Download Social Investor Meeting on Responsible Inclusive Finance 2017

SocialInvestorMeetingon
ResponsibleInclusiveFinance2017
March15-16–ZurichatUniversityofZurich
MeetingNotes
Fortheprioritizedworkstreamsforthegroupin2017pleaserefertopage15
Foralistofmeetingparticipantspleaserefertopage16
Day1–March15
Welcome
WelcomebyhostsofthemeetingHansRamm(SDC)andAnnetteKrauss(Centerfor
SustainableFinanceandPrivateWealthattheUniversityofZurich)
UpdatesfromSPTF,SIWG,SmartCampaignandMIMOSA
SPTFupdates–byLauraFoose
• CompletedtherevisionoftheUniversalStandards–synchronizedwithThe
SmartCampaignandCERISESPI4,andarenowstablefor3years.SPTFsupports
implementationofthestandardsthroughresources(ImplementationGuide,
ResourceCenter),webinars,TAdatabase.
• ContinuetomanagetheResponsibleInclusiveFinance(RIF)workinggroupto
ensurecoordination.
• ContinuetomanagetheResponsibleMicrofinanceFacility(RMF):163
applicationsreceived,25trainingsfunded,33projectsco-financed–allin23
countries(MENA,SSA).
• Continueworkingtoadvanceoutcomesmanagementpractices-guidelinesfor
investorsandFSPspublished,wearerunningpilot(s)totestindicators.
• Undergoingstrategicplanningprocess–SPTFboardmeetinginBerninthe
comingdays.Thankyoutoallinvestorswhosharedfeedbackviaarecentsurvey.
SPTFSocialInvestorWorkingGroupupdates–ByLeticiaEmme
• Thegroupcontinuestobeoneofourmostactiveandengagedgroups
• Groupmemberscontinuetogrow–wenowhavealmost400membersfrom133
organizations.
• Weareincreasingoutreachandcoordinationwithbroaderimpactinvestment
initiatives,groups,andtools(UNPRI,GIIN/IRIS,GIIRS,EVPA,GABV,SVI/SVUK,
Toniic,ImpactManagementProject).
• Thenextin-personmeetingwillbeonJune6inMexicoCity,inconjunctionwith
theSPTFAnnualMeeting
• Attheendofthismeeting,wewillbediscussingthekeythemesthatemergeas
mostcrucialforinvestormemberstoidentifytheprioritiesofthegroupgoing
forward.Thisisamember-drivengroupandweneedinvestorsinputandactive
involvementtocontinuetoadvancepracticeinthesector.
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BriefupdateofTheSmartCampaign–ByIsabelleBarres
Deepeningworkonconsumerlending,onlinecreditandagentmodels.Alsodoinga
topicaldeepdive–clientprotectionforrefugees,energyfinancingmodels,and
consumerlending.
MIMOSAUpdates–ByDanielRozas(alsojoinedintheroombyEmmanuelleJavoy)
NowoperatinginstrategicpartnershipwitheMFP(administrativehome)
Sofarhavepublishedreportson7countries(Cambodia,Kyrgyzstan,Bolivia,Morocco,
Peru,Azerbaijan,Senegal).Newcountries:India(reportcomingthisspring),Nicaragua
(comingsecondpartof2017),andathirdcountryTBD.
MIMOSAandMicrofinanzaPlatformhaveagreedtohostMIMOSAreportsonthedata
platformbeingdevelopedbyMicrofiananza.
RoundtablediscussiononopenissuesonSPM
Questiontoparticipants–whatarethemainissuesthatyouarechallengedwiththat
youwouldliketodiscussmoreintheworkinggroup?Arethereanypositive
developmentsinyourworkonSPMorinthesectorthatyou’dliketomakesurewe
discuss?WhatisthemainSPMriskthatyou’veseenoverthelastyear?
1. Opportunity–linktoSDGs.Investorsaretryingtounderstandhowtocooperate
andhowlinktotheSDGsbasedonwhatwearealreadydoing.Howcanwe
incorporateandembedthesegoalsontowhatwearealreadydoing?Notjustin
marketingtoolsbutinawaythatweuseittoimproveSPM.
2. Howtoimprovelinkofsocialandfinancialperformance
3. Needtoincreasealignmentwithassetowners–investorsseeSPTFaskey
platformtohelpeducateandraiseawarenessonresponsibleinclusivefinance.A
lotof“competitors”talkabout“impact”andclaim“impactmeasurement”
withoutexplainingmethodologyofmeasurement,evenwhentheyarenot
measuringoutcomesattheclient-level.Itishardforfundmanagerstocontinue
toberigorousinexplainingmethodologyofmeasuringsocialperformancewhile
competing.LeticiaEmme(SPTF)notedthatweareworkingonincreasing
awarenessandeducation.Forexample,weareworkingondevelopinga
frameworktohelpunderstandandmeasureinvestmentopportunitieswithin
inclusivefinanceforassetowners.TheSecretariatwillbesharingthistoolwith
investormemberstogathertheirfeedback.
4. Issueoftaxonomyandrigorofdatamanagement–istherevalueonbeing
preciseoncontent?(whencompetitorsareover-claiming).Doweneedtobe
simpleronwhatwedo,evenwhenwefearlosingthequalityofourwork?
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5. Environment–canweincludeenvironmentinSP?Canweraisetheimportance
ofthissubjectsothatwetalkaboutSPMpeoplenotjustthinkaboutsocialbut
alsogreen.
6. Educationtoassetownersonrangeon“impact”investmentandrigorofdata
beingmeasurediscritical.
