A 2 ben simmes social environmental impact.ppt
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A-2 Ben Simmes social environmental impact
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A 2 ben simmes social environmental impact.ppt
- 1. Social impact Ben Simmes, Managing Director Oikocredit Tokyo 6th
- 2. HOW TO ACHIEVE SOCIAL IMPACT? THE EFFECTIVE TRANSLATION OF OUR MISSION INTO PRACTICE
- 3. 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
- 4. Two objectives Social investments Empowering disadvantaged people with credit
- 5. Support Associations providing capital North America: Europe: Canada Germany USA France Spain Netherlands Belgium Switzerland Austria Denmark Sweden Italy United Kingdom Latin Asia: America Philippines Mexico Japan Uruguay Korea
- 6. 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
- 7. Two objectives Social investments Empowering disadvantaged people with credit
- 8. SOCIAL IMPACT STRATEGY: 5 PILLARS • OIKOCREDIT ITSELF • PROJECT PARTNERS • END-BENEFICIARIES • MICROFINANCE SECTOR • INVESTORS
- 9. 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..)
- 10. Oikocredit in Microfinance Oikocredit CGAP MIV Survey Results (2009) MF Portfolio in 15% 7% Africa MF Portfolio in 27% 11% Asia & Pacific MF Portfolio 18% 47% CEE & CA Portfolio in top 5 34% 58% countries (47% in top 10) % of MFI 79% 63% borrowers - women
- 11. 1/3 of our 890 partners are cooperatives At 31 December 2011
- 12. Githunguri Dairy Farmers Cooperative Small scale dairy farmer Average 3 acres, 5 cows
- 13. BULLOCK WORKERS, MFI OWNERS • Savings and credit • Health and sanitation • Gender empowerment • Business development skills • Marketing support • Dividends in each of past 5 years to clients 71% owned by clients
- 14. CHOOSE RIGHT PROJECT PARTNERS FINANCIAL SCORE CARD ESG SCORE CARD
- 15. 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%)
- 16. CLIENT WELFARE & BENEFIT (40%)
- 17. B. Client Benefit and Welfare • Avoiding overindebtedness • Transparency • Feedback from clients • Code of ethics • Interest rates • Non-financial products & services
- 18. 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
- 19. 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 achieved Essential practices: individual practices towards meeting the standard
- 20. Example Standard 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
- 21. OIKOCREDIT PARTNERS ASSISTANCE TO STRENGTHEN SOCIAL PERFORMANCE - SOCIAL PERFORMANCE AUDITS - TARGETTING POOR - PROMOTE TRANSPARENCY - CAPACITY BUILDING
- 22. CERISE SPI (social audit) Tool FUNDACION MUJER - COSTA RICA Exercise par Dimension Geographical Targeting 100% Social Responsibility Individual Targeting Community 75% 70% Social Responsibility- Clients 50% Methodological Targeting 33% 67% 50% 20% 25% 75% HR Policy 0% 50% Diversity of Products, Services 50% 75% Enhancement of social capital Quality of Services 63% 78% Client Representation Services Plus 100% Transparency
- 23. 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
- 24. 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
- 25. HIGHLIGHTS INTERNATIONAL Active 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
- 26. 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
- 27. MONITORING DATABASE Data collected: • Number of clients • Average loan size • % Rural clients • Gender policy • Monitoring changes • ….
- 29. CHALLENGE YOU HAVE TO BE JUST AS PROFESSIONAL TO ACHIEVE SOCIAL RETURN AS TO ACHIEVE FINANCIAL RETURN
- 30. Thank you
Notas do Editor
- www.oikocredit.org
- www.oikocredit.org
- www.oikocredit.org We have a flexible interest rate on both our hard and local currency loans, taking into consideration: market rate, project and country risks, development relevance and cost coverage. Contrary to popular belief, our project partners don't come to us because our interest rates are lower than local banks. On average, our rates are about 95% of commercial rates. The reason they come to us is because they have a hard time getting loans from regular banks. They can't offer the full 100% security required. We can also offer a longer term (five-ten years) than those banks would normally offer. Banks in developing countries typically offer loans of six months or one year to minimize risk. We do not charge extra fees or commissions. Our loan appraisal and disbursement procedures are transparent and relatively non-bureaucratic. Finally, our regional and country offices, which are staffed by local professionals rather than expatriates, contribute to the quality of our services through their capacity to understand the environment and realities of our clients.
- www.oikocredit.org 1) 2007 including one off result Banco del Desarollo of 12.7 2) 2009 affected by lower growth and higher provisions
- www.oikocredit.org
- www.oikocredit.org We have a flexible interest rate on both our hard and local currency loans, taking into consideration: market rate, project and country risks, development relevance and cost coverage. Contrary to popular belief, our project partners don't come to us because our interest rates are lower than local banks. On average, our rates are about 95% of commercial rates. The reason they come to us is because they have a hard time getting loans from regular banks. They can't offer the full 100% security required. We can also offer a longer term (five-ten years) than those banks would normally offer. Banks in developing countries typically offer loans of six months or one year to minimize risk. We do not charge extra fees or commissions. Our loan appraisal and disbursement procedures are transparent and relatively non-bureaucratic. Finally, our regional and country offices, which are staffed by local professionals rather than expatriates, contribute to the quality of our services through their capacity to understand the environment and realities of our clients.
- How is Oikocredit situated within the Microfinance industry?
- www.oikocredit.org
- www.oikocredit.org
- www.oikocredit.org
- We are able to plot the ESG results per dimension and at a glance, we see how MFIs in a particular country compare against each other in a particular dimension. In the dimension Client benefit and welfare, we first of all look at how an MFI takes care not to harm clients – we look at processes in place to assess repayment capacity, how the MFI informs clients about interest rate, how an MFI solicits feedback from clients and uses that to review its products and services. www.oikocredit.org
- www.oikocredit.org
- Our strategy calls for using social audits – we have introduced the Social Performance Indicators social audit tool developed by Cerise. The tool focuses on 4 main areas of social performance: outreach, adaptation of products and services, client benefits and social responsibility. Within each dimension are several key elements which are scored and leads to a graphical presentation of results. Based on the results, Oikocredit has a discussion with the MFI and we may then agree to support the MFI in addressing areas it wants to improve. We also work with partners on the Progress out of Poverty Index. It is compatible with the social audit tool in so far as the dimension of outreach is concerned and the PPI results feed into our pricing of loans. We have the possibility to give partners a discount for extraordinary social relevance and reaching the poor and the excluded is an element of that discount and the PPI provides verifiable information.
- www.oikocredit.org
- www.oikocredit.org
- www.oikocredit.org