Impact report 2016

Including the Excluded. How impact investing in inclusive finance made a difference in 2016

Including the Excluded

Inclusive finance aims to make a broad range of financial services available to low-income populations in developing countries and emerging economies that are often excluded from such services. The estimated 2 billion people that lack this access have little opportunity to take charge of their financial lives, let alone to plan for a more prosperous future.

The call and urgency for financial inclusion is also embedded in the UN Sustainable Development Goals (SDGs), a set of 17 ambitious goals to end poverty, protect the planet, and ensure prosperity for all. Bringing people into the financial system can be instrumental in attaining many SDGs, including creating jobs, improving gender equality and access to education, to name a few.

This global acknowledgement of the importance of inclusive finance, in combination with the promise of financial technology (fintech), make investing in inclusive finance as exciting as ever.

In this Impact Report you can read about our role as impact investor in inclusive finance in Africa, Asia and Latin America. By zooming in on investees in Pakistan, Indonesia, Georgia, Ecuador and India we want to give you a flavour of what inclusive finance can do and how the institutions highlighted, and backed by the investors in our funds, contribute to a more inclusive world.

Dirk Elsen
Director Emerging Markets
Triodos Investment Management

2016: At a glance

Our investment portfolio

  • Assets under management: EUR 835 million
  • Number of countries: 46
  • New countries in our portfolio: 4 (Belarus, Costa Rica, The Philippines, Thailand)
  • Number of financial institutions: 116
  • Number of equity investments: 26
  • Managed by a dedicated team of 48 professionals, of 13 different nationalities

Regional exposure

As per end 2016
(as % of portfolio)
  • Latin America
  • East Asia & Pacific
  • Eastern Europe & Central Asia
  • Africa & Middle East
  • South Asia
  • Global

Top 10 exposure by country

As per end 2016
(as % of portfolio)
Country %
Cambodia 18.1%
India 13.9%
Ecuador 7.8%
Paraguay 4.8%
Bolivia 3.9%
Georgia 3.5%
Kyrgyzstan 3.5%
Peru 3.4%
Panama 3.4%
Uganda 3.2%

Division over instruments

As per end 2016
(as % of portfolio)
  • Debt
  • Equity
  • Subordinated debt

Division over currency

As per end 2016
(as % of portfolio)
  • USD
  • Local currency
  • EUR

Division over financial inclusion segments

As per end 2016
(as % of portfolio)
  • Microfinance
  • Housing finance
  • SME Finance
  • Leasing
  • Others

Outreach highlights

Number of borrowers reached by institutions in our portfolio

20.2 million

Number of savers reached by institutions in our portfolio

13.7 million

Percentage rural clients

41%

Percentage female loan clients

83%

Number of people employed by institutions in our portfolio

134,780

Average loan

EUR 1,119
East Asia & Pacific EUR 1,844
South Asia EUR 310
Latin America & Caribbean EUR 3,121
Eastern Europe and Central Asia EUR 1,886
Africa and Middle East EUR 646

Diverse product offering

% of investees offering other financial services
 
 
 
  • Money transfer services
  • Savings products
  • Insurance products

Care for the enviroment

% of investees with environmental practices
 
 
 
 
 
  • Exclusion list
  • Green office procedures
  • Green financial products
  • Environmental training for customers
  • Donations for environmental protection

Non-financial services

% of investees offering additional training and services
 
 
 
 
  • Adult education
  • Enterprise training
  • Women empowerment
  • Health services

A global outreach.
116 investments across 46 countries

Investing for impact

Our vision and approach to investing for impact in inclusive finance

Why do we invest in inclusive finance?

Addressing global challenges and contributing to the Sustainable Development Goals

As an investor, we want to contribute to providing access to affordable and responsible financial products and services for those traditionally excluded, currently 2 billion people. We strongly believe that access to finance enables them to better manage their daily life, cope with unexpected difficulties, developing their entrepreneurial skills, and plan for the future. Greater access to financial services is also seen as a key enabler for many of the United Nations Sustainable Development Goals (SDGs), a set of 17 goals to end poverty, protect the planet, and ensure prosperity for all. For example, the very first SDG – ending extreme poverty – explicitly mentions the importance of access to financial services and financial inclusion of farmers can lead to bigger investments in the plating season, resulting in higher yields – and hence progress toward SDG 2, which focuses on improving food security. Increasing account ownership among the world’s unbanked – most of whom are women – would help the SDGs promote gender quality (SDG5).

Investing in key players

We invest in local financial institutions that have local knowledge and expertise, understand their markets, are deeply rooted in communities, and serve the real economy by offering products and services that meet the needs of the people. For us, they are key actors in building an accessible, well-functioning and transparent financial sector that both supports and fuels sustainable development.

Triggering economic and social development

Rather than being the silver bullet to end poverty, we are convinced that financial inclusion is an important contributor in a complex amalgam of economic, social and cultural measures. Access to financial products and services, such as savings, credit, payment facilities and insurance does give people more options to take charge of their lives, thus triggering economic and social development.

Our goals

Our long-term investment strategy has defined three interconnected goals that have guided our activities in 2016:

  • Providing access to finance to underserved client groups.
  • Building robust, transparent and professional financial institutions, thus contributing to an accessible, well-functioning and inclusive financial sector that fuels social and economic development.
  • Broadening our impact agenda by focusing on small and medium-sized enterprises, renewable energy, sustainable agriculture, and fulfilment of basic needs, such as housing, education and healthcare.

Our approach: How do we manage for sustainable impact in our investment process?

We invest in financial institutions that aim for a well-balanced mix between people, planet and profit. This basis for our investment policy is anchored in the overall investment process and translated into practices, tools, and indicators which together form the Triodos Sustainability Management System.

Sustainability embedded in our investment process

  • Initial
    screening
  • Due diligence
  • Investment
    decision
  • Monitoring
  • Reporting
Initial screening: We screen the portfolio company's mission and strategy to ensure the alignment with the Triodos vision and mission and the fit with the Triodos funds' strategy.

The Triodos Sustainability Banking Assessment (SBA) Scorecard

The Triodos Sustainability Banking Assessment Scorecard helps to analyse, monitor and report on the non-financial performance of our portfolio companies in an effective and transparent way. The Triodos Scorecard consists of 25 indicators grouped in five dimensions: Environment, Management & Staff, Product Range, Responsible Finance, and Governance.

The Triodos SBA Scorecard takes into account relevant industry initiatives, including the UNPRI Principles for Investors in Inclusive Finance, the Universal Standards for Social Performance Management and the SMART Campaign’s Client Protection Principles, which address some of the most debated topics in the industry, such as fair pricing.

