Environmental and social risk management tools for MFIs

The Netherlands Finance Development Company FMO published on its website a series of new interesting tools for Microfinance Institutions. Some TSF participants have already participated in a dedicated training with other MFI's.

FMO has developed practical and easy-to-use environmental and social risk management tools for microfinance institutions (MFIs).
The E&S risk management support tools for MFIs, now available in English and Spanish, include:

Part A: Office Guide
The Office Guide consists of guidance on how E&S evaluation and follow-up processes (= the Environmental and Social Management System) can be put in place in alignment with the MFI's regular credit evaluation, approval and monitoring and reporting processes.

Part B: Field Guide
The actual Field Guide provides the MFI loan officer with practical guidance to address environmental and social themes in the contact with their clients. There are two main sections:

An Activity Assessment Tool - this is a matrix, summarizing the key environmental and social risks for each of the various sectors that MFIs work in: various forms of agriculture, services, and manufacturing.

24 Fact Sheets, describing in a practical way for each sector as identified in the Activity Assessment Tool, the relevant environmental and social themes, with simple to recognize icons,
guidance for the loan officer to assess the situation with the client for each of the relevant themes, explanation of the benefits for the microclients of improvement on environmental and social matters, and recommendations for possible prevention and mitigation measures (actions to agree upon with the client, practical advice), best practices,
Next this, information is given on the legal context, and practical tips for implementation.

Part C: Training Guide
FMO provides practical training courses to client MFIs and MFI Funds to help them underway in setting up the relevant management systems. This Training Guide Contains all the materials used, and these materials can be used in-house by the MFI to further train staff.

FMO published these Guides in English and Spanish here.

Findesa's 2006 Annual Report

Gabriel Solórzano, Chairman of the Board of Findesa (Nicaragua), presented the 2006 Annual Report, claiming that '... all our financial effort would not be important if we could not balance it with triple results adding social and environmental impact to our goals. We have signed an agreement with Hivos Foundation to start a project which will measure the social impact to our customers and employees. That is why our annual sustainability report based on Global Reporting Initiative (GRI) standards details our efforts in these areas. You may download it at http://www.findesa.com.ni/memoria2006/memoria2006v2.pdf '

Sustainable Banking is HOT

In a recent Financial Times Article (info here), the author claims that more and more banks are embracing sustainable banking as a strategy to gain a competitive advantage. This is no mere Western phenomenon – the FT Sustainable Banking Awards show that banks from Asia, Africa and Latin America have joined the world of sustainable banking.
In a recent IFC survey, 86% of financial institutions reported positive changes as a result of measures to integrate social and environmental issues into their business. Even more significantly, not a single one reported any negative effects.
Almost three-quarters of banks questioned responded that the reduction in risk associated with better management of social and environmental issues significantly reduced the likelihood of bad debts, damage to the bank’s reputation, and costly opposition from negatively affected social groups and non-governmental organizations.
Almost 50% said that adherence to sustainable guidelines also increased their access to international financial assets.
Finally, more than a third of banks questioned announced that they had won new business as a result. New opportunities have arisen in the areas of loans for environmental projects, access to new markets and expansion into sustainability-driven sectors, such as the rapidly expanding eco-efficiency and clean-production sectors.