Social Performance Taskforce New Website

http://www.sptf.info/ is the new platform of the Social Performance task Force.

The Social Performance Task Force consists of over 350 leaders from all over the world from every microfinance stakeholder group: practitioners, donors and investors (multilateral, bilateral, and private), national and regional networks, technical assistance providers, rating agencies, academics and researchers, and others. Created in March 2005, the Task Force has been charged with clearly defining social performance and addressing questions about measuring and managing social performance.

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.

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.

Defining Social Performance

In its May 2007 Issue of Focus Notes (nr. 41), CGAP gives an in-depth discription of the activities of the Social Performance Task Force (for more background see this link)

The Social Performance Task Force has reached consensus around the following definition of Social Performance:

Social Performance is the effective
translation of an institution’s social
goals into practice in line with accepted
social values; these include sustainably
serving increasing numbers of poor and
excluded people, improving the quality
and appropriateness of financial services,
improving the economic and social
conditions of clients, and ensuring
social responsibility to clients, employees
and the community they serve.

The Triple Bottom Line seems somewhat forgotten in this definition, but in last week's Paris meeting, a lot of progress was made in that direction. Also, a 'final' set of social performance indicators was discussed.

As soon as this final list is available, we will post a link on this blog.

SEEP's Social Performance Progress Brief

The SEEP Network just released its latest Social Performance Progress Brief (March 2007, Vol 1, Nr 3). This briefing series is a SEEP Network initiative to introduce the concepts of social performance to the microenterprise field.
In the brief the authors state that ‘…. for many MFIs [the starting point] has been their mission and commitment to providing access to the poor and helping them improve their social and economic conditions. But while the microfinance industry over the years has adopted a set of financial indicators with clear reporting standards and guidelines to determine the financial health of institutions, there exists no corresponding set of social performance indicators. Recently, the microfinance industry’s widespread interest in complementing financial assessments of MFIs with assessments of their social performance has blossomed into a number of different tools for this purpose.’

Three initiatives are being presented in this Brief, including the FACET BV operated Triodos Bank and the Global Reporting Initiative:Transparency in Sustainability and Finance (TSF) project. For a link click: Social Performance Progress Brief vol. 1 no. 3

Two New Articles

Dear reader,

Two recently published articles are both very interesting to check out (links attached to the covers above)

First off, a document titled "Sustainability Management and Reporting' (UNEP FI, Dec 2006). The document zooms in on the benefits for financial institutions in developing and emerging economies. Quote: ' It is becoming increasingly apparent that full disclosure and transparent reporting around environmental, social and governance issues – in fact the whole spectrum of issues that make up sustainability – is a key differentiating factor between those institutions that are leading and those which are reactive in this complex area.'

The second document, titled 'The do's and dont's of Sustainable Banking' (BankTrack, Nov 2006), challenges banks to 'embark upon the journey towards sustainability'. This document is written not especially for microfinance banks or emerging countries, but it nevertheless contains some interesting viewpoints, for instance this:

' Don’t treat sustainability as a niche market. Do recognize that sustainability is already at the core of all your business activities, as most activities financed by your bank have social and environmental impacts, be they positive or negative. The challenge is to recognize these impacts and shift their balance in a positive direction.'

Four Scenarios for the Future of Microfinance

Here's a link to a recent 'Focus Note' by CGAP, summarizing the results of a 'scenario-building exercise to help anticipate and prepare for the (...) forces that will shape the future of microfinance'.

A quote:
" ... it is essential to temper expectations about the extent to which microfinance can eliminate poverty or reach the very bottom—destitute households—sustainably. A realistic evidence-based story must be provided. The search for better measures of impact remains an important
strategy to prepare for the critiques that will inevitably come and capitalize on the real potential of microfinance."

Microcredit Summit 2006

Dear Participants,

Soon we will provide you with information about the outcomes of the Social Performance Taskforce Meeting, held in Halifax, Canada, last week Friday and Saturday (10 and 11 Nov. 2006, see photo below). We made some decisions about a list of (22) social performance indicators. As soon as the list is available, we will disseminate this list actively to all participants.

For now, we would like to inform you about some background reading materials and reports, produced for the Summit by a range of organisations and individuals. You can find the overview here: http://www.microcreditsummit.org/papers/allpapers.htm

Will be back soon!!

Geert Jan

Microfinance Gateway's Social Performance Website

Did you know that the microfinance gateway is currently developing a dedicated website about social performance? In the Rome meeting, last April, of the Social Performance Platform, this was announced by Laura Foose (Alternative Credit) and Syed Hashemi (CGAP). We think it's very promising and a already quite a useful source of information.
Check it at http://microfinancegateway.com/resource_centers/socialperformance