0% 20% 40% 60% 80% 100% Governance Management and Staff Product Range Responsible Finance Environment
Governance: Contributing to sustainability highly depends on the governance of the company. Questions we address: Is management and board committed to good governance practice and social and environmental objectives and does the institution have a balanced board composition?

Example of an anonymised client

A bank targeting small and medium-sized enterprises (SMEs)
Environment Management and Staff Product Range Responsible Finance Governance
  • Financial Institution
  • Portfolio
  • Region

The diagram above assesses a financial institution (red) based on the five dimensions and compares it with the average in the region (green) and in the portfolio (blue). This particular financial institution has a high score on Product Range as it has the license and capacity to offer a diverse range of products and services to small and medium-sized enterprises (SMEs), coupled with strong credit and risk management system as the loan amounts are higher than typical microfinance clients. The high score on Environment can be explained by the institution’s focus on developing climate-smart projects and projects to mitigate the emissions of greenhouse gases, including energy efficiency, renewable energy and cleaner production projects. Our investment supports the institution’s ambition to finance more underserved SMEs in the country.

Provider, enabler and inspirer

We believe that investing for impact requires more than simply providing capital. Where the provided debt or equity primarily serves the underserved; we also envision ourselves as an enabler. We build meaningful and long-term relationships with our portfolio companies, enabling them to realise their ambitions and increase their client base. We encourage the exchange of knowledge and expertise, e.g. by organising workshops for our investee companies to discuss key topics in the sector, and by giving access to our extensive network. Moreover, being a financial institution ourselves, we aim to inspire by sharing our vision on using money in a way that leads to a world that is fairer, safeguards our planet, and enables each individual to reach her/his full potential.

The Triodos three-fold approach to investing for impact in inclusive finance

serving the underserved building robust financial institutions broadening our impact agenda e n a b l i n g i n s p i r i n g p r o v i d i n g

What did we achieve in 2016?

Our activities are guided by three interconnected goals.
Goal 1: serving the underserved. Goal 2: building robust financial institutions. Goals 3: broadening our impact agenda.

Goal 1: Serving the underserved

The financial institutions in our portfolio have a specific focus on reaching out to those traditionally excluded from access to affordable, effective and transparent financial products and services. These institutions reach:

Borrowers

20.2 million With a loan people can start or expand their business, utilise their talents and generate income.

Savers

13.7 million A savings account offer people a safe place to put their money - e.g. for school fees, hospital bills, and other unexpected expenses.

Rural clients

41% People living in rural areas are often excluded from financing as their remoteness is seen as too expensive by banks to have or start operations.

Female clients

83% Women are often in disadvantaged positions in many developing countries. Giving women the freedom to manage their income and to provide for their families empowers their position.

Average loan size

EUR: 1,119 The average loan size is very closely linked to local income levels in the different regions of the world. As a result, the average loan size varies greatly across the regions, from over EUR 3,000 in Latin America, to one-tenth of that amount in South Asia:
East Asia & PacificEUR 1,844
South AsiaEUR 310
Latin America & CaribbeanEUR 3,121
Eastern Europe and Central AsiaEUR 1,886
Africa and Middle EastEUR 646

Goal 2: Building robust, transparent, and professional financial institutions

We focus on building robust, professional and profitable financial institutions with a sustainable approach to providing a wide range of financial services to those traditionally excluded. These institutions fulfil a strong and instrumental role in society and their values-driven approach is crucial in developing an accessible, well-functioning and inclusive financial sector that fuels social and economic development.

A diversity of financial institutions

116 At year-end 2016 we provided finance – both debt and equity – to 116 financial institutions in 46 countries. These institutions vary from very small NGOs working in underdeveloped markets without basic infrastructure to fully fledged banks that offer a wide range of products.

New investees

18 We entered relationships with 18 institutions that focus on the un(der)served in Thailand, India, The Philippines, Pakistan, Ecuador, Bolivia, Costa Rica, Paraguay, Peru, Panama Belarus, Georgia and Kazakhstan.
Overview of new investments

Diverse product offering

Microfinance and SME clients are interested in more than just taking out loans. They also want to be able to save, take out insurance and transfer money. A growing number of financial institutions – also in our portfolio - is able to meet these requirements. % of investees offering other financial services
 
 
 
  • Money transfer services
  • Savings products
  • Insurance products

Equity investments

26 We have equity positions in 26 institutions and play an active role on the Board of Directors. In this way, we bring our sustainable banking knowledge and expertise to the table and participate in the institutions’ governance and strategic development.

Offering non-financial products

The provision of non-financial services helps improve end clients’ capacities in better managing their finances and their living conditions. % of investees offering additional training and services
 
 
 
 
  • Adult education
  • Enterprise training
  • Women empowerment
  • Health services

Sustainability Banking Assessment Scorecard

We assess our investees using the in-house developed Triodos Sustainability Banking Assessment Scorecard, that challenges us and our investees to dive deeper into the role of governance, the product offering and the commitment towards responsible finance practices and the environment.

Strengthening our approach to SME focused financial institutions

In 2016 we strengthened our approach and criteria in financing financial institutions that focus on small and medium-sized enterprise (SMEs) in emerging markets. We closely look at the institutions’ exposure to the real economy and their environmental and social risk management system towards SMEs.

Transparency and fair pricing

The interest rates that financial institutions charge their clients is an important point of attention. We take both the profit target of the financial institution and the rates applicable in the local market into account. We assess if the institutions also pay attention to financial education and training of their clients. In 2016, 83% of the institutions in our portfolio offered financial literacy trainings to their clients.

Client Protection Principles

82% 82% of our investees are endorsers to the Client Protection Principles that put the interest of microfinance clients at the centre.

Goal 3: Broadening our impact agenda

In our quest for innovation we are looking for opportunities that tie together financial services, renewable energy and sustainable agriculture. We have also developed a strategy to engage the small and medium-sized enterprise (SME) sector. This sector is the backbone of the economy, is firmly rooted in local communities and increasingly addresses sustainability issues. Furthermore, we have taken steps to finance players in the financial sector that address basic needs, such as access to affordable housing and education.

Care for the environment

We stimulate efforts by financial institutions to make environmental protection a priority. For example, institutions can organise training courses and other activities in order to educate their clients about environmental protection and the contribution that they can make. % of investees with environmental practices
 
 
 
 
 
  • Exclusion list
  • Green office procedures
  • Green financial products
  • Training
  • Donations

Green credit lines

25% 25% of our clients provide green credit lines. Examples are loans for biogas installations or solar panels.

