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  1. 1. 2nd International Symposium on Social Investment Evaluating Social Impact Presented by Tes Pilapil, Regional Director Southeast Asia 13 October 2013 Tokyo, Japan
  2. 2. Oikocredit – Who are we?  Oikocredit -worldwide cooperative society established in 1975  International office in The Netherlands  “Oiko” is Greek for «house» home, family  “Credit” from Latin “credere”, to have faith  The oldest and one of the largest social investors in microfinance worldwide
  3. 3. Our Experience • since 1975 • 100% private investment financed through sale of shares • Diverse membership o Churches o Church-related institutions o Support associations (30 SAs in 13 countries) o Project partners • Dual return: modest financial return and social return on investment
  4. 4. Facts & figures At 30 June 2013 • 859 partners in close to 70 countries • 589 microfinance partners (of total number of partners) • € 533 million outstanding • € 105 million approved • € 119 million disbursed • 28 million clients reached by Oikocredit’s microfinance partners* • 36 regional and country offices *at 31 December 2012
  5. 5. Strategic Support to Social Enterprises • Loans • Equity investment • Risk management • Product development • Market positioning • Social performance Capacity Building Development financing/Investments Strengthen partners’ capacities to sustainably deliver VALUE to clients/members • Management systems • Staff development • Partners’ feedback • Risk management + control Organizational development Clients/ Members /Disadvantaged groups
  6. 6. Strengthening the capacities of the social enterprises • Governance • Finance Management • Risk Management Financial Results Social Impact Balanced double or multiple-bottom line Partners with strong capacities to deliver value in a sustainable way
  7. 7. Capacity Building Market Development& Positioning Risk Management Product Development Sustainable value creation Social Performance Management (SPM)
  8. 8. Social Performance What is it?
  9. 9. Social Performance defined The effective translation of an institution’s mission into practice in line with accepted social goals Importance: • Achievement • Accountability
  10. 10. Social Return/Social Impact Choosing the Right Partners Monitoring Social Performance Accountability of Partners Feedback from Partners Capacity Building Support Social Covenants
  11. 11. Partner selection • Create jobs and income • Cooperatives, financial institutions or small to medium enterprises • Women in management positions • Environmentally sustainable and respect animal welfare • Suitable management structure • Are (or can soon become) financially sustainable • Demonstrate a clear need for foreign investment * Will never finance child labour, arms productions, explosives or other dangerous materials
  12. 12. To evaluate social impact, we collect data: Partners’ outreach Targeting methodology Employment rates Sustainability Compliance with MF Client Protection Principles Care for the environment Products and services offered
  13. 13. Tools - The Environment, Social and Governance (ESG) Scorecards • Developed by Oikocredit in 2010 • Select the right partners by identifying strengths and weaknesses • Monitors and tracks improvements in social performance management • Starting point for dialogue among partners • Evaluate the needs for capacity building support • Areas for improvement as part of Social Covenant • Red Flags • Incentive: “Extraordinary Social Relevance” discounts
  14. 14. The Oikocredit ESG Scorecard Domains  Outreach and Inclusion (15%) ESG Scores:  Client Benefit and Welfare (40%) 45% - 54% Moderately Weak. Initial efforts underway to address SP issues  Social Performance and Governance (30%)  Environment (5%)  Responsibility to Community and Staff (10%) <45% Very Weak. Neglible attention to social performance 55% - 64% Average. Covers minimum standards and key issues but needs for improvement 65% - 79% Strong - Very Strong. Shows strong social orientation and addresses all SP areas. Clearly reflects attention to double bottom line. 80% and higher Excellent. A clear leader in social performance showing many best practices
  15. 15. Tools -- Progress out of Poverty Index (PPI) • Developed by Grameen Foundation for MFIs • 10-question survey tool • Enables MFIs to accurately select clients from their target group • Provide insights into whether a client’s economic situation has changed • Oikocredit promotes the implementation of PPI to ensure they remain committed to serving disadvantaged people • Areas for improvement as part of social covenant
  16. 16. Tools - Microfinance Client Protection Principles (CCP) The Client Protection Principles • Are minimum standards that providers of financial services should adhere to  Appropriate product design and delivery In Oikocredit:  Prevention of over-indebtedness • Basic CPP orientation for all Microfinance partners  Transparency • SMART Campaign  Responsible pricing • CPP Assessment  Fair and respectful treatment of clients • CPP in social covenant  Privacy of client data  Mechanisms for complaint resolution
  17. 17. Tools - Social Performance Indicators (SPIs)  Social auditing and assessment tool developed by the CERISE (French)  Framework for reviewing organization’s social strategy, processes and results of products and services  Uses indicators covering 4 dimensions: • targeting and outreach • benefits to clients • products and services • social responsibility  internal dialogue, policy reforms
  18. 18. How does it work? Example: CPP Partner Selection Due diligence -Financial -Social (ESG) Strengths/ Gaps in CPP Practices Social covenant Letter OR Loan agreement: * CPP practices to improve *Timeframe CPP Capacity Building Support CPP Orientation CPP Assessment Action Plan Monitoring Regular Reports Visits from Country Office/CBSPM Officer
  19. 19. Social Performance in Oikocredit  International Office, The Netherlands  Social Performance & Financial Analysis Director (Department)  Capacity Building Manager  2 Full time Researcher/Analysts, Social Performance  Social Performance Specialist  Special Projects Manager (Environment)  Regional Offices  Capacity Building/SP Officer at Regional Level  Southeast Asia Office  Regional Coordinator, Capacity Building/SPM  SPM Officer (part-time)  Consultants
  20. 20. Collaboration with Microfinance sector (Global)  Social Performance Task Force (SPTF) • development of standards for social performance management, MFIs  Client Protection Principles (CPPs) • steering committee of the SMART Campaign  MFTransparency • promotes transparency in pricing in the microfinance sector • Oikocredit uses MFTransparency tool in due diligence  Principles for Investors in Inclusive Finance (PIIF) • leadership of the UN Secretary-General’s Special Advocate for Inclusive Finance for Development, Princess Máxima of the Netherlands, Oikocredit co-developed the PIIF. • implementation and reporting guidelines for these principles.
  21. 21. Dōmo arigatōgozaimashita Thank you very much!
  22. 22. Disclaimer This document was produced by Oikocredit, Ecumenical Development Cooperative Society U.A. (Oikocredit International) with the greatest of care and to the best of its knowledge and belief at the time of writing. The opinions expressed in this document are those of Oikocredit International at the time of writing and are subject to change at any time without notice. Oikocredit International provides no guarantee with regard to its content and completeness and does not accept any liability for losses which might arise from making use of this information. This document is provided for information purposes only and is for the exclusive use of the recipient. It does not constitute an offer or a recommendation to buy or sell financial instruments or banking services and does not release the recipient from exercising his/her own judgment. The recipient is in particular recommended to check that the information provided is in line with his /her own circumstances with regard to any legal, regulator, tax or other consequences, if necessary with the help of a professional advisor. This document may not be reproduced either in part or in full without the written permission of Oikocredit International. It is expressly not intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law. Every investment involves risk, especially with regard to fluctuations in value and return. It should be noted that historical returns and financial market scenarios are no guarantee of future performance. Investments in foreign currencies involve the additional risk that the foreign currency might lose value against the investor‘s reference currency. Oikocredit International is a cooperative society with limited liability (coöperatieve vereniging met uitgesloten aansprakelijkheid) under the laws of the Kingdom of the Netherlands.