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Social & environmental performance for microfinance

Social & environmental performance for microfinance. The triple bottom line. overview. What is social performance management? Social Performance Management: why should we care? Tools to manage social performance Managing environmental, health & safety performance. Social performance?.

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Social & environmental performance for microfinance

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  1. Social & environmental performance for microfinance

  2. The triple bottom line

  3. overview What is social performance management? Social Performance Management: why should we care? Tools to manage social performance Managing environmental, health & safety performance

  4. Social performance? Portfolio quality Client focused microfinance Staff satisfaction Transparency Safe working conditions Ethical collection practices fair pricing Overindebtedness Poverty lending Low interest rates Data privacy Multiple loans Client satisfaction Women empowerment Suggestion box Integrity Financial inclusion Codes of conduct

  5. The MFI The entrepreneur & the household Small business The poor? Health, safety & environmental impacts

  6. Social performance management • Why are we doing microfinance in the first place? • What do we as MFIs want to achieve? • Access to financial services? • Poverty alleviation? • Economic growth catalyst? • Social change catalyst?

  7. Social performance management Social Performance Management is about: Setting your objectives (what do you want to achieve?) Offering adequate services in an efficient way Measuring your results Adapting your products and processes to improve performance

  8. Social performance management

  9. SMART campaign • Preventing overindebtedness • Transparency & Responsible Pricing • Appropriate Collections Practices • Ethical Staff Behavior • Complaints Handling and Resolution • Privacy of client data

  10. Microfinance Transparency • How much interest do you really charge? • And do you tell your clients?

  11. What’s your policy on: • Avoidance of over-indebtedness • Transparent and fair pricing • Appropriate collections practices • Equal treatment of staff / staff development • Environmental management • .... • (Choose 2)

  12. Social performance management • 2. Offering adequate services • Why is client satisfaction important? • Many clients think MFIs don’t meet their needs! • Satisfied clients will retain and attract new clients (word of mouth) • it is 10 times cheaper retaining a client than attracting one • a retained client is likely to improve livelihood

  13. Social performance management • 2. Offering adequate services • 5 Ps: product, price, place, promotion & people •  adjust to target group! • Not all clients are the same! • women may have different needs than men • Listen to clients feedback • drop out rates • exit interviews

  14. How will your MFI ensure that it will continuously meet your clients needs?

  15. Social performance management 3. Measuring results

  16. Social performance management Acleda bank (Cambodia) annual client survey: • “how has your income situation developed?” • income situation reduced: • 2005: 1.1-2.3%, 2006: 0.5%, 2007: 3.4% • further investigation for more specific info as to the underlying causes in 2008

  17. Reliance • Gambia

  18. NDFS Shepherd • India

  19. Social performance management What can you measure & report? (some suggestions) • profile of clients (do you actually serve your target group?) • gender, location, economic position, etc. • client satisfaction & turnover • change in poverty status / business growth • improvement in leadership skills • staff profile, satisfaction & turnover

  20. Mixmarket • Social indicators

  21. Who should be reading your annual report? • clients • donors / investors • government • management / board • ..... • What information do they require?

  22. What information does your MFI report on? How would you measure and collect the data?

  23. Lessons learned with social performance measurement • Translate social vision in clear social goals • Start with few indicators, expand as you go • A lot of data is already measured throughout the process • Do not report only for investors  use information internally. Social performance management

  24. SPM: why should we care? a) Publish what you preach!

  25. SPM: why should we care? b) Improve the governance of your organisation 8 board board management management Field staff Field staff

  26. SPM: why should we care? c) Investors and donors are interested in non-financial impact of MFIs IFC’s mission is to promote sustainable private sector development in developing countries, helping to reduce poverty and improve people’s lives. IFC believes that sound economic growth, grounded in sustainable private investment, is crucial to poverty reduction. Through its Environmental and Social Review Procedure, IFC reviews the business of its FI clients to identify activities where the FI could be exposed to social and environmental risk as a result of its investments.

  27. SPM: why should we care? d) Social performance drives financial performance

  28. What benefits would social performance management bring to your MFI?

  29. Tools for SPM

  30. Tools for SPM Social scorecards: SPI & QAT • SPI reviews: • Policy • Systems • Performance (standard indicators

  31. Tools for SPM Social scorecards: SPI & QAT • QAT reviews: • Objectives set • Strategy for meeting objectives • Monitoring systems • Information quality • Information analysis & use

  32. Tools for SPM • 2. Social ratings • A rating is an externally assessment of the social performance of an MFI • Social results • Systems implemented • Major rating agencies: • Planet rating, microfinanzas, MicroRate, mCril

  33. Tools for SPM

  34. Tools for SPM • 3. Poverty scorecards • A poverty scorecards assesses: • Poverty status of clients (very poor, poor, not so poor, non-poor) • Improvements in poverty level

  35. Tools for SPM PPI: estimates the likelihood that an individual falls below the national poverty line

  36. Tools for SPM

  37. Tools for SPM 4. Social performance reporting a) GRI guidelines

  38. Which of these tools would be useful for your MFI?

  39. Environmental management Would your MFI support this type of business activity?

  40. Environmental management Should you be concerned with your clients health & safety? And what about the waste water?

  41. Environmental management Can MFIs reduce harmful pesticide use by their clients?

  42. Environmental management What role can MFIs play in supporting renewable (e.g. solar) energy?

  43. What environmental, health & safety issues may be relevant for your clients? What does your MFI do to manage these? What costs & benefits does this involve?

  44. Environmental management

  45. Reports to investors Loanapplicationsheet Managing EHS risks Reporting Application Reportingformats Exclusionlist Factsheets Monitoringspecs Recovery &monitoring Appraisal Contractclauses MISinfo Loanappraisalsheet Contracting & Disbursement Loancontract

  46. Environmental management

  47. Environmental management

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