European Microfinance Week 2020

INTRODUCTION

The e-MFP Green Inclusive and Climate Smart Finance (GICSF) Action Group was created in 2013, with the objective to raise awareness about the challenges related to inclusive finance and the environment, enhance the knowledge and actions of inclusive finance actors in dealing with environmental issues, and facilitate cooperation among green inclusive finance actors.

One of main goals of the AG is to develop tools to measure the environmental performance of Microfinance Institutions (MFIs). The AG developed the Green Index tool (GI) in 2014, with the aim to provide a tool for the sector to measure MFIs’ environmental performance. The tool has been integrated into the SPI, and the AG is currently conducting a joint project with the e-MFP GICSF AG and SPTF/CERISE to update the GI and create a 7th dimension in the Universal Standards. The training aims to guide participants on the application of the tool, its axes of evaluation, the concepts of environmental performance reviewed in order to update the tool, and the introduction of a fifth dimension in an interactive modality. Relevant for FSPs, investors, and consultants.

PRESENTATIONS

Natalia REALPE CARRILLO presented the work done by the Action Group led by Realpe Carrillo and Davide FORCELLA, in conjunction with various stakeholders, to upgrade the Green Index. The presentation built on the previous session, entitled ‘Reaching the 7th Dimension’.

In the presentation, Realpe Carrillo highlighted the next steps planned for 2020-21, such as a state-of-the-art publication on Green Finance, a ‘Green Index 3.0’ with 7 Universal Standards, the analysis of a large database of Green Index assessments, a webinar series, and a marketplace.

She then presented the Green Inclusive Finance triple bottom line approach and introduced the Green Index 2.0, consisting of 4 axes of assessment:

• Environmental strategy;
• Internal Environmental risk management;
• External Environmental risk management;
• Green Products.

Realpe Carrillo provided examples of how to use the tool and the respective assessment and scoring system for each of the axes.

Forcella subsequently explained how the fourth axis of Fostering Green Products is assessed, and the methodology of its use. He emphasised the need for quantitative indicators, which will appear in the Green Index 3.0. It will be based on collaborative work to track and report on progress and understand the environmental performance outcomes of financial service providers. The Action Group is collaborating with members and partners to produce a state-of-the-art publication with more than 600 assessments conducted across the globe from 2011-2019.

A preliminary analysis revealed an increasing trend of green loan provision, and the integration of internal and external environmental risk assessment at the FSP level. The Green Index 3.0 will add a resilience dimension (vulnerability) focused on both active and passive risk contexts, as well as assessing the balance between resilience and opportunities.

Realpe Carrillo subsequently gave an exercise to the participants, based on the case of Kompanion in Kyrgyzstan, to work with the 4 abovementioned dimensions of environmental performance. This was done in separate breakout sessions.

The training can be replicated and offered in different formats for FSPs and MIVs, ranging from short sessions to dedicated training-of-trainers sessions for different stakeholders.