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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.


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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