7. Adaptabilityoftoolsandstandardstootherareasofimpactinvestment
8. Pricingtransparencyissues
9. Responsibleexits--NpM-PlatformforinclusivefinanceworkingwitheMFPand
wouldliketosharewiththeSIWG
10. ManagingsocialdatafromSPI4inacommonplatform–thereareefficienciesto
gaininmanagingsocialdataifwehaveacommondatabase–e.g.,CERISE(vs.
eachinvestororganizationrunningitsownprocess).
11. Needtodefineprocessforidentifyingprioritiesandworkingonthem–for
exampleforworkwithassetowners,thisneedstobedonefrommanyangles
(e.g.,importancewithtrackingoutcomeswhileatthesametimemakingsure
therearenocontradictionsindoingharm–thinkofscaretactics).
12. Digitalfinance–needgood/bestpracticestomeasureSPM.LauraFoose(SPTF)
notedthatSPTFwillbedoingresearchonhowstandardscanberelevantto
digitalfinance,SME.WewillbeworkingwitheMFPandwouldliketoworkwith
investormemberstoseeiftheyareinterestedinsharingtheirinvesteessothat
wecangotothemanddocasestudiesontheapplicabilityofthestandardsto
theirbusinessmodels.CGAPalsoworkingontopicofimprovingclientvaluein
digitalfinance.
OverviewofsocialperformanceindicatorsinMIVsurvey–byMarinaParashkevova
andRamkumarNarayanann(Symbiotics)
Overviewonthe10-yearkeyMIVtrendsthatemergedbasedondatacollectedby
SymbioticswithCGAPsince2006aswellasthesocialoutreachindicatorsintroducedin
the2016surveyaspartofacollaborationwiththeSPTF.Participantssharedsuggestions
toimprovemethodology:
• QuestiononnumberofMIVsgatheringoutcomedataseemshighvs.whatwas
expected.Itwouldbehelpfultoadddefinitiononwhatoutcomevs.outputdata
issothatresponsesareconsistentandaccurate.
• Questiononresponsiblegovernance–couldpotentiallybeinterestingtoalso
addlenderstothequestion(notjustequityfunds).
• After10years,timeseemsrighttoreviewthemethodology,evenifitmeans
datanotalwaysbeingcompletelycomparable.Symbioticsisopentosmall
revisions.Candefinitelytrytodigmoreoncurrentindicatorsbutwouldpreferto
notdrasticallychangetheformat.
• PotentiallyaddaquestiononwhatdoesitmeantoMIVstoendorsetheClient
ProtectionPrinciples.
• Symbioticssurveyhasaveryhighresponserate,whichisanasset.Thereisa
balanceinhowmanyquestionscanyouaddwhileatthesametimekeeping
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completionratehigh.CouldMIVsopentheirportfoliodatawithSymbiotics?Vs.
justreportingondata/questions.
PRIReportonProgressDiscussion-byKurtMorrisen(UNPRI)andJurgenHammer
(GrameenCreditAgricoleFoundation)
JurgenHammernotedthatthereisabitoffrustrationamongPRIreportersintermsof
theiruseoftheinformationthatcomesfromthereportstoimprovetheirwork.Last
February,SPTFmetwiththeCEOofPRI(FionaReynolds)tobetterunderstandthe
importancethatPRIseesonthereportonprogress.TheirobjectiveistogetESGinto
mainstreamfinancialmarkets.InthepastESGwasaquestionofrisk.Forfinancial
marketstobeviableinthelongtermthereisathirddimensionneeded–focuson
outcomes(pleasenotethattheymeanESGwiththisterm).PRIbelievesthereisa
positivecorrelationbetweenoutcomesfocusandfinancialperformance.PIIFreporters
couldbeusedaslaboratorywithinPRItobetterassessoutcomereportinganduseof
datathatcomesfromthereport.Mrs.Reynoldsagreedoncommitmenttoincrease
visibilityofPIIFinwebsiteandalsoimprovetimingonreport(2015reporthasnotbeen
releasedto-date)
KurtMorrisennotedafewissueswithPRI–
• Timingtocollectthedata-ittakes6monthstocollectdata.Thisisrawdata,
whichmeansanadditional3monthsforPRItoanalyzethedata.Thereisonly
onepersoninstaffinchargeofanalyzingthedata,andthatpersonisnotonly
dedicatedtothisworkbutalsohasotherpriorities.
• Releaseofreport–2015reportwassenttocommunicationsinDecember2016
buthassincethenbeenstuckincommunications.Asuggestiontoimprove
timingofreleaseistosharedataresults(justresults,notinsights)onlineright
awayandtakelongertoreportoninsights.
• Improvementsintermsofdatabeingreported–Inthelastfewyears,reporters
arenotshowingimprovement.E.g.,whilereportersself-reporttoendorseclient
protectionprinciples,whenaskediftheyhaveaformalizedprocessonit,the
numbersarestilllargelynegative.Thereisalsoalackofstandardizationon
managementprocessesandstandardsbeingusedbyPRIreporters.
AkeyquestiontothePRIreportersisnotjustwhatthedatashowsbutwhatdowewant
todowiththatdata.Howcanweintegratethequestionfromoneorganizationwithin
theecosystems?PIIFreporthasplateau.PIIFadvisoryboardisnowintegratedwithPRI.
Whatcanwedotoimprove?
Questions–whatdoesoutcomesmeaninthePIIFframework?ItmeansESG,even
thoughpeopleintheindustryusedifferentterminologies.
UNPRIacknowledgesthattheirfocusisESGandnotimpact.However,thereisnow
moreinterestintheSDGs.Thewaytheydefineimpactis“investmentsthathavea
marketreturnatleastwhilehavingasocialorenvironmentalperformance”.