Active in agriculture

18% The agricultural sector, a very important sector in developing countries, is highly exposed to climate fluctuations and potential natural disasters. Local farmers are therefore often excluded by lenders. We encourage financial institutions to be an active lender in this sector. Based on the total loan portfolio of all institutions in our portfolio, the percentage of loans extended to the agricultural sector amounted to 18% at year-end 2016.

Greening the inclusive finance sector

Together with the Dutch Platform for Inclusive Finance (NpM), FMO, Lendahand, Oikocredit, and Triple Jump we formed the Green Inclusive Finance working group to promote a more environmentally-responsible approach in the inclusive finance sector. A study was conducted to determine the potential and the growing momentum of green practice among the Dutch investors in the inclusive finance sector. Read the full report:
Read the full report

Addressing basic needs

Financial inclusion has become more than providing access to basic financial products and services. It also plays a crucial role in addressing other pressing issues, such as access to education and healthcare, and affordable housing. In 2016, we invested, amongst others, in Shubham Housing Development Finance in India that offers housing loans to the informal-income population, and in Avishkaar that supports social businesses across multiple sectors in India, Indonesia, Sri Lanka, Bangladesh and Pakistan, such as financial inclusion, healthcare, agriculture and education.

Loans to small and medium-sized enterprises

We assess whether financial institutions provide loans to small and medium-sized enterprises (SMEs) that contribute directly to the development of the local economy through the employment that they provide and the taxes that they pay.
  • Portfolio allocation per market segment
  • Microenterprises
  • SME
  • Consumer
  • Corporate
  • Other

SME focused financial institutions

We entered new relationships with four financial institutions that cater to small and medium-sized enterprises: Belarusky Narodny Bank (Belarus), Capital Bank (Panama), Banco Continental (Paraguay), Banco Internacional (Ecuador) and Financiera Desyfin (Costa Rica). This sector is an important pillar in any economy but especially in developing countries the biggest obstacle for healthy growth of SMEs is lack of access to capital.

Case 1: "Women matter in our economy"

Roshaneh Zafar, Founder and Director of Kashf Foundation in Pakistan

“Women matter in our economy”

“When I worked with the World Bank, the women I spoke with would tell me they wanted a better life: better food for their children, clothes and education. They would say, “Don’t tell us you want to change our lives. Show us how we can get access to these things.”’. The desire to enable these dreams motivated Roshaneh Zafar to establish Kashf Foundation in Pakistan in 1996, and the organisation has since provided financial products and services to more than 1.7 million clients.

Challenges and drivers

Whilst seeking to economically empower women in Pakistan, Kashf has faced many challenges over its’ 20-year history. However, the approach of its founder Roshaneh Zafar has seen it create solutions and overcome difficult times, whilst always keeping its clients’ needs central. She explains that the primary challenges the organisation faces fall into a framework of three types – macro, institutional and market related – and that with each challenge it has had to adapt and grow.

Macro challenges

“We provide financial products and services to low-income women, essentially those running home-based businesses. Most earn between USD 3 to USD 5 a day, and they don’t keep cash flow statements or balance sheets. Typical credit checking is difficult because there’s very little information. One of our challenges is to assess the entrepreneur and analyse the household’s economy and dynamics. We’ve had to develop tools that can give us a sense of net worth. We know the average performance of different types of businesses, where they get their stock, and can get a sense of their credit history. We regularly collect data and have a strong loan tracking system. It’s not always successful, but our delinquency rate is very low at only 0.5% on average. We’ve figured out how to work in an environment where there is little data, irregular streams of income and informal systems.”

Institutional challenges

Like many organisations, human resource management, leadership training and succession planning are key operational challenges. “Investing in staff training and building their capacity is ongoing for us. Even though the realm of microfinance is changing, for example with branchless banking options, we can’t do away with human contact. Investing a lot in our staff is an asset, but it’s also a cost.”

Market challenges

As a market frontrunner and innovator, Kashf has stimulated and created its’ own competition. “We were the first to open urban markets in Punjab, and a lot of competitors followed suit. When we initially entered the market, only 20% of all outstanding loans in this region were made to women. Now it’s over 50%. We developed the proof of concept when it comes to women’s financial empowerment in Pakistan.” Kashf is also the first and only to offer a female-centric health insurance product. “It’s our largest program and covers 1.5 million women, men and children. So far no one else is replicating it, but it won’t be long before we have competition. The product’s viability is proven. We’re also looking at the rural finance market for women and have developed a group-based cash flow product. We’re opening-up new markets and new opportunities.’

Education and working with schools

Ms Zafar’s approach to creating solutions has also given rise to working with schools. Pakistan has one of the world’s largest number of children out of school, and she wanted to address it. “Our impact assessments triggered us to work with schools. We learned that when a woman earns more, she puts better quality food on the family table, and puts her children into private schools because the quality is perceived to be better than in public schools. We wanted to close the loophole, so we developed a low-cost private school product. Our idea was to provide finance, but when we did our research, we discovered that finance was not the only need. The schools needed support with management training, book-keeping, planning, rosters for attendance, and teacher training. Quality of a learning environment is important, so we collaborated with one of Pakistan’s largest private school networks, who designed the teacher training and then trained our trainers. We now have 15 trainers who only train teachers and school owners.”

Shifting mindset

“When I set up Kashf’s first strategic plan we expected to reach 10,000 women by 2003, but by 2003 we had actually reached 60,000 women. Similarly, our other plans have also exceeded our expectations, but we still have a lot of work to do. One-on-one, our success has been phenomenal, and there are so many client stories I can share, but on the other hand, when I think about women in my country and read the local papers, we still have a long way to go. Women are still treated as commodities here. Because of this, we campaign through a dramatized television series, which is broadcast on mainstream channels. It’s a microscope of what happens to women in Pakistan. Our public service campaigns are on different topics from child rights, child sexual abuse, and violence against women. But they always give a message of hope. These are issues bigger than helping our entrepreneurs succeed. It’s about creating an environment about where women are respected, one in which we can support each other.”

Case 2: Access to an in-house toilet

Bina Artha’s impactful sanitation loan in Indonesia

Case 3: CREDO Bank in Georgia

From a credit-only institution to a fully-fledged bank

CREDO Bank in Georgia

Zaza Pirtshkhelava, CEO of Credo Bank and Frank Streppel, Head of Global Investments – Emerging Markets at Triodos Investment Management BV and a board member of Credo Bank, share their insights on the importance of financial inclusion in Georgia, the evolving role of Credo Bank, and the value of a banking license.

