> Posted by Adriana Magdas
The Social Performance Task Force defines social performance, or the social bottom line, as the entire process of making an organization’s social mission a reality. This may include serving larger number of poor and excluded people; improving the quality and appropriateness of financial services; creating benefits for clients; and improving the social responsibility of microfinance institutions. Managers for social investments and microfinance funds must actively assess the social performance of their client institutions to determine the extent to which social goals are met and measure the benefits for clients of microfinance and their communities.
In 2010 Oikocredit, a large financier of microcredit which seeks to offer both financial and social returns to its investors, appointed social performance management specialists at all of its regional offices to assist project partners with social performance development and management.
Oikocredit routinely collects information from partner institutions using tools developed to monitor the social impact of investments. These tools incorporate the Social Performance Indicators, which assess the social performance of an institution by analyzing its intentions and actions, and the ESG (environment, social, governance) scorecard developed to reflect Oikocredit’s core selection criteria and vigorous environmental and governance criteria. It is important to note that a considerable component of the ESG scorecard is the Smart Campaign’s Client Protection Principles, which promote transparency, fair practices, and quality services.
Several other leading social investors and microfinance funds have started to regularly publish “social performance reports” which highlight their respective social performance approach, strategy, and accomplishments. Some notable examples are: Triple Jump, Blue Orchard, Incofin, and responsAbility. All of these have endorsed the Smart Campaign and demand of their partners that they implement the Client Protection Principles in their business practices with clients .
We urge microfinance institutions, support organizations, and industry professionals to do the same and incorporate a social performance agenda into their strategy. For tools and guidance on how to start doing so, please visit the Smart Campaign and the Social Performance Task Force.
Image credit: Benjamin D. Esham