Microfinance and the environment The experience of the MFI sustainability guidance 30 th November 2010 Alberic Pater Triodos Facet

Consultancy firm promoting sustainable banking and SME development in developing countries & emerging economies Part of the Triodos Group, innovator of sustainable banking Headquarters: Zeist, the Netherlands Representative offices in Africa, Latin America, Easten Europe, Asioa 30 professional staff consultants Triodos Facet

Triple bottom line reporting EE / RE financing Social and environmental risk management MFI / SME banks Triodos Facet Sustainability Performance Management

What can we as investor do to improve the environmental, health & safety impact of microfinance clients? The objectives of FMO

Help MFIs to develop & implement a social & environmental risk management system 2006 – 2008: Face to face trainings to more than 50 MFIs 2009: Develop e-learning toolkit to support MFIs during implementation phase. The objectives of FMO

Awareness raising / Training Integrate E&S management in existing systems Guiding management & offer practical tool for loan officers Help clients improve their impact, instead of excluding them Focus on clients in risky sectors The principles of the toolkit

What are social & environmental risks? Why are these risks relevant for MFIs? 1. Get prepared What are risks in my portfolio? What do my stakeholders think? Plan & implement a pilot project 2. Proceed to action Develop an E&S policy Implementation plan Evaluate E&S management system 3. Implement successfully The structure of the toolkit

Awareness raising

Simplifying E&S risks

Exercise: recognising E&S risks

Exercise: recognising E&S risks

Why E&S management: case study

Why E&S management: reality check

Integrating E&S in the loan cycle

Assessing E&S risks

Assessing E&S risks

Assessing risks at client level

Planning the pilot project

Develop E&S policy and roll-out

Checklist and planning tool

Several MFIs have used it, positive feedback on practical approach icons, photo tools, factsheets, step-by-step approach Basix India: pilot with “peer group approach” Particularly for MFIs with small enterprise portfolio rather than “traditional” microfinance. Useful for awareness raising and addressing “low hanging fruit” at client level Reflections on E&S toolkit

Interesting prototype. Maintain the practical and step-wise approach Additional modules to be developed: Offer client-interaction courses for loan officers Sustainable product development module (energy/water efficiency) Client protection module The future of E&S toolkit

MFIs are interested, but low urgency to address E&S issues Loads of other priorities Business case is longer-term Higher management champion is important Donors / investors have not really addressed E&S issues beyond the level of exclusion lists Addressing E&S by MFIs

Alberic Pater Thank you for your attention Any questions?