Largely self-employed population

Entrepreneurship is a key driver for the economy of Georgia, situated in the Caucasus at the crossroads where Europe meets Asia. Georgia is known for its unique cultural heritage, traditions of hospitality and cuisine. Two third of the country’s population, 4.5 million, is self-employed and an estimated 500,000 micro-businesses are active in rural areas, reflecting the importance of the agricultural sector for the economy.

Bringing credits to the remote villages

In 1997, World Vision started Georgia’s Entrepreneurs’ Fund WV/GEF. Later in 2005, local registration was obtained and the operations were continued under the name of VisionFund Credo (shortened as Credo), with a major focus on micro-entrepreneurs as they had very limited access to finance. Zaza Pirtshkhelava: ‘We were, and still are, bringing credits to the remote villages, predominantly to small-scale farmers.’ In doing so, Credo plays an important role in making the financial sector of Georgia more inclusive. Nowadays, Credo Bank has a nationwide network of 62 service centres. Zaza Pirtskhelava: “We can meet the financial needs of those entrepreneurs operating in different sectors, but agriculture still remains one of the major concerns of us. Approximately 70%, 200,000 clients of Credo Bank, operate in this sector.”

Innovative approach

Credo applies innovative ways to make it easy for the clients to operate their businesses. Namely, Crop Card was introduced for purchasing agricultural equipment, seeds, planting materials, veterinary vaccines and other medications. Farmers are allowed to repay debt after the harvest is done and those companies, selling agricultural products, receive immediate payments from Credo.

Need and importance of product diversification

In 2014, Triodos Investment Management, through Triodos Microfinance Fund and Triodos Fair Share Fund, became a shareholder of Credo, with each holding 9.9% of ownership. Since the beginning, Frank Streppel is a Triodos’ representative in the board of directors of Credo. He provides expertise in inclusive finance and sustainable banking, advising on sound governance and strategic development. Frank Streppel: "With the strong focus on rural areas and a nationwide network, Credo Bank plays an exemplary role for Georgia’s financial sector. At the beginning of our relationship, Credo was the market leader in microcredit. Together with Credo, we soon realised the need and importance of a further product diversification, such as savings products."

Later, it became clear that in order to build capacity and an infrastructure for this diversification, obtaining a banking license was an essential step for Credo. In 2016, it was decided to start the journey towards becoming Credo Bank. Zaza Pirtshkhelava: "Reason behind this decision was two-fold: we wanted to offer broader array of financial products, including savings accounts and current accounts, considering that as a credit-only institution, we were not allowed to do so. Besides, there was a limit to loan size as we could offer loans up to GEL 50,000 (approximately EUR 18,500). Meaning that we were not be able to grow together with our clients."

Obtaining a banking license

In March 2017, Credo obtained the banking license from the Central Bank of Georgia. Currently, it continues functioning under the name of Credo Bank. Frank Streppel: "A major achievement by the management of Credo and the result of a very diligent process and hard work."

One of the most important concerns was to put into operation the internal reporting structure. Zaza Pirtshkhelava: 'It took a lot of time and effort from us. We had to expand and strengthen our middle management positions, bring in knowledge and expertise in reporting, and also in product management and in the retail part. For me, one of the key concerns in the hiring process was that the new specialists should be selected based on their compliance with our organisational culture.'

Frank Streppel: "From the very beginning it was also clear that obtaining a banking license was not a goal itself. I see it as a very important step, a must, in the institutional strengthening of Credo Bank so that it can optimally meet the needs and requirements of its current and future clients."

Concrete next steps

A concrete next step has already been taken by Credo Bank: the loan size was increased. It can now offer the loans of more than GEL 50,000. Zaza Pirtshkhelava: "Next year we plan to launch our retail products, such as debit cards, term deposits and current accounts."

In the years to come, Credo Bank will maintain its focus on the lower segments of the market. Zaza Pirtshkhelava: “We will never leave that segment.” In order to keep its leading position and increase its outreach Credo Bank will put even more emphasis on innovation, with a prominent role for fintech (financial technology) solutions. "This will help us to open up new markets and to make our processes even more efficient. Our 728 loan officers use an application to make loan disbursement procedures quick and easy. As we are going to further diversify our products offering, we constantly look for the possibilities to update and to develop an inclusive application for our clients."

Case 4: Access to affordable housing

Shubham Housing Development Finance in India

Access to affordable housing

India is one of the most populous nations in the world and it has a housing problem exacerbated by limited access to finance. Shubham Housing Development Finance Company Limited addresses this problem by providing access to formal credit.

The necessity of housing

The topic of housing has been given a global platform through the United Nation’s Sustainable Development Goals (SDGs). One of the goals presented by the United Nations is to ensure access to adequate, safe, and affordable housing to all by 2030 in an effort to reduce the extreme poverty often found in concentrated urban areas. One way to reach this goal is by providing access to formal credit.

India has one of the largest economies in the world and is poised to become one of the most populous nations in the upcoming decades. Despite the country’s impressive economic growth, poverty is still rampant with more than half of the 350 million people living in urban areas and residing in slums or low-quality housing. In India, the housing problem is exacerbated by limited access to finance.

Closing the gap

Shubham Housing Development Finance Company Limited (Shubham) addresses this housing problem. Established in 2010, the company provides retail home loans to low income borrowers for a period of up to 15 years. Its primary products are mortgages, home-improvement loans and loans against property.

Chief Executive Officer at Shubham Housing Development Finance Company, Sanjay Chaturvedi: “Shubham and its leadership team serve a vast working class population who define India, but are surprisingly excluded from access to formal credit. Shubham has devised a unique process to underwrite loans based on a household’s real income following an intensive cash flow analysis based method.”

Shubham focuses on rural, self-employed or micro-entrepreneur customers who are moving away from being tenants to becoming owners. To date, it has 88 branches in 84 cities across India and has served over 20,000 households.

Life changing and cascading effect

Sanjay Chaturvedi: “Owning property has a life changing and cascading effect on the borrower and his entire family. A better home leads to better sanitation, better health, better social standing and increased confidence. Furthermore, it allows borrowers to build up a credit history that can open other doors. For example to take out a loan to start or expand a business.”

The rental money that clients save now goes towards the equity of their home, thus building savings which can be used for retirement.

Triodos Microfinance Fund and Triodos Fair Share Fund have provided a loan to Shubham, enabling Shubham to increase its outreach in the coming years.

