Social impact

Ben Simmes, Managing Director Oikocredit

Tokyo 6th

HOW TO ACHIEVE SOCIAL IMPACT?

THE EFFECTIVE

TRANSLATION OF OUR

MISSION INTO PRACTICE

Mission of Oikocredit

Oikocredit promotes global justice by

challenging people, churches and others to

share their resources through socially

responsible investments and by empowering

disadavanged people with credit

Two objectives

Social investments

Empowering disadvantaged people

with credit

Support Associations providing capital

Latin America MexicoUruguay

Asia: Philippines JapanKorea

Europe:Germany France Spain Netherlands Belgium Switzerland

Austria Denmark SwedenItaly United Kingdom

North America: Canada USA

Key activities

• Discuss role of money and use of financial reserves

• Develop and offer alternatives

• Enable investing/offer investment products

• Share experiences

• Positive examples of scalable business models that create

social and environmental value

Two objectives

Social investments

Empowering disadvantaged people

with credit

SOCIAL IMPACT STRATEGY: 5 PILLARS

• OIKOCREDIT ITSELF

• PROJECT PARTNERS

• END-BENEFICIARIES

• MICROFINANCE SECTOR

• INVESTORS

OIKOCREDIT

SPECIALISED DEPARTMENT

INTERNATIONAL, REGIONAL, COUNTRY SPM STRATEGIES

INTERNAL CAPACITY BUILDING; BOARD, STAFF, SA’S INVESTORS

IMPROVEMENT OF SYSTEMS AND TOOLS

REVIEWING POLICIES (CAPACITY BUILDING, DISCOUNTS..)

Oikocredit in Microfinance

Oikocredit CGAP MIV Survey Results (2009)

MF Portfolio in Africa

15% 7%

MF Portfolio in Asia & Pacific

27% 11%

MF Portfolio CEE & CA

18% 47%

Portfolio in top 5 countries

34%

(47% in top 10)

58%

% of MFI borrowers - women

79% 63%

1/3 of our 890 partners are cooperativesAt 31 December 2011

Githunguri Dairy Farmers Cooperative

Small scale dairy farmerAverage 3 acres, 5 cows

BULLOCK WORKERS, MFI OWNERS

71% owned by clients

• Savings and credit

• Health and sanitation

• Gender empowerment

• Business development skills

• Marketing support

• Dividends in each of past 5 years to clients

CHOOSE RIGHT PROJECT PARTNERS

FINANCIAL SCORE CARD

ESG SCORE CARD

Scorecard contents

Five dimensions:1. Outreach and targeting (20%)2. Client benefit and welfare (40%)3. Governance (25%)4. Environment (5%)5. Responsibility to community & staff (10%)

CLIENT WELFARE & BENEFIT (40%)

B. Client Benefit and Welfare

• Avoiding overindebtedness• Transparency• Feedback from clients• Code of ethics• Interest rates• Non-financial products & services

Universal standards are organised into six categories

1. Define and monitor social goals

2. Ensure board, management and employee commitment to social

goals

3. Treat clients responsibly

4. Design products, services, delivery models and channels that meet

clients’ needs and preferences

5. Treat employees responsibly

6. Balance financial and social performance

Example

Standard

2a Members of the Board of Directors are committed to the institution’s social mission

Essential Practices

2a.1 The institution provides Board members with an orientation on the social mission and goals, and the Board’s responsibilities related to the social performance management of the institution and confirms that each member agrees.

2a.2 The institution requires Board members to adhere to the institution’s code of ethics.

Standard: statement of what should be achievedEssential practices: individual practices towards meeting the standard

ExampleStandard

3a The institution determines that clients have the capacity to repay without becoming over-indebted and will participate in efforts to improve market level credit risk management.

Essential Practices

3a.1 The Institution’s loan approval process requires evaluation of borrower repayment capacity and loan affordability. Loan approval does not rely solely on guarantees – whether peer guarantees, co-signers or collateral – as a substitute for good capacity analysis.

3a.2 The institution’s credit approval policies give explicit guidance regarding borrower debt thresholds and acceptable levels of debt from other sources.

3a.3 When available, the institution checks a Credit Registry or Credit Bureau..

3a.4 The institution’s internal audit verifies employee compliance with policies and systems to prevent risk of client over-indebtedness

Go to: http://sptf.info/spstandards1

OIKOCREDIT PARTNERS

ASSISTANCE TO STRENGTHEN

SOCIAL PERFORMANCE

- SOCIAL PERFORMANCE AUDITS

- TARGETTING POOR

- PROMOTE TRANSPARENCY

- CAPACITY BUILDING

CERISE SPI (social audit) Tool

FUNDACION MUJER - COSTA RICA

Exercise par Dimension

20%67%

50%

75%

63%

50%

50%33%

100%

78%

75%

70%

0%

25%

50%

75%

100%Geographical Targeting

Individual Targeting

Methodological Targeting

Diversity of Products, Services

Quality of Services

Services Plus

Transparency

Client Representation

Enhancement of social capital

HR Policy

Social Responsibility- Clients

Social Responsibility

Community

AUDITS IN LATIN AND CENTRAL AMERICA Number of SPI audits Number of MFIs Bolivia 26 14 Honduras 14 9 El Salvador 11 11 Guatemala 11 7 Costa Rica 7 7 Ecuador 7 5 Nicaragua 7 6 Dominican Republic 6 6 Argentina 5 4 Peru 5 5 Brazil 2 2 Paraguay 2 2 Uruguay 1 1 Total 104 79

44 – Costa Rica RDC

15 – Uruguay RDC

CAPACITY BUILDING PARTNERS

Donors:

- Dutch Ministry of Development Cooperation

- IFC

- Rabobank

- ICCO

- Church of Sweden

- Members

- USAID

Around 2.5 million Euro up till 2015

HIGHLIGHTS INTERNATIONALActive participation in boards, debate and developments:

Smart Campaign:

- fine tuning of the client protection principles (CPP)

- adherence to principles

Social Performance Task Force

- developing general standards for social performance

Investor Principles

- reporting on principles/adherence

- promoting the principles

Development tools

- standardizing SPI (Cerise)

- critical review PPI with Grameen

CLIENTS

Client protection principles

• Appropriate product design and delivery

• Prevention of over-indebtedness

• Transparency

• Responsible pricing

• Fair and respectful treatment of clients

• Privacy of client data

• Mechanisms for complaint resolution

MONITORING DATABASE

Data collected:

• Number of clients

• Average loan size

• % Rural clients

• Gender policy

• Monitoring changes

• ….

Sharing information with investors

CHALLENGE

YOU HAVE TO BE JUST AS PROFESSIONAL TO

ACHIEVE SOCIAL RETURN AS TO ACHIEVE

FINANCIAL RETURN

Thank you