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Measurementisneeded.Purposeisexcluded.PRIisworkingonadocumenton
positioningPRIwithintheSDFframework.ThetargetwouldbetousetheSDGs
outcomesgoingforwardforimpactinvestmentsinthePRImethodology.
Socialandenvironmentalperformancemanagementtraditionalbeyondmicrofinance
–byPedroFernandez(responsAbility)
WhyiskeytoexpandourconversationtoSMEsfinancialinstitutions?
• IncreasingratioofSMEFIinMIV’sportfolio
• SMEsforthebackboneofeconomies
• SMEs(similartomicrofinance)havelimitedaccesstofinancialservices--~200M
SMEsundeservedand/orunderserved
Keydiscussionpoint–endcustomersofSMEscompaniesfacehealth,environmental,
andsafetyrisks.ThesealsorepresentbusinessrisksfortheSMEFIs,whichinturnarea
liabilitytotheinvestor.
HowdoesrAaddresstheserisks?–DirectinvolvementwithSMEFItohelpstrengthen
theirinvestmentsstrategiesandE&Smanagementpractices.rAisalsostartingto
provideTAtoSMEfinancialinstitutions,e.g.tosetupamanagementsystemtoevaluate
andaddresstheE&Srisks.
SMEsarebanksandnon-banks.IssuesaregettingmorecomplexandasaresultrAis
consideringmorecomplexinvestmentmodels(e.g.,projectfinanceandasset-backed
finance)
Abigchallengeisthelackofawarenessandunderstandingofthisissue.
DFIshaveworkedinthisspaceformanyyears,theyhavecreatedstandards.The
challengeforMIVsisthattheyareatadifferent“segment”andseedifferentchallenges.
ThetaskistoseewhatDFIshavealreadydevelopedandwhatisapplicabletoMIVs
(withfewerresourcesthanDFIs)andhowtodoitinasimpleway.Shouldweshare
amongparticipantsinthegroupourapproachestotheseissues,ratherthanreinventing
thewheel?
CordaidandOikocreditinvestingtogetherinanSMEinLatinAmerica.Thereisatool
mappedtostandardsbutseemstimeconsuming–couldbesharedwithothers.
ILOhasbeenworkingonS&EissuesforSMEsmostlyinAfricafor6-7years.Tryingto
integrateintotheirprocesses,checklistssothatittakeslesstimeforinvestee.Needto
worktogetherintherelationshipwiththeSMEinidentifyingtherisksandhelpthem
improve.Improvementplanscanbepartoftheagreementorloandocumentation.Very
happentocontinuethisdiscussion.
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eMFPhasbeeninconversationswithSPTFtodevelopguidelinesformeasuringSPfor
SMEinvestments.ThisyearwewillbelaunchingajointactiongroupbetweeneMFPand
SPTF(ledbyaconsultantfromMicrofinanza)toaggregatelessonsfromthefieldand
developguidelines.eMFPandSPTFwillreachouttoinvestorstogathertheirinterestin
beingpartofthisworkinggroup.InvestorsshouldfeelfreetoreachouttoSPTFand
eMFPaswell.
ResearchfromtheUniversityofZurichsuggeststhatstrengtheningprocessesatthe
SMElevelisveryimportant.
EIBislaunchinglaterthisyearatoolforSMEs.
SPI4.2andALINUS2.0:Uptakeoftheevaluationandsocialaudittoolforand
monitoringtoolforinvestors financialserviceproviders(FSPs)andthecommonsocial
duediligenceandmonitoringtoolforinvestors–byCecileLapenu(CERISE),Jurgen
Hammer(GrameenCreditAgricole)
OverviewoftheSPI4andALINUS2.0.
• Concentrateonwhatcounts(analyzeresultsthroughsocialdashboardandmake
informedinvestmentdecisions)
• Convinceandguidepartnerstoimprove
• Compileresultsattheportfoliolevel
• Comparetobenchmarks
• Communicateusingacommonlanguage
WhoisusingALINUS?
• 8MIVs/DFIsusingSPI4ALINUS:ADA/LMDF,AFD/Proparco,Alterfin,BNPParibas,
Cordaid,GCAMF,Incofin,Pamigafinance
• 6MIVsintesting/strategicplanning:DeutscheBank,EuropeanInvestmentBank,
GrassRoot,Oikocredit,Symbiotics,TripleJump.
• About15MIV/DFIsincontactwithCERISE/SPTF,forawarenessraising,strategic
discussions(includingEVPA)
WhoisusingSPI4?
• 313SPI4auditscompleted(targetsetlastyearatinvestormeetingwastogetto
300inayear–andithasbeenachieved)
• From88countries
• 14underwayand70inthepipeline
• 71%areaccompaniedself-assessments
• +600peopletrainedinSPI4(CERISE&SPTF)
• 83qualifiedauditorsworldwide
ExperienceofGrameenCreditAgricoleinassessingentireMIVportfoliowithALUNUS
61partnersinSSA,MENA,ASIAandECA.
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Onlyhighqualityauditstakenintoaccount(donebyexperiencedauditors+100%
complete+includecommentstojustifyscoring.LACandEuropeauditsnotincluded).
Benchmarksbydimension–overallCGAMFhadatotalscoreof63%vs.CERISEdatabase
benchmarkof57%.Theyalsolookedatbenchmarksbygeographicalregionandtier.
ThisreportwaspresentedtotheboardofdirectorsofGrameenCreditAgricoleandit
wasagreatexercisetohelpthemunderstandwhatitmeanstomeasureSPM.Itwas
alsoveryhelpfulformanagementtoidentifywheretofocuseffortsgoingforward,for
exampleperformanceofAfricanpartnersarebelowaverage,thiscanhelpidentify
wheretofocusTA.