Case 5: Pioneering climate-smart projects

Banco Internacional in Ecuador

Pioneering climate-smart projects

Headquartered in Quito, Banco Internacional is the fifth largest bank in Ecuador, focusing on small and medium-sized enterprises (SMEs). The bank has a nation-wide network of 87 branches and more than 380 ATMs, serving more than 200,000 borrowers and close to 400,000 savers.

Mitigating climate change

To enhance and improve its services to the productive sector and to demonstrate its commitment to mitigate climate change, Banco Internacional aims to increase both its SME and climate-smart projects portfolios. These efforts make the bank a pioneer in the green SME arena in the country and result in high development impact.

Enabling green growth

The loan provided by Triodos Microfinance Fund supports Banco Internacional in this ambition, enabling the growth of the bank’s climate-smart projects and projects to mitigate the emissions of greenhouse gases, including renewable energy, energy efficiency and cleaner production projects.

First step: hydropower

A concrete example is a EUR 5.7 million loan that Banco Internacional provided to hydropower project ‘Sigchos’ in the south-east of Ecuador, with an installed capacity of 15.7MW. The project is estimated to start operations by the fourth quarter of 2017.

Our funds

Our funds consist of different risk profiles and funding structures and are thus suited to the needs of financial institutions at all stages of development, from start-up to fully-developed.

Triodos Microfinance Fund

Established in 2009 as a sub-fund of Triodos SICAV II with share classes available for institutional investors, high net worth individuals, and private banking clients across Europe.

  • Total assets: EUR 357 million
  • Number of countries: 36
  • New investments: 17, in Costa Rica, Bolivia, Ecuador, Cambodia, India, Indonesia, Belarus, Peru, Panama, Paraguay and Pakistan
  • Number of financial institutions: 76
  • Number of equity investments: 14

Regional exposure

As per end 2016
(as % of portfolio)
  • Latin America
  • East Asia & Pacific
  • South Asia
  • Eastern Europe & Central Asia
  • Africa & Middle East
  • Global

Top 10 country exposure

As per end 2016
(as % of fund's total assets)
Cambodia 14.7%
India 11.9%
Ecuador 6.7%
Paraguay 4.8%
Georgia 3.4%
Panama 3.4%
Kyrgyzstan 3.4%
Bolivia 3.1%
Sri Lanka 2.9%
Peru 2.9%

Asset allocation

As per end 2016
(as % of fund’s total assets)
  • Debt
  • Equity
  • Subordinated debt
  • Cash and cash equivalants

Exposure by currency

As per end 2016
(as % of portfolio)
  • USD
  • Local currency
  • EUR

Division over financial inclusion segments

As per end 2016
(as % of portfolio)
  • Microfinance
  • Housing finance
  • SME Finance
  • Leasing
  • Other inclusive finance

Outreach highlights

Number of borrowers reached by institutions in portfolio

18.6 million

Number of savers reached by institutions in portfolio

11.0 million

Percentage rural clients

41%

percentage female loan clients

83%

Number of people employed by institutions in portfolio

121,046

Average loan

EUR 1,163
East Asia & Pacific EUR 2,105
South Asia EUR 310
Latin America & Caribbean EUR 3,207
Eastern Europe and Central Asia EUR 1,942
Africa and Middle East EUR 742

Portfolio per market segment

  • Microenterprises
  • SME
  • Consumer
  • Corporate
  • Others

Portfolio per sector

  • Manufacturing
  • Service
  • Trade
  • Agriculture
  • Others

Diverse product offering

% of investees offering other financial services
 
 
 
  • Money transfer services
  • Savings products
  • Insurance products

Care for the enviroment

% of investees with environmental practices
 
 
 
 
 
  • Exclusion list
  • Green office procedures
  • Green financial products
  • Environmental training for clients
  • Donations for environmental protection

Non-financial services

% of investees offering additional training and services
 
 
 
 
  • Adult education
  • Enterprise training
  • Women empowerment
  • Health services

IN THE SPOTLIGHT: BANCO INTERNACIONAL IN ECUADOR

Banco Internacional is the fifth largest bank in Ecuador, focusing on small and medium-sized enterprises (SMEs). The bank has a nation-wide network of branches, serving 206,000 borrowers and 385,000 savers. To enhance its services to the productive sector and to demonstrate its commitment to mitigate climate change, the bank plans to increase both its SME and climate-smart projects portfolios. These efforts will make Banco Internactional a pioneer in the green SME arena in the country and result in high development impact. The loan provided by Triodos Microfinance Fund is used to realise this ambition.

As a fully-fledged bank, offering a diverse range of financial products and services, Banco Internacional has developed strong acumen in conducting sustainable banking practices. Using our Sustainable Banking Assessment Scorecard, the bank performed as below:

Governance Management and Staff Product Range Responsible Finance Environment 100% 80% 60% 40% 20% 0%
Governance: Sound governance and sustainability strategy are clearly visible in Banco Internacional’s governance structure. There are committees dedicated for topics such as risk, compliance, audit, ethics, remuneration, and occupational health, with an active participation of the independent board members. The bank implements a strong Code of Ethics which is fully integrated in the bank’s activities.

Triodos Fair Share Fund

Triodos Fair Share Fund was launched in 2002 as one of the first funds for retail investors in the Netherlands to invest in the microfinance sector worldwide. The fund focuses on well-established financial institutions that demonstrate a sustainable approach toward providing financial services to those traditionally excluded.

Investment portfolio

  • total assets: EUR 328 million
  • number of countries: 37
  • new investments: 16, in India, Costa Rica, Bolivia, Cambodia, India, Indonesia, Belarus, Peru, Panama, Paraguay and Pakistan
  • number of institutions: 76
  • number of equity investments: 15

Regional exposure

As per end 2016
(as % of portfolio)
  • Latin America
  • East Asia & Pacific
  • Eastern Europe & Central Asia
  • Africa & Middle East
  • South Asia
  • Global

Top 10 country exposure

As per end 2016
(as % of portfolio)
Cambodia 17.0%
India 14.7%
Ecuador 7.4%
Paraguay 5.7%
Kyrgyzstan 4.3%
Georgia 4.1%
Panama 4.0%
Bolivia 3.7%
Mongolia 3.5%
Sri Lanka 3.5%

Division over instruments

As per end 2016
(as % of portfolio)
  • Debt
  • Equity
  • Subordinated debt

Exposure by currency

As per end 2016
(as % of portfolio)
  • USD
  • Local currency
  • EUR

Division over financial inclusion segments

As per end 2016
(as % of portfolio)
  • Microfinance
  • Housing finance
  • SME Finance
  • Leasing
  • Others

