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March 16, 2005
Not Just for Corporations: Six Microfinance Banks on Three Continents Use GRI Guidelines
by William Baue
Microfinance institutions in Africa, Asia, and South America are issuing sustainability reports
using Global Reporting Initiative guidelines, as are other non-corporate entities such as GRI
itself.
SocialFunds.com --
Global Reporting Initiative (GRI) Sustainability Reporting
Guidelines: they're not just for corporations anymore (to paraphrase Annette Funicello's line
hawking orange juice). Last month, GRI announced that six microfinance institutions (MFIs) in
developing nations on three continents-- Africa, Asia, and South America--are preparing
sustainability reports incorporating GRI guidelines. MFIs offer microcredit, or small loans
typically accompanied by technical assistance and financial counseling, to low-income individuals
or microenterprises overlooked by mainstream financial institutions.
The MFIs include one in Asia (Acleda Bank in Cambodia), two in Africa (K-Rep Bank in Kenya and Centenary Rural Development Bank in Uganda), and three in South America (FIE in Bolivia, Banco Solidario in Ecuador, and FINDESA in Nicaragua). Acleda Bank currently has a brief Environment, Social and
Community Report posted on its website, but the difference between this relatively perfunctory
document and a sustainability report based on GRI guidelines is significant. The six MFIs will
utilize GRI's handbook for small and medium
enterprises (SMEs) for support in producing the in-depth reports.
To further support the
MFIs in producing the in-depth reports, GRI is collaborating with Triodos Bank, which has a wealth of experience in GRI-based
reporting dating back to 2001. Triodos already provides financing to these six MFIs through its
Hivos-Triodos and
Triodos-Doen funds. Triodos, which has 250 employees, also utilized the GRI SME handbook for
its own report.
Triple bottom line (TBL) reporting, which covers social and
environmental as well as financial information, is not completely novel to the microfinance sector.
For example, Oikocredit, which is
considered by the World Bank to be the
largest international private provider of microcredit in the world and provides microfinancing to
some of the six GRI-reporting MFIs such as FIE Bolivia, utilizes TBL reporting.
'The
international microcredit field is shifting its measures or metrics for gauging the impact of
micrcredit in local areas from what today are primarily narratives of how people use microcredit to
more demographic information," said Terry Provance of Oikocredit USA. "We have our own grid or
tool for impact assessment, though it is very difficult to isolate the impact of one factor such as
microcredit when you try to gauge what it does for education, nutrition, health, housing,
employment, savings, etc...."
Despite the difficulty, assessing the social and
environmental impact of microfinance is vital for investors who want to see how their investments
advance poverty reduction. The degree to which the GRI framework is appropriate for such
assessment of microfinance will be borne out by the experience of the six pioneering MFIs.
Besides corporations and now microfinance institutions, many other types of groups (known as
"organizational
stakeholders" in GRI-speak) are also utilizing GRI guidelines. The process of preparing a
GRI-based report is particularly valuable for organizations that urge corporations to transparently
disclose information about their social and environmental sustainability, as it exposes them to the
challenges of such reporting.
For example, the socially responsible investment (SRI)
mutual fund firm Calvert Group, which
joined 16 other SRI firms in explicitly calling on corporations to issue GRI-based sustainability
reports, recently issued its own GRI report. Nongovernmental organizations
such as the Coalition for Environmentally Responsible Economies (CERES), which helped found GRI, similarly call on companies to
issue GRI-based reports, so it helps enhance their credibility when they walk their talk by issuing
their own GRI-based report.
GRI recently
demonstrated perhaps the most appropriate expression of walking its talk by issuing a
sustainability report following its own guidelines.
"Through the reporting process, we
realized that we had been neglecting a fundamental truth: that even though an organization may base
its entire existence around promoting sustainable development, it is still necessary to take basic
steps towards ensuring that its own operations are in line with such goals," stated GRI Chair Judy
Henderson.
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SRI World Group, Inc. All Rights Reserved.
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