Commentsfromtheaudience–weneedtostartspreadingthismessagetonon-peers
andnotlike-mindedpeopleabouttheimportanceofdoingthisworkandusingthistool.
Weneedtomaketheconversationonsocialperformancemorecentraltodiscussionsin
corporationseverywhere–giveittheimportanceintheagendathatthetopichas.
Weneedtointegratesocialperformancereportingtofinancialreportingtothepoint
wherewedon'tneedtohaveanSPMchampion,becausesocialandfinancial
performanceareequallyintegratedintothebusiness.
UpdatefromIncofin(whowasadoptedALINUSastheirsocialduediligenceand
monitoringtool).HavebeenworkingwithMISteamtomakesuresystemmatchesand
iscompatiblewithSPI4.Thisprocesstakesawhile,sountilsystemisready,Incofinwill
startdoingtheirreportingontheSPI4frameworkbasedontheExcelsheet(untilMISis
readytoactastheonlinetool).
UpdatefromCordaid.Investmentmanagersaremostenthusiasticthanoriginally
thought.Theyarefindingthetooltobeveryhelpfulforduediligenceandverypractical
togetreports.TheirnextstepistoaligntheMIStool.
UpdatefromPAMIGAFinance.PamigaNGOusesSPI4foralltheFSPstheyworkwith.
TheydevelopactionplansfortheorganizationswiththeresultsoftheSPI4assessments.
Onceassessmentsaredone,PamigaFinanceusesthisinformation/ALINUSsidetomake
theirinvestmentdecisions.TheobjectiveofPamigaistobeabletoevaluatetheirentire
portfoliowiththeSPI4andassesstheevolutioninperformanceofinvestments.
CERISEmentionedthatontopofworkingwithinvestors,theyareworkingwith
networks(suchasOpportunityInternational–webinarpresentationavailablehere)
Participantsbrokeintogroupstodiscuss:1)ProsandconsonadoptingALINUSand2)
FeedbackonALINUStoolkitforinvestors
1)ProsandconsonadoptingALINUS
Pros
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• Benchmarking
• Helpsidentifyareasforimprovementbasedoninternationalbestpractices
• Helpsimprovedecision-making
Challenges
• Easeofaccesstoacommondatabase
• Datareliability(rightnowmostdataisself-reported)
• Needguidelinesforduediligenceandwhattypeofdocumentsandtrainingscan
bedevelopedtohelpinvestmentofficers
• Fixedstandardizedtoolcan’tbeupdatedquickly(e.g.,won’tbeupdatedfor
another3yearssorecentdiscussions/identifiedprioritieswillnotbe
incorporatedforawhile)
2)FeedbackonALINUStoolkitforinvestors–thisisalivingdocumentandwillcontinue
tobeupdatedwithfeedbackandexperiencesfrominvestors.
• Makesurewesellitnotasbeingadditionalworkforinvestmentofficer.
• Whiletoolkitisverygood,peopleneedtobetakenbythehandtolookatitand
itwouldbehelpfultohaveatraining(maybehalfday)withfurtherdetails,stepby-step.
• Veryuseful,wellillustrated,easytofollow.
Managingsocialimpact–byLuciaSpaggiari(Microfinanzarating/eMFPActiongroup)
andAmeliaGreenberg(SPTF)
OverviewoftheworkoftheSPTFoutcomesworkinggroupindevelopingguidelinesfor
outcomesmanagementforFSPsandcommonoutcomeindicatorsintheareasof
business/entrepreneurship,economicpoverty/housing/assets,andresilienceand
vulnerability.TheSPTFisconductingapilotinPerutotesttheseindicators.Grameen
FoundationisalsorunningapilotinIndiaintegratingtheoutcomeindicatorsfromthe
SPTFworkingGroup.
Quickoverviewofoutcomemanagementguidelinesforinvestorsandrole/playgame
forparticipants.
Lendersguidelinesforsettingcovenantsinsupportofresponsiblefinance–byDina
Pons(incofin)andJonasLuici(TCX)
Thesessiondiscussedtheuseinrealityof2specificcovenantsandillustratedthe
exampleofanun-hedgedinvestmentinaFSPinAzerbaijan.
• Netun-hedgedforeigncurrencyopenpositiontoequity<25%
• Incomplyingwiththiscovenant,theBorrowershallcommitnottopassFXrisk
ontoitsclientsbyagreeingonaceilingofthelevelofhardcurrencyloans
extendedtoitsclientsasa%ofitsGLP.
CreditandFX—wrongwayrisk
• CreditriskincreaseswithFXdepreciation
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•
•
Transferringcurrencyrisktoborrowersincreasesprobabilityofdefault
Increaseofuncertaintyontherecoverydate
Intheperiod2012-2014,FSPsinAzerbaijanweredoingwell–normalPAR30,goodROE
andROAlevels
IllustrativeFSPwith50%ofloanbookinUSD(500k)
Forthreeyears,2012-2014,costofhedgingwas6%
2015crisis–oilpricesdecreasesignificantly,Azerbaijangoesthroughadouble
devaluation
TheFSPthathad50%ofloanbookinUSDloses35%.Par30goesfrom1%to86%,loses
45%ofclientsand50%ofstaff.Profitabilityishighlynegative.Investorloses87%of
equityin20months.
Whathappened?BorrowerswerebelievedtohaverevenueonUSD.Themomentthe
devaluationhappened,theborrowerscouldnotonlywiththeirpaymentsanymore(cost
wasnow96%higher)andinturnMFIcan’tpayinvestorback.FortheMFItheamountto
repaydoubleintermsoflocalcurrency(becauseofdevaluation).
IfinvestorinvestedinUSD,100%ofinvestmentisatrisk.