Outreach highlights

Number of borrowers reached by institutions in portfolio

18.6 million

Number of savers reached by institutions in portfolio

10.6 million

Percentage rural clients

40%

Percentage female loan clients

83%

Number of people employed by institutions in portfolio

119,640

Average loan

EUR 1,148
East Asia & Pacific EUR 2,105
South Asia EUR 310
Latin America & Caribbean EUR 3,193
Eastern Europe and Central Asia EUR 1,695
Africa and Middle East EUR 742

Portfolio per market segment

  • Microenterprises
  • SME
  • Consumer
  • Corporate
  • Others

Portfolio per sector

  • Manufacturing
  • Service
  • Trade
  • Agriculture
  • Other sectors

Diverse product offering

% of investees offering other financial services
 
 
 
  • Money transfer services
  • Savings products
  • Insurance products

Care for the enviroment

% of investees with environmental practices
 
 
 
 
 
  • Exclusion list
  • Green office procedures
  • Green financial products
  • Environmental training for customers
  • Donations for environmental protection

Non-financial services

% of investees offering additional training and services
 
 
 
 
  • Adult education
  • Enterprise training
  • Women empowerment
  • Health services

IN THE SPOTLIGHT: SONATA FINANCE IN INDIA

Sonata Finance (Sonata) is a credit-only microfinance institution with an ambitious social mission towards financial inclusion, targeting the underserved northern states of India. Sonata provides loans to over 700,000 clients, at an average of EUR 225 per client, of which 100% are women and 80% earn less than USD 1.25 per day. Triodos Fair Share Fund’s relationship with Sonata started in 2014 with a loan, and in late 2016, Triodos Fair Share Fund, together with Triodos Microfinance Fund, purchased an equity stake in Sonata. As a shareholder with active board membership, we are able to directly support a growing and impactful microfinance institution.

As a credit-only microfinance institution operating in India, Sonata is demonstrating strong sustainability performance, albeit facing some operational restrictions due to its license. The assessment on Sonata using our Sustainability Banking Assessment Scorecard brought us to the results below.

Governance Management and Staff Product Range Responsible Finance Environment 100% 80% 60% 40% 20% 0%
Governance: Sustainability focus is clearly embedded in Sonata’s overall business strategy and is shared among all board members. The board is diverse with shareholders’ representatives and an independent director, bringing in different set of knowledge and practices from the field of sustainable banking, finance, and social sectors both from the local Indian and international markets. Sonata is currently a credit-only institution and due to the regulatory setting, it is not allowed to become a deposit-taking institution, unless it becomes a bank.

Hivos-Triodos Fund

Hivos-Triodos Fund Foundation (Hivos-Triodos Fund) is a joint initiative of Triodos Bank and Hivos, established in 1994. Thanks to its funding structure Hivos-Triodos Fund is able to assume more risk and acts as an incubator for innovation in line with our strategy. Hivos-Triodos Fund focuses on financial institutions that are active in underdeveloped markets. The fund also aims to promote access to renewable energy and contribute to the sustainable development of the agricultural sector in developing countries, by financing local financial institutions that target SMEs and by making direct investments in businesses that are active in sustainable agriculture and/or renewable energy.

Fund data as of 31 December 2016

Total assets

EUR 85 million

Number of institutions

34

Number of countries

17

Number of equity investments

9

Outreach highlights

Loan clients reached by financial institutions in portfolio

2.3 million

Savings clients reached by financial institutions in portfolio

2.2 million

Average loan amount (EUR)

694

Percentage of female loan clients

81%

Percentage of clients in rural areas

52%

Number of people employed by financial institutions in portfolio

15,120

Triodos Sustainable Finance Foundation

With its investments, Triodos Sustainable Finance Foundation aims to accelerate sustainable development worldwide. Thanks to its funding structure it able to assume more risk and acts as an incubator for innovation in line with our strategy. A part of the portfolio is dedicated to the inclusive finance sector where it finances new and relatively higher risk financial institutions that target difficult-to-reach client groups and under-served geographical areas.

Fund data as of 31 December 2016

Total assets

EUR 64 million

Investments

23

Number of countries

18

Number of equity investments

7

Outreach highlights

Loan clients reached by financial institutions in portfolio

2.1 million

Savings clients reached by financial institutions in portfolio

3.4 million

Average loan amount (EUR)

1,879

Percentage of female loan clients

74%

Percentage of clients in rural areas

55%

Number of people employed by financial institutions in portfolio

27,002

About us

Our vision on impact and impact measurement

As an investor for impact we understand finance to be transformational, and define it as directing money so that it benefits people and the environment over the long-term. The impact we are interested in – for each of our investment strategy - is the effect of our activities on society and the environment.

For our inclusive finance investment strategy this impact is about providing access to finance to those traditionally excluded and building robust, sustainable and professional financial institutions that are key actors in developing an accessible, well-functioning and inclusive financial sector that fuels social and economic development.

We realise that our role and efforts in this complex web of change are can only to a limited extend be captured in quantitative metrics and indicators. We also believe that investing for impact moves beyond providing capital and requires a strong intention and a holistic and long-term approach, as opposed to one-dimensional solutions. With this approach Triodos differentiates itself from others in the capital-providing space.

To understand our vision and the extent to which we’re delivering on it, means sharing stories that illustrate the whole picture. These stories provide the essential context and background for our activities. They illustrate our ‘theory of change’. They are not ‘cherry-picked’ to highlight work that is atypical of our wider efforts.

The quantitative indicators are a part of the whole story. That means indicators, such as ‘number of loan clients reached’, ‘percentage female clients’ and ‘percentage rural clients’, are not a goal in itself; they are pieces of information that are part of the broader picture. For that reason, we neither set specific goals for indicators nor do we compare them to last year figures, simply because a higher number doesn’t necessarily mean more impact. For instance, financing a small an innovative financial institution which will drive financial inclusion in rural areas could mean more impact than financing an established financial institution in a mature market.

This publication aims to assess and communicate the impact of our Inclusive Finance investments in a transparent and meaningful way. For the reader’s convenience we avoid academic terminology, such as impact, outcomes, outputs, and so on.

