A group of 40 global investors in the microfinance industry, including US retirement planning firm TIAA-CREF and several microfinance investment vehicles (MIV), recently launched a set of guiding principles for investing in the microfinance industry at the Responsible Finance Forum in The Hague, Netherlands. The initiative – titled “Principles for Investors in Inclusive Finance” – is reportedly the brainchild of Her Royal Highness Princess Maxima, the United Nations Secretary General’s Special Advocate for Inclusive Finance for Development, and a core group of Dutch investors, including; Triodos, a microfinance investment vehicle (MIV); Goodwell, a for-profit social investment outfit; Oikocredit, a cooperative investment fund; PGGM, an investment and pension firm; and SNS Asset Management, an institutional investment group. The group and Her Royal Highness Princess Maxima developed the principles together with CGAP and the United Nations-backed Principles for Responsible Investment (PRI), a network of international investors created to promote the practice of responsible investing.
By signing the principles, investors are committing to the following: (1) to encourage microfinance institutions (MFIs) to expand their range of financial services to low-income clients in more remote locations; (2) to encourage client protection in the form of pricing transparency and prevention of over-indebtedness; (3) to provide fair terms and transparent investment conditions to all investees; (4) to include environmental, social and corporate governance (ESG) issues in their investment policies and reporting; (5) to promote transparency throughout the investment process including pricing, terms and objectives of investments; (6) to balance social and financial returns to recognize the interests of clients, MFIs and investors; and (7) to collaborate with other investors to set investment standards as trends in the industry emerge. Further information on the principles can be found at: http://www.unpri.org/files/2011_01_piif_principles.pdf.
The new inclusive finance principles, which go into effect at the moment of signing, differ from “The Principles for Responsible Investment,” a list of principles devised by 20 institutional investors in 2005 to encourage investors to incorporate ESG issues in their policies and investment strategies. The United Nations-backed PRI group was created in 2005 after the launch of the principles to encourage investors to implement the practices.
The first signatories of the inclusive finance principles include: ACCION Investments in Microfinance, Achmea, All Pensions Group (APG), Bamboo Finance, Blue Orchard Finance, Blue Orchard Investments, Calvert Foundation, Caspian Advisors, Cordaid, Developing World Markets, Dutch Microfund, Financierings-Maatschappij voor Ontwikkelingslanden (FMO), Finance-in-Motion, Goodwell Investments, Grassroots Capital Management, Incofin Investment Management, Leger des Heils, Microvest Capital Management, Minlam Asset Management, MN Services, Municipality of Eindhoven, Nedlloyd Pension Fund, Norwegian Microfinance Initiative, Oikocredit, Pensioenfonds Vervoer, Pensioenfonds Zorg en Welzijn (PFZW), Pensionfund of the Ministers in the Protestant Church in the Netherlands, PGGM, Pensioenfonds Medewerkers Apotheken (PMA), PNO Media, Reaal, responsAbility Social Investments, Sarona, SNS Asset Management, SPF Beheer, Stichting Pensioenfonds (ABP), SNS Reaal, Symbiotics, TIAA-CREF, Triodos Investment Management and Triple Jump. More information on the signatories can be found at: http://www.unpri.org/files/2011_01_piif_signatories.pdf.
By John Howard-Smith, Research Associate
About CGAP (Consultative Group to Assist the Poor): Housed at the World Bank Group, CGAP (Consultative Group to Assist the Poor) is an independent policy and research center established in 1995 dedicated to facilitating the provision of financial access to poor people worldwide. CGAP is supported by approximately thirty development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors.
About United Nations Principles for Responsible Investment (UNPRI): The United Nations Principles for Responsible Investment (UNPRI) initiative is a network of international investors created under the auspices of the United Nations (UN) in 2005 to promote the practice of responsible investing. Based in the United Kingdom, UNPRI has put together six principles for responsible investment which focus on environment, social, and governance (ESG) principles; collaboration; and transparency. Its signatories are its members, including asset owners, investment managers and professional service partners who work in concert to promote UNPRI principles in practice. As of February 2011, UNPRI has 876 signatory investors.
[1] Reponsible Investor: “Major Dutch pension funds, TIAA-CREF launch microfinance principles” http://www.responsible-investor.com/home/article/major_dutch_pension_funds_tiaa_cref/
[2] The Royal Forum: “Crown Princess Maxima attended Responsible Finance Forum”, http://www.theroyalforums.com/21454-crown-princess-maxima-attended-responsible-finance-forum/
[3] Principles for Responsible Investment Press Release: “40 Global Investors Launch Inclusive and Responsible Finance Principles” http://www.unpri.org/files/2011_01_piif_press_release.pdf
MicroCapital.org story, November 2, 2010: “MICROCAPITAL BRIEF: CGAP (Consultative Group to Assist the Poor), United Nations Principles for Responsible Investment Initiative Set Standards for Microfinance Investment Vehicle Environmental, Social and Governance (ESG) Performance”, https://www.microcapital.org/microcapital-brief-cgap-consultative-group-to-assist-the-poor-united-nations-principles-for-responsible-investment-initiative-set-standards-for-microfinance-investment-vehicle-environmental-socia/
MicroCapital’s Microfinance Universe profile: CGAP (Consultative Group to Assist the Poor), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+(Consultative+Group+to+Assist+the+Poor)
MicroCapital’s Microfinance Universe profile: United Nations Principles for Responsible Investment (UNPRI), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=United+Nations+Principles+for+Responsible+Investment
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
Similar Posts:
- MICROCAPITAL BRIEF: G20, SME Finance Forum Showcase Digital Finance Solutions for MSMEs Via Online Database, Seek Submissions
- MICROCAPITAL BRIEF: Rite Water of India Nets $8m in Equity from Incofin via Water Access Acceleration Fund
- MICROFINANCE PAPER WRAP-UP: “Climate Risk and Financial Inclusion: A Regulatory Perspective on Risks and Opportunities;” by Peter Knaack, Peter Zetterli
- MICROCAPITAL BRIEF: Energy Entrepreneurs Growth Fund (EEGF) Raises $125m to Increase Access to Energy in Sub-Saharan Africa
- MICROCAPITAL BRIEF: DFIs Invest $109m in Horizon Capital IV to Support SMEs in Ukraine, Moldova