Ifinvestorwashedged-swapwithTCXtoprotectMFIandinvestorriskfromFXrisk.For
theMFItheloantorepayisexactlythesameintermsoflocalcurrency.Thismeansthat
theinvestorreceiveshis/herinvestmentback.Whocoversthedifference?TCX.
TheswapthattheinvestorhaswithTCXhasavaluethatchangesovertimeanditis
representedbythemark-to-market.
WhyisitbettertohedgeFXatalltimes?
• Strongsocialimpact–wholechainfrominvestorstoendborrowersisprotection
fromdepreciations/externalshocks
• Improvedcreditrisk
• Protectionfrommonetarycrisis
• Recoveryprocessisfaster
Whatwouldhavehappenedifinvestorsfactoredthe6%annualcostofhedging?It
wouldhavecost25%ayearofnetrevenueandwouldhavelost10%ofROE.Would
havestillremainedsignificantlyprofitable.Theproblemisthatpeoplearesometimes
toooptimisticintheirview.
TCXforyearshasbeentryingtoconvincethesectorontheimportanceofthehedging
message.TheproblemisthatMIVsdonotseeanincentivetohedge.
CGAhasaninternalpolicythattheyhavetolendinlocalcurrencyandhavetobe100%
hedged.Whenthecrisishit,theirinvesteeswerealsohitofcoursebutCGAwasableto
reducetheirexposureandalmostrecuperatetheentireinvestment.
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TCXhasbeencreatedbyDFIsandbackedbytheDutchandGermangovernments.This
meansthatTCXprovidestheirservicestothemandthenprovidefunding.Sincethey
havethisbacking,theyareabletoofferthehedgingtheydo.Thereasonwhytheycan
doitalsoisbecauseofdiversification(theydon’tjustofferhedginginonecurrency).
LauraFoose(SPTF)addedthattheUniversalStandardsincludeanindicatoronFX.SPTF
isinterviewingTCXtoobtainguidanceforFSPs.Thisguidancewillbeincludedinthe
revisionoftheUniversalStandardsimplementationguide.Therealsowillbeawebinar
onthistopicinthecomingmonths.
Transparentandresponsiblepricing-byLuciaSpaggiarandAldoMoaurofrom
MicrofinanzaRating
WithMicrofinanceTransparency(MFT)nolongerinoperations,MircofinanzaRatinghas
developedaproposalforaDataPlatformtoensurethatthesectorcontinuestohave
transparentandresponsiblepricing.
Dataplatformisnowinpilotphase.MicrofinanzaRatingwouldbethehouseofthe
platformbutithasaglobalSteeringCommittee(SPTF,SmartCampaign,CERISE,MFT,
ADA,MIMOSAandJohnOwners–formerAFIrepresentative)andanadvisoryboard
(AfD,Sida).Underthesamerooftwomodelswouldbeoffered:ratingsubscriptionand
datasubscription.
Whatwillthedataplatformoffer?
Aone-stopshoptofinddataonAPR,SPI4ALINUS,IRIS,ESG,UNSDG,outcomeson
greenindex,clientprotectionprinciples,financialindicators
TobeusedbyMIVsforduediligenceandmonitoringtoassessdataofinvesteesand
comparetobenchmarks.
MIXwasapproachedtotakepartonthisproject,butdecidednotto.
Basedonfeedbackfrominvestorsin2016,MicrofinanzaPlatformrevisedtheconcept.
Whoarethedataproviders?Ratingagencies,CERISE,MIVsandDFIs,FSPnetworks,FSPs
Whoarethedatausers?DFIs,Foundations,MIVs,regulators,standard-settingbodies,
researchinstitutes.
Itwillhaveasubscriptionfee.MFTofferedalldatatothepublicforfree.NowFSPswill
beabletochooseiftheywanttodisclosethenameoftheirorganizationorratherstay
anonymous.
Nextsteps:
• 2017dedicatedtopilot–developingaprototypewebsitewithsomebasic
functions.Sharethisasasimulationwithinvestorstogathertheirinput(e.g.,
howmuchthey’dbewillingtopay,whatanalysiswouldtheyliketosee,etc)–
simulationtobeheldatnextinvestormeetingduringtheSPTFAnnualMeeting
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inMexicoinJune.Forthosewhocan’tattend,therewillbeawebinarinthe
summer.
Whatwillthedataplatformallowinvestorstodo?AssessaFSPinthethreepillars
discussedearliertoday:financialandsocialperformanceandrisk.
ThinkaboutusebyresearchcentersatUniversitythatdonothavebigbudgets.Also,an
importantcriteriaforbuyingdataisunderstandingthenumberofobservationsperyear
willbeavailable.
Day2–March16
ThewayforwardforDutchGreenInclusiveFinance–bySonjaOoms(Oikocredit)
OverviewoftheNpMGreenInclusiveFinanceworkinggroup-recentjointeffortsby
Dutchactorstogreentheinclusivefinancesector(e.g.,reductionofcarbonemissions,
climatesmartadaptations,andprotectionofbiodiversitywhilestrengtheninglocal
entrepreneurshipandlocalcommunities).ThisgroupisworkingtogetherwiththeNpM
RuralFinanceworkinggroup.
Objectiveofworkinggroupistodefinegreeninclusivefinance,developcasestudies,
assessroleoftechnology,standardsandindicators,andgenerateawareness.
GIINreportmapsallindicatorsavailableingreen.
TheGreenIndex2.0waspresentedattheEuropeanMicrofinanceWeekinNovember
2016.ItwasdesignedbytheMFandEnvironmenteMFPactiongroup.Itisatoolto
assessenvironmentalperformanceofFSPs.Youcanaccessithere.
