MICROCAPITAL BRIEF: Social Investors Investigate Criteria for Environmental, Social and Governance (ESG) Performance of Microfinance Institutions (MFIs), Triple Jump, Oikocredit Hold Meeting to Mull Harmonization of ESG Evaluation

The Social Investor Working Group on Tool Sharing and Harmonization, a group born out of the Social Investor Group meeting in Bern in June 2010, where approximately 40 investors representing about half of total assets under management in the microfinance sector met to discuss socially responsible investing, is exploring different ways to assess the environmental, social and governance (ESG) performance of microfinance institutions (MFIs). The working group is exploring several ESG dimensions such as social performance metrics and the examination of client protection measures during investment evaluations. Data collected from 71 microfinance investment intermediaries (MIIs) by CGAP (Consultative Group to Assist the Poor) shows that 70 percent share ESG data with their investors and 85 percent endorse the client protection principles as specified in the Task Force Investor Guide [1].

Thus far, investors have been relying on questionnaires, score cards and other evaluation tools to assess the level of MFIs’ commitment to ESG practice. Responding to a need for information sharing, Triple Jump, a Dutch microfinance fund manager, will be hosting a “first experts meeting on tool sharing and harmonization” on September 23, 2010 in alliance with Oikocredit, a Dutch cooperative investment fund founded in 1975 and comprised of church groups, social support groups and individual investors. This workshop intends to foster cooperation among 15 investors so they can exchange ideas and possibly arrange a common set of criteria that touches upon the most important aspects of ESG performance [2].

About the Social Performance Task Force: The Social Performance Task Force (SPTF) was created in 2005 and consists of 650 leaders from microfinance stakeholder groups including practitioners, donors and investors (multilateral, bilateral and private), national and regional networks, technical assistance providers, rating agencies, academics, researchers and others. It has been charged with clearly defining social performance and addressing questions about measuring and managing social performance.

About Triple Jump: Triple Jump was founded in 2006 to support the expansion of microfinance institutions (MFIs) in various stages of development by providing capital and advisory services. As of December 2009, Triple Jump manages five microfinance investment funds, worth a total of approximately USD 250 million. Its investments span 132 MFIs in 53 emerging markets in Latin America, Eastern Europe, Africa and Asia.

About Oikocredit: Oikocredit is a Dutch cooperative investment fund comprised of church groups, social support groups and individual investors. Established in 1975, it works in 70 countries worldwide, investing mainly in microfinance institutions (MFIs), as well as trade cooperatives, fair trade organizations and small and medium-sized enterprises (SMEs) in the developing world. As of year-end 2009, Oikocredit reported USD 665 million in total assets with 790 active investments, of which 543 were in MFIs.

By Diana Baide, Research Assistant

Sources and Additional Sources

[1] CGAP. “Investors’ Corner Overview: 2010 Microfinance Social Investors Meeting”

http://www.cgap.org/gm/document-1.9.44917/Summary_MF_Social_Investors_Meeting_June_29_Bern_Rev.pdf

[2] Triple Jump. “Expert Meeting on Social Performance.” September 2, 2010

http://www.triplejump.eu/news/Expert+Meeting+on+Social+Performance/2617/

MicroCapital’s Microfinance Universe profile: Social Performance Task Force

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Social+Performance+Task+Force

MicroCapital’s Microfinance Universe profile: Triple Jump

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Triple+Jump

MicroCapital’s Microfinance Universe profile: Oikocredit

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Oikocredit

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