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Role of greater transparency in overcoming the reputational threat to the Microfinance Industry. Overview.

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The Microfinance industry is going through the biggest crisis in its history due to the events that have happened in India, Bangladesh, Morocco, Nicaragua and Bosnia. At this point in time, concrete steps need to be taken by the stakeholders to rectify industry shortcomings and return to a more positive trend.  Improved transparency would constitute a step towards overcoming the current crisis.

Each panelist will describe:

  • The internal tools, reporting standards/formats used by the MIV to promote greater transparency.
  • How does the MIV communicate/ report to its clients, investors and other stakeholders?
  • What is the communication policy of your MIV? What measures do you take and tools you use to maintain the reputation of your MIV in the popular media?
  • How do you make sure that all of you product offerings, employee behaviors and client treatments are inline with the mission and vision of your organization ( i.e. providing financial services in a responsible manner)
  • Sachin S Vankalas, LuxFLAG (MODERATOR)
  • Luis Viada, Executive Vice president, Microrate, USA
  • Dina Pons, Investment Manager, Incofin, Belgium
  • Dr. Arman Vardanyan, Portfolio Manager, Absolute Portfolio Management, Austria
  • Mr Jacco Minnaar, Fund Manager, Triodos, the Netherlands

Arman Vardanyan,

Fund Manager,

Absolute Portfolio Management

Luxembourg, 4 November 2011

Absolute Portfolio Management – investment management company, specialist in alternative investments and microfinance.


Dual Return Fund Key Social Performance Facts:

    • 96% of MFIs have a written, formal social responsibility policy or code of conduct
    • 83% of the MFIs provides good-quality social information to its stakeholders through a diversified range of communication channels (MIX Market etc.)
    • 95% of MFIs strive to promote diversity among loan officers and hire staff that reflects the clients served
    • 82% of MFIs have an exclusion list on lending
    • 83% of MFIs implement a rigorous system to determine a client’s level of indebtedness
    • 90% of MFIs have fair and not coercive collection policies
    • Source: Symbiotics Social Responsibility Assessment

Social Responsibility Report (the Symbiotics social rating tool)

  • 100 indicators in line with industry standards, the MIX, UN Reporting Initiative
    • Social governance
    • Labor climate
    • Financial inclusion
    • Client protection
    • Product quality
    • Community engagement
    • Environmental policy

Regular communication:

    • Monthly fund factsheets and country reports
    • Monthly institutional investor report (incl. Social impact)
    • Fund updates and articles in the media
    • Website:
    • Communication material: brochures, leaflets, etc.
  • Customized replies to investors’ enquiries

Incofin Investment Management’s actions towards the promotion of greater transparency

    • Why ?
    • How ?
    • Moving Forward…

Why do we need to promote greater transparency?

    • Investing in Microfinance does not make us «necessarily » socially responsible.
    • We need to provide tangible proofs to our claim of being a double/triple bottom line industry

How do we currently promote greater transparency?

    • At the MFI level: Measuring and Promoting social performance (debt and equity)
    • At the MIV level: Working together towards the promotion of collective guidelines
    • At the investors level: Reporting on our social achievements

Moving Forward…

    • At the MFI level: Need for enhancement of social reporting
    • At the MIV level: Need for alignment of messages
    • At the Investors level: Need for awareness raising on the fact that microfinance can only be a patient investment.

LuxFLAG panel

Role of greater transparency in overcoming the reputational threat to the Microfinance Industry

Jacco Minnaar

Fund Manager

Friday November 4th, 2011

2pm – 3:30pm

triodos bank
Triodos Bank
  • Sustainability
  • Transparency
  • Excellence
  • Entrepreneurship

What we stand for

triodos investment management
Triodos Investment Management

Transparency throughout investment process

Investors in our funds

  • Trust
  • Global standards
  • Meaningful relationships
  • Constant dialogue

Triodos Investment Management

Microfinance Institutions

Ultimate clients

which crisis
Which Crisis?
  • Increasing Systemic Risk
  • Isolated Trouble Spots
  • Media coverage = Public Perception

…were we complicit?

Oversold promise


investment clarity
Investment Clarity





  • Return
  • Principal
  • Headline Risk
  • Social progress
  • Track Record


Understand the Tradeoffs

  • Investment
  • Objective
  • Social
  • CSR
  • Process
  • Output/Outcomes
  • Social
  • Mission


  • About LuxFLAG
  • LuxFLAG Microfinance Label
  • LuxFLAG Microfinance Label: review of applications
  • Labelled MIV Factsheet
about luxflag
About LuxFLAG

LuxFLAG, launched in July 2006, is an independent organisation that strives to

provide clarity and confidence to micro‐finance investors by awarding a distinctive label upon specific published criteria to eligible Microfinance Investment Vehicles (MIVs).

luxflag microfinance label
LuxFLAG Microfinance Label

The primary objective of LuxFLAG Microfinance Label is to reassure investors that the MIV actually invests, directly or indirectly, in  the  Microfinance sector. Investing indirectly means that the MIV can, rather than giving direct  loans to Microfinance Institutions (MFIs), invest into other MIVs  themselves investing more  than 50% in Microfinance.

Advantages of the LuxFLAG Microfinance Label  :

• Reinforces clarity, transparency and credibility towards the Investors

• Enhances Visibility of the MIV in the international platforms.

• Helps reaching international investment community

luxflag microfinance label review of applications
LuxFLAG Microfinance Label: review of applications
  • Pre analysis by the LuxFLAG team
  • Comprehensiveanalysis by the Eligibility Committee against specified published eligibilitycriteria and Social Criterion
  • Review by the Board of Directors