Participantswerebrokeninto2groupstodiscussideasinfavororagainstthisinitiative
(imitatingtheEnglishHouseofCommons).
CoordinationofEffortsWiththeBroaderImpactInvestingSector–ledbyLeticia
Emme(SPTF),OliviaPrentice(Bridges),andKurtMorrisen(UNPRI)
OverviewofImpactManagementProject(facilitatedbyBridges)andUNPRI’sMarket
Maps.
Theimpactinvestingsectorcontinuestogrow,withadditionalfundingflowinginand
newplayersenteringthesector(pensionfunds,largecommercialbanks,HNWI,etc).
LeticiaEmme(SPTF)mentionedthattohelpinvestorsnavigateandunderstandthe
differentopportunitiesinthebroadimpactinvestingsectorandagreetocommon
definitionsandwaysformeasuringnonfinancialperformance,inthelastyear,several
initiativeshavebeenworkingondevelopingmaps,frameworks,andconventions.These
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includetheworkthatUNPRIisdoingwithMarketMaps,theworkBridgesisfacilitating
withtheImpactManagementProjectandtheworkoftheGIINwithNavigatingImpact.
SPTFhasbeencoordinatingwithallofthem.Intheseveralmonthswefacilitated
webinarswithTideline(lastSeptember,whoseeffortisnowbeingintegratedintothe
IMP)andwiththeImpactManagementProject(IMP)andmanyofyouhaveconnected
withBridgestojointheIMPhuddles.
Objectiveofsessionisprovideaspacewhereinvestorcanlearnmoretheworkthatis
ongoing,understandthedifferencesandcomplementaritiesbetweentheinitiatives,get
asenseofthetimelineofeachproject,andmostimportantlyunderstandthewaysin
whichtheycanprovideinputandhelpshapetheseefforts.
ThereisawideunderstandingthattheexperienceofSPTFinvestormembers–seasoned
socialinvestorsinfinancialinclusion–canprovideakeyroleinbuildingthesenew
frameworksandresources.Financialinclusionhasalottoshareintermsofwhatwe
haveachieved,commonstandards,commonsocialaudittool,commonoutcome
indicators,etc.
Onceavailable,frameworksandconventionsaregoingtobeusedbyassetownersas
theymakeinvestmentdecisionsinFinancialInclusion(andothersectors).The
frameworksandterminologyinconventionscanalsobeusedbyassetmanagersasa
waytodifferentiatethemselveswhentalkingtoassetowners.Giventhatthesewill
becomecommontoolsandconventionsinthebroadersectorandalsogiventhewealth
ofexperiencethatsocialinvestorsinFIhave,itiscriticalthatSPTFsocialinvestor
memberstakepartinhelpingshapethesetoolsandconventions.TheFIsector/vertical
(oncedeveloped)canalsobeusedasexampleforothersectors/verticalsintermsofall
thathasbeenachievedinFI(commonstandards,commonsocialmeasurementtools,
outcomesmanagement,etc).
OliviaPrentice(Bridges)providedanoverviewoftheImpactManagementProject.
KurtMorrisen(UNPRI)providedanoverviewoftheMarketMap.TheUNPRIwillrelease
awhitepaperwiththemethodologyofthemarketmapsinthecomingweeks.SPTFwill
circulatethewhitepaperwithinvestormembers.SPTFandUNPRIwillholdawebinarin
AprilforinvestormemberstoprovidefeedbacktothefinancialinclusionMarketMaps.
Investorsarealsowelcometogetinvolvedinprovidingfeedbackinotherthematic
marketmapsoftheirinterestaswell.SPTFwillcoordinategatheringinputforthe
FinancialInclusionmarketmap.
Further,theGIIN’sNavigatingImpactInvestingprojectisdevelopingtemplatesforhow
tomeasure“impact”indifferentverticals.AffordableHousingandCleanEnergyarenow
available.SPTFwillengageinvestormemberstotaketheseframeworksandhelp
developtheFinancialInclusionvertical.
12
Opendiscussiononhowtoincreasealignmentacrosstheinvestmentvaluechain
Panelists:
BeatriceZwicky-MemberoftheboardandinvestmentcommitteeofNESTPension
Fund,Switzerland
HansRamm–FocalpointforfinancialsectordevelopmentatSDCandmemberofthe
boardofSPTF
IvoKnoepfel-FounderandmanagingdirectorofOnValuesinvestmentconsulting,
Switzerland
PerrinePouget–InvestmentofficeratEuropeanInvestmentBank(EIB),Luxembourg
Moderators:
AnnetteKrauss–Seniorresearcherandmanagementboard,CSPatUniversityof
Zurich’sDBF
LisaSherk–HeadofsocialperformancemanagementatBlueOrchard,Switzerland
Whenyoulooktomakeinvestmentsinfinancialinclusion,howdoyouincorporatethe
data/informationonthesocialperformancesideoftheinvestment?Doyouhave
specificbenchmarksthatyoulookat?HowdoyouapproachSP?
• NESTPensionFundlookataccessindicators(howmanypeoplearereached)and
regionalaccess(howmanycountriesarereached).Givenfiduciarydutyof
pensionfunds,financialperformanceisakeyconsideration.Intermsofchoosing
wheretoinvest,theychosetoinvestincompanies/fundstheyarefamiliarwith.
2011-2012crisisofOID(newsonsuicidesduetoOID)reducedPensionFund
interestinthesector.Inthecomingyearswereconvincedtoinvestinthesector
again.GoodtoseedevelopmentslikeSPI4.