About Triodos Investment Management

The Triodos inclusive finance funds are managed by Triodos Investment Management. Triodos Investment Management, a wholly-owned subsidiary of Triodos Bank, is a globally recognised leader in impact investing and connects a broad range of investors who want to make their money work for positive change with innovative entrepreneurs and sustainable businesses doing just that.
Read more

About Triodos Bank

Triodos Bank is one of the world’s leading sustainable banks. Established in 1980, we have pioneered a groundbreaking, commercially successful approach to money that values people, the environment and culture, as well as profit.
Read more

New investments

Our additions to the portfolio in 2016

Asian Credit Fund, Kazakhstan

Asian Credit Fund (ACF) in Kazakhstan focuses on rural households and in particular women who earn income from small-scale agricultural activities. ACF is among the first microfinance institutions in the country to have launched energy efficiency loans and provides financing for housing improvements. In addition, ACF is exploring opportunities to finance renewable energy products in parts of the country, for example the installation of solar panels.

In the coming years, the institution will continue to deepen its outreach targeting small households in rural areas. Triodos Sustainable Finance Foundation has provided a loan to ACF to realise this ambition.

Key indicators as of 31 December 2016:

number of loan clients 18,620
percentage female clients 87%
percentage rural clients 93%
average loan amount EUR 442
number of savings clients n.a.

Accion Frontier Inclusion Fund – global (equity)

Triodos Fair Share Fund and Triodos Microfinance Fund have invested in the Accion Frontier Inclusion Fund (AFIF), the world’s first global fintech fund that aims to catalyse fintech innovations that can radically improve the quality and availability of financial services for the underserved. Alternative credit, payments, small and medium enterprise (SME) finance, and insurtech are among the solutions the fund aims to accelerate. AFIF focuses on emerging markets in sub-Saharan Africa, Latin America, and Asia (with a particular emphasis on India and Southeast Asia) that have demonstrated the greatest potential for inclusive fintech.

AFIF is a very innovative addition to our inclusive finance portfolio and an exciting opportunity to strengthen our connection with the fintech space, which can trigger direct follow-on investments for our funds in the future.

Aavishkaar Venture Management Services Group in India (new equity)

Aavishkaar Venture Management Services Group (Avishkaar) is one of the pioneers in the impact investing space in India, channelling capital towards sustainable and scalable solutions that enhance the livelihoods of the low-income market segment. With over 10 years of experience, the company has supported social businesses across multiple sectors, such as financial inclusion, technology, agriculture, health, and education and expanded its investment operation into neighbouring countries that face similar social challenges, such as Indonesia, Sri Lanka, Bangladesh, and Pakistan.

Triodos Microfinance Fund and Triodos Fair Share Fund are a shareholder in Avishkaar. This allows us to work directly with an entrepreneurial group that continuously strive to solving social and financial inclusion problems through many innovative means, thereby broadening our impact scope.

Alliance Group Leasing in Georgia

Alliance Group Leasing (AGL) in Georgia aims to improve the country’s business environment and supports micro, small and medium enterprises (MSMEs) by means of providing access to proper productive equipment through financial and operational lease. From the inception AGL has served more than 4,000 clients.

It's innovative approach and plans to grow the share in green financing (for example e-bikes) and agriculture makes it a good fit with Triodos Sustainable Finance Foundation. With its loan to AGL, Triodos Sustainable Finance Foundation supports MSMEs in Georgia and – as AGL’s first international investor – it helps AGL to improve its investment profile for potential funding from other international investors.

Key indicators as of 31 December 2016:

number of loan clients 127
percentage female clients 19%
percentage rural clients 5%
average loan amount EUR 18,632
number of savings clients -

Belarusky Narodny Bank in Belarus (new debt)

Belarusky Narodny Bank (BNB) is one of the oldest private banks in Belarus, primarily serving small and medium-sized enterprises and private individuals. It has more than 50,000 clients across its 15 service centres and 24 ATMs that cover most regions in the country. Through the assistance of its the shareholders, BNB developed environmental and social risk management system (ESMS) for its credit process using international best standards. The bank has a green credit product for environmentally-friendly investment and modernisation of machinery, equipment, and trucks for clients in the transportation industry.

Since adopting SME-focused strategy in 2009, the bank has since grew its SME portfolio and in 2014 it launched ‘Smart Business’ program that provides financial and non-financial supports to Belarussian SMEs.

Triodos Microfinance Fund and Triodos Fair Share Fund have provided a loan to BNB to realise its growth ambitions.

Capital Bank in Panama (new debt)

Capital Bank is the initiative of a young successful Panamanian lawyer and entrepreneur Moisés Cohen with the aim to address the unmet demand for financial services and products of the small and medium-sized enterprises (SMEs) in his country. Since its inception in 2007, Capital Bank has grown into a nationwide network of five branches, 26 ATMs and 100+ points of non-banking correspondents serving over 10,000 entrepreneurs in the SME and retail segments. In addition to regular lending products, Capital Bank offers a wide range of non-lending services to SMEs that include insurance, factoring and leasing.

Capital Bank’s full commitment and dedication to this sector is also illustrated by the training programmes and workshops that they offer via their subsidiary Capital Entrepreneural. Entrepreneurs are trained on important skills and knowledge, including accountancy, tax policies, negotiation skills, business innovation and governance.

Triodos Microfinance Fund and Triodos Fair Share Fund have provided a loan to Capital Bank to realise its growth ambitions. This loan fits the Triodos funds' strategy to stimulate the SME sector in emerging and developing countries and emerging economies.

Key indicators as of 31 December 2016:

number of loan clients 7,270
percentage female clients 40%
percentage rural clients 0%
average loan amount EUR 128,407
number of savings clients 4,660

CMAC Sullana in Peru (new debt)

CMAC Sullana was founded by the Sullana Municapility in the north of Peru with the aim to provide financial support and protection for micro entrepreneneurs, families, small-scale farmers and children by means of credit products, savings and insurance services.

CMAC Sullana characterizes itself by its forefront position in technological innovation as a main driver to increase its outreach. This strategic focus has allowed CMAC Sullana to be the first Caja providing mobile banking services via their own app as well as their own debit cards.

The institution is the first channel of MiVivienda (My house) fund, a government fund dedicated to catalyse funding for housing for low and middle-classes population through financial institutions.

Triodos Microfinance Fund and Triodos Fair Share Fund have provided a loan to CMAC Sullana to realise its further growth ambitions.

Key indicators as of 31 December 2016:

number of loan clients 247,525
percentage female clients 51%
percentage rural clients 3%
average loan amount EUR 2,904
number of savings clients -

Banco Continental in Paraguay (new debt)

Established in 1979, Banco Continental is currently the largest SME bank for small- and medium-sized enterprises (SMEs) in Paraguay. The bank plays an important role in the country’s economy by providing finance to the primary economic sectors that are also the main source of employment and entrepreneurs, namely agriculture and cattle ranching, and by pro-actively setting a strict environmental and social standards to promote the adoption of sustainable and responsible business practices

Banco Continental is one of the founders of Mesa de Finanzas Sostenibles (Roundtable for Sustainable Finance) that aims to spur a sustainable financial sector in Paraguay.

