:

* CPP practices to improve

*Timeframe

CPP Orientation

CPP Assessme

nt

Action Plan

Regular Reports

Visits from Country

Office/CB-SPM

Officer

Social Performance in Oikocredit

International Office, The Netherlands Social Performance & Financial Analysis Director (Department)

Capacity Building Manager 2 Full time Researcher/Analysts, Social Performance Social Performance Specialist Special Projects Manager (Environment)

Regional Offices Capacity Building/SP Officer at Regional Level

Southeast Asia Office Regional Coordinator, Capacity Building/SPM SPM Officer (part-time) Consultants

Collaboration with Microfinance sector (Global) Social Performance Task Force (SPTF)

• development of standards for social performance management, MFIs

Client Protection Principles (CPPs)• steering committee of the SMART Campaign

MFTransparency • promotes transparency in pricing in the microfinance sector• Oikocredit uses MFTransparency tool in due diligence

Principles for Investors in Inclusive Finance (PIIF)• leadership of the UN Secretary-General’s Special Advocate for

Inclusive Finance for Development, Princess Máxima of the Netherlands, Oikocredit co-developed the PIIF.

• implementation and reporting guidelines for these principles.

Dōmo arigatōgozaimashita

Thank you very much!

Disclaimer

This document was produced by Oikocredit, Ecumenical Development Cooperative Society U.A. (Oikocredit International) with the greatest of

care and to the best of its knowledge and belief at the time of writing. The opinions expressed in this document are those of Oikocredit

International at the time of writing and are subject to change at any time without notice. Oikocredit International provides no guarantee with

regard to its content and completeness and does not accept any liability for losses which might arise from making use of this information.

This document is provided for information purposes only and is for the exclusive use of the recipient. It does not constitute an offer or a

recommendation to buy or sell financial instruments or banking services and does not release the recipient from exercising his/her own

judgment. The recipient is in particular recommended to check that the information provided is in line with his /her own circumstances with

regard to any legal, regulator, tax or other consequences, if necessary with the help of a professional advisor.

This document may not be reproduced either in part or in full without the written permission of Oikocredit International. It is expressly not

intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law.

Every investment involves risk, especially with regard to fluctuations in value and return. It should be noted that historical returns and financial

market scenarios are no guarantee of future performance. Investments in foreign currencies involve the additional risk that the foreign currency

might lose value against the investor‘s reference currency.

Oikocredit International is a cooperative society with limited liability (coöperatieve vereniging met uitgesloten aansprakelijkheid) under the laws

of the Kingdom of the Netherlands.