• EIBlooksatinternationalstandards(humanrights,climatechange),whichtend
tobeverygeneralandnotspecifictoasector.Investmentagreementsinclude
clauseonspecificprinciplestobefollowed.ForexampleinFinancialInclusion,
agreementsincludeaspecificreportingframework(basedonMIXandSPI3
indicators+indicatorsdemandedbyEUinvestorssuchasjobcreation.).Financial
InclusionisasmallminorityofEIB’sportfolio,butSMEisbigger.
• BlueOrchardalignedreportingbetweenUniversalStandardsandIFCstandards.
• Reportingisrelatedtotheimpactexpectationsofthestakeholder.Thatiswhy
forEIBforexampleisimportanttoreportonindicatorssetbytheEU.
• SDC–intermsofassessmentthekeyistheselectionoftherightpartnerforthe
investment.Thereare2categoriestheylookat:1)provensocialmission(show
strongefforttodevelopclient-orientedproductsandservices),2)responsible
delivery(lookforSmartcertification,socialauditsorratings,etc).Intermsof
reporting,theyrequestanoutcomesreportofnomorethan5pagesthatis
morethananecdotesofindividualclientsandincludesperceptionsofclientsin
termsofchanges–thisistheoutcomeindicatorSDCcarestotrack.Outcomes
reportisrequestedattheendoftheinterventionaswellasanupdate3years
later.
13
•
OnValues–reportingdependsonwhatinvestmentmanagercanprovide.We
areoftennotamajorityshareholderorinvestorsowecan’tdemandwhat
reportstobeproduced.Whatwedodemandisthatthereissocialperformance
managementandmeasurementisreportedbacktousfrequently.Thereare
manyinvestmentmanagersouttherewhocallthemselves“sustainable”,
“responsible”or“impact”anddonotreportonsocialperformance.Forusitis
keytoreceiveSPMreportingfromtheinvestmentmanager.Clientslikeindepth
casestudies(e.g.outcomescasestudies).Manytimesassetownerslikeclient
stories.Roleofadvisoristoexplaintothemthatthestoryisnotenough.We
wouldliketoseetheindustrycomeupwithuniversalstandards.Investorslove
universallyacceptedstandards.Theycan’tdigesttoomanystandards.Themore
universallyacceptedthepracticesthebetter.Wheninvestorsknowthereare
standardsinasectoritgivesthemtrustinthesector.Investorsaretypically
globalinvestors,e.g.,investin50+countriesacross60+sectors,eachincluding
severalsub-sectorsandchallenges.Itisdauntingforthemtounderstand
granulardetailsofeachsector.Youhavetomakeiteasyforinvestorsto
understandyoursector.PRIiseasyforthemtounderstand.Atthefamily
office/foundationside,thereferenceforthemistheGIIN/IRISframework.
ShowinghowindicatorsofanMIVmapwithPRIorIRISisimportant.Thishelps
anassetownercompareamonginvestmentmanagers.
Arecurrenttoolsandindicatorssufficientlyalignedthatyoucancompareamong
investmentmanagers?
• Thereisconvergencehappening,butstilltherearebigdifferencesinhowsectors
report.Wecan’tstillcompareamonginvestmentmanagersacrosstheboard.
Butthat’sok.Wedon’tneedtodoascientificstudy.Itismoreimportanttous
thattheinvestmentmanagerstickstotheirreportingsystemsothatwecan
comparetheevolutionoftheperformance.
• NESTPensionFundwasnotawareofalotoftheworkthathasbeen
accomplishedinfinancialinclusion.Itisimportanttoengagewithasset
owners/pensionfundstospreadoutthenewsofwhathasbeendeveloped.They
don’thavethetimetolookatthedetailsofeverysingletool,butitsgoodto
knowwhattoolsexistsothattheycanasktheirinvestmentmanagersiftheyuse
thesetoolsornot.
• ForEIBwhilealignmentandstandardizationisuseful,theyarealsoopentoMIVs
beingcreativeindevelopingindicatorsthatareparticularlytailoredtothe
specificinvestments.
• Itwouldbegreattocreateasimplesummaryofalltheinformation/tools
developedinfinancialinclusionthatcanbeeasilysharedwithassetownersso
thattheycanasktheirassetmanagersaboutthese.
• Aggregationchallenge–inFinancialInclusion,youcanusethescoreofanSPI4
orasocialrating.
• Alignmentbetweenexpectationsofassetownersintermsofreportingandwhat
isrealisticanddoableforinvestmentmanagerstoprovide–assetownerwants
14
toknowiftheirwishisbeingaccomplished,arepeoplebetteroffasaresultof
accesstofinancialinclusion?Reportingonnumberofpeoplebeingreacheddoes
notanswerthisquestion.Needfocusonoutcomes.Thiswillalsohelpaddress
skepticismonthevalueoffinancialinclusion.
Howimportantisthe“tradeoff”forimpactinvestors?
• ForPensionFunds,theycan’tthinkofitastradeoff.Bothaspectshavetowork.
Investmentshavetobesociallyandenvironmentallysoundbutalsohavetobe
strongfinancially.Pensionfundsarelimitedintermsoftheirexposureto
microfinancegivenregulations.
• Familyoffices/Foundationshavemoreflexibilityandcantakemorerisks.We
needtobeabletotalkaboutblendedvalue.Whereafoundationcanmaximize
socialandfinancialperformanceastheywish.Familyofficesareevenfreerthan
foundations.Theycanacceptlowerreturns,butnotforever.Inmatureareas,
acceptinglowerreturnsmightbedoingharmtothedevelopmentofthesector.
