A Comprehensive Resource For the Microfinance Industry How can the Universal Standards for Social Performance Management be useful for investors?

2 Idea for exploration: Common document repository and collaboration for qua Today Network MIV DFI Lender MFI Rating Agency Cerise MIX Network MIV DFI Lender MFI Rating Agency Cerise MIV DFI MIV DFI Common platform MIX Tomorrow

Based on leading industry initiatives and practices implemented successfully by financial institutions Voluntary resource—not a rating, regulatory or certification system

“What’s important is that the principals of the company are true to the mission and pursuing goals in a meaningful way.” –Asad Mahmood, Deutsche Bank  Board is committed to the social mission.  Board holds institution accountable to its social mission and goals.  Senior management sets, and oversees implementation of, strategy for achieving social goals.  Recruits, evaluates, and recognizes employees based on both social and financial performance criteria.

Standard 2b: Members of the Board of Directors hold the institution accountable to its social mission and social goals. Essential Practice 2b.1 The Board reviews social performance data, including: mission compliance, performance results, human resource policy, social performance related risks, client protection practices, growth, and profit allocation. Essential Practice 2b.2 The Board uses social performance data to provide strategic direction, taking into account both social and financial goals. Essential Practice 2b.3 The Board incorporates social performance management criteria into its performance evaluation of the CEO/Managing Director. Essential Practice 2b.4 The Board has a documented strategy to prevent institutional mission drift during changes in ownership structure and/or legal form.

“Microfinance stands on two pillars—one is financial, the other is social— and without both the industry will never have the impact we want.” –Nancy Samy, former Deputy Executive Director of Sanabel, Egypt  Has growth rates that are sustainable and appropriate for market conditions.  Has a financing structure that is appropriate to a double bottom line institution.  Pursuit of profits does not undermine long-term sustainability or client well- being.  Compensates senior managers appropriately for a double bottom line institution.

SPI-4 Tool for FIs and Investors Objective: Create a universal social performance assessment tool that integrates emerging industry social performance standards. The tool aims to streamline social performance assessment and to decrease the reporting burden on financial institutions – Draws on Universal Standard for Social Performance Management which includes the Client Protection Principles – Utilizes other area-specific assessment frameworks, such as pro-poor, rural, gender and environment. – Designed for financial institutions, networks, investors and regulators

DATA CAPTURE

UNIVERSAL STANDARDS REPORTING

Spider Graph depicting performance in each dimension of the Universal Standards

“The stories are important, but it would be better if those were accompanied by a more analytical approach to the whole portfolio.” –Rekha Unnithan, TIAA-CREF The Universal Standards can: Align due diligence tools to help monitor SPM practices Provide broader, deeper and more concrete information about SPM Identify areas for improvement over course of investment A Social Performance Management Resource For Investors

AFD/Proparco