ConclusionsandNextSteps
SIWGworkstreamsprioritizedbyinvestorparticipantsfortheSIWGgoingforward:
• HarmonizingSPMduediligence(ALINUS)–testingALINUS,contributingto
toolkits
• Harmonizingloanagreementcovenants–preventingclient-bornFSrisk
(awarenessraisingtoassetowners,defininglimits)
• Measuringandreportingonsocialoutcomes–sharingimplementation
examples
• Pricingtransparencyanddataplatform–investorstoprovidefeedbackto
MicrofinanzaRatingonthedataplatformpilot/simulation
• NEW–SocialandenvironmentalperformanceatSMElenders
• NEW–Increasealignmentbetweenassetownersandassetmanagers–
Secretariattodevelopmaterialstoraiseawarenesswithassetowners.Investors
inthegrouptoprovidefeedback.Alsoinvestorstoprovideinputonthe
conventionsandmappinginitiativesbeingdeveloped
o ParticipateinImpactManagementProjecthuddles(Bridges)
o ProvidefeedbackonFinancialInclusionMarketMap(UNPRI)–webinar
o DevelopFinancialInclusionvertical(basedonGIIN’stemplateforother
sectors)
• Equityandresponsibleexits–SecretariatwillcoordinatewithNpMonthework
theyaredoing.SPTFwillalsolikelyholdawebinaronresponsibleIPOsinthe
comingmonths.Anyinvestormemberwithinformationonupcomingorrecent
exitspleasegetintouchwithLeticiaEmme.
• Preventingover-indebtedness–AVOID–anyupdatesontheguidelines/
feedbackfrominvestorsarewelcome.Participantsnotedtheimportanceto
keepthistopicintheagenda.
LeticiaEmme(SPTFSecretariat)willfollowupwithinvestorsinterestedinbeinginvolved
inthedifferentworkstreams.
15
Participantstothe2017SIWGmeeting
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Organization
ACTIAM
ADA
ADA
AdvansSA
AFD
AgaKhanAgencyforMicrofinance
AgaKhanAgencyforMicrofinance
AgaKhanAgencyforMicrofinance
AgaKhanAgencyforMicrofinance
Alterfin
BambooCapitalPartners
BankimBistumEsseneG
BBVAMicrofinanceFoundation
BlueOrchardFinance
BlueOrchardFinance
BlueOrchardFinance
BridgesFundManagement
CDCGroup
CenterforSustainableFinanceandPrivate
Wealth-UniversityofZurich
CERISE,SPTF
CompañíaEspañoladeFinanciacióndel
Desarrollo,COFIDES,S.A.,S.M.E.
CordaidInvestmentManagement
DeutscheBankAG-DeAMSustainable
InvestmentEurope
DeutscheBankAG-DeAMSustainable
InvestmentEurope
DevelopingWorldMarkets(DWM)
e-MFP
EloraFinance
EuropeanInvestmentBank
EuropeanInvestmentBank
GrameenCreditAgricoleFoundation(SIWG
co-chair,SPTFboardmember)
IncofinInvestmentManagement
IncofinInvestmentManagement
InternationalLabourOrganisation
34 LiechtensteinDevelopmentService(LED)
Participant'sname
Pelzer,Nikkie
Canetti,Sarah
Ramirez,Juana
Brown,Katherine
Beck,Charlotte
Destouches,Benoit
Gray,Julia
Merchant,Sitara
Patel,Trushna
Giordano,Caterina
Chardon,ArianeCherix
Lukas,Janne
GarciaVanGool,Stephanie
Sherk,Lisa
Zappia,MariaTeresa
Lorenz,Hannah
Prentice,Olivia
Forecast,Rebecca
Krauss,Annette
Lapenu,Cecile
Morant,Beatriz
Noe,Sascha
Howe,Sarah
Saito,Yoshiko
Glassmeyer,Shedd
Rozas,Daniel
Marti,Adrian
Gloukoviezoff,Georges
Pouget,Perrine
Hammer,Jurgen
PONS,Dina
Roelofs,Dana
Richter,Patricia
Duenser,Heinz
16
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
LuxembourgMicrofinanceandDevelopment
Fund
MicrocredHolding
MicrofinanzaRating(SPTFboardmember)
MicrofinanzaRatingSrl
MicroVestCapitalManagement
MIMOSA
NESTPensionFund
NordicMicrofinanceInitiative
NpM-Platformforinclusivefinance
Oikocredit
Oikocredit
OnValues
PAMIGAFinance
PAMIGAFinance
PAMIGAFinance
PAMIGAFinance
PGImpactInvestments
Proparco
Proparco
responsAbilityInvestmentsAG
responsAbilityInvestmentsAG
responsAbilityInvestmentsAG
SDC(SPTFBoardmember)
SIDI-SolidaritéInternationalepourle
58 Développementetl'Investissement
59 SIMAFunds
60 Symbiotics
61
62
63
64
65
66
Symbiotics
Symbiotics
TCXFund
TheSmartCampaign
TriodosInvestmentManagement
TriodosInvestmentManagement
TripleJump(SIWGco-chair,SPTFboard
67 member)
Wilson,Apricot
Guyon,Hervé
Moauro,Aldo
Spaggiari,Lucia
Hofer,Thomas
Javoy,Emmanuelle
Zwicky,Beatrice
Streeval,Cathrine
Sluijs,Josien
Ooms,Sonja
Landolt,Simone
Knoepfel,Ivo
CHAOBEROFF,Renée
JOVIC,Snezana
JAN,Charline
MERCERET,Mathieu
Scaramella,Sara
Angoso,Pauline
Bottin,Laurence
Fernandez,Pedro
Heimes,Martin
Hug,Carola
Ramm,Hans
GACHES,PIERRE
Pierluca,Xavier
Narayanan,Ramkumar
ParashkevovaHolmegaard,
Marina
Zeitoun,Safeya
Luini,Jonas
Barres,Isabelle
Fitri,AdystiRaissa
Foppa,Heidi
Bochatay,Christophe
17