Triodos Fair Share Fund and Triodos Microfinane have provided a loan to Banco Continental.

Desyfin in Costa Rica (new debt)

Financiera Desyfin. (Desyfin) is a financial institution based in San José, Costa Rica, which primarily focuses on the small-medium enterprise (SME) sector, offering a wide range of products and services to clients. Their vision is to become the country’s leading financial institution specialised in SMEs focused on renewable energy and food and agriculture among others, emphasising long-term relationships with clients as well as social and environmental responsibility.

Costa Rica is a front-runner in renewable energy and Desyfin finances many SMEs that are involved in renewable energy. The company operates through a head office in San José with six branches in the northwest and southeast part of the country.

Triodos Microfinance Fund and Triodos Fair Share Fund have provided a subordinated loan to Desyfin to strengthen the institution’s capital and to provide long-term support for the realisation of its strategic plans as a player in the SME sector.

Key indicators as of 31 December 2016

number of loan clients 4,006
percentage female clients 31%
percentage rural clients 0%
average loan amount EUR 57,835
number of savings clients 3,301

Fundación Diaconía in Bolivia (new debt)

Fundación Diaconíaconía) is a non-governmental organisation in Bolivia. Based in El Alto, Diaconia’s core focus is to provide access to finance in the country’s most rural and poorest areas, such as El Alto, Oruro and Potosi. It also places an emphasis on protecting the environment and looking into ways to develop products that help clients better adapt to climate change while educating them in the process.

Triodos Microfinance Fund and Triodos Fair Share Fund have provided a loan in local currency to Diaconía to support its ambition to increase its outreach.

Key indicators as of 31 December 2016:

number of loan clients 65,839
percentage female clients 52%
percentage rural clients 22%
average loan amount EUR 1,786
number of savings clients -

IntelleGrow in India (new equity)

Founded from the IntelleCap group in 2010, IntelleGrow provides debt financing to small and medium-sized enterprises (SMEs) across India and in the following sectors: agricultural supply chain, clean energy, education, financial inclusion, healthcare, and water and sanitation.

IntelleGrow’s loan portfolio has positively impacted over one million lives through the reduction of greenhouse gases, production of clean energy, and access to education (to name a few).

Triodos Microfinance Fund and Triodos Fair Share Fund hold an equity stake in IntelleGrow and contribute to the institution's strategy and further growth.

Key indicators as of 31 December 2016:

number of loan clients 107
percentage female clients 0%
percentage rural clients 0%
average loan amount EUR 326,029
number of savings clients -

Banco Internacional in Ecuador (new debt)

Banco Internacional is the fifth largest bank in Ecuador with a focus on small and medium enterprises (SMEs). It was established in 1973 and has evolved into a full-service commercial bank. It has 87 branches in 20 proinces and reaches 206,789 active borrowers, and 385,158 savers.

Banco Internacional is seen as an innovative bank and is leading the way in climate smart projects. The loan provided by Triodos Microfinance Fund and Triodos Fair Share Fund will aid in funding the growth of the bank’s climate-smart projects or projects created to mitigate the emissions of greenhouse gases, including: energy efficiency, renewable energy, water efficiency, and cleaner production projects.

Kashf Foundation in Pakistan (new debt)

Kashf Foundation (Kashf) is a microfinance institution in Pakistan with a strong emphasis on female empowerment. Its clients are only women and half of its staff is female which is quite remarkable in a country like Pakistan. Kashf focuses on enhancing the role that women can play in improving the economic status of their families by building their entrepreneurship skills through access to business loans. In addition to microfinance activities, Kashf is one of the largest providers of health and life insurances (1.7 million clients) and provides a number of trainings on financial literacy, business development and gender roles/justice to its clients.

In 2016 Kashf was awarded the European Microfinance Award with the theme being ’Microfinance and Access to Education’. Kashf’s programme involves loans to low-cost private schools, along with pedagogical training for teachers to improve teaching practices and specialised school management courses for school owners to improve the school infrastructure and their financial and operational administration. Since 2014, Kashf has worked with approximately 1,000 schools, serving over 150,000 students.

Triodos Microfinance Fund and Triodos Fair Share Fund are the first international lenders to Kashf Foundation.

Key indicators as of 31 December 2016:

number of loan clients 237,573
percentage female clients 100%
percentage rural clients 28%
average loan amount EUR 227
number of savings clients -

NeoGrowth in India (new debt)

NeoGrowth Credit is a credit-only non-bank financial corporation in India that provides short- NeoGrowth is an innovative niche player in the Indian financial sector. The company solely focuses on micro, small and medium-sized enterprises (MSME), specifically merchants and retailers. The MSME sector plays an important role in the growth of the economy. NeoGrowth uses a so-called Merchant Cash Advance (MCA) model to target these enterprises. In brief: it provides credit to retail merchants in exchange for an agreed upon percentage of future credit card and/or debit card sales. Merchants repay their loan on a daily basis depending on the turnover of their credit/debit card sales.

NeoGrowth plays a vital role for their clients as most of them have no or limited alternatives to access credit and thus expand their businesses.

Triodos Microfinance Fund and Triodos Fair Share Fund have provided a loan to NeoGrowth to further realise its growth ambitions. The loan solidifies the funds’ SME strategy in emerging markets.

Key indicators as of 31 December 2016:

number of loan clients 3,595
percentage female clients 16%
percentage rural clients 0%
average loan amount EUR 16,999
number of savings clients -

OnePunuhan in The Philipinnes (new debt)

MicroVentures Philippines Financing Company’s (OnePuhunan) long-term mission is to foster the economic progress of small-scale entrepreneurs in the Philippines through the delivery of specialised financial services in a fair, transparent, efficient, and sustainable manner. OnePuhunan aims to provide the client with products that are easy to understand, aims to anticipate the client needs and hold transparency in high regard.

The Philippines has been a leader in promoting and creating an enabling environment for financial inclusion, but there is still much work to be done as only 28% of adult Filipinos have a bank account. With funding from Triodos Sustainable Finance Foundation, OnePuhunan aims to extend its lending practices and improve its 'green' products and create a more comprehensive environmental policy.

Key indicators as of 31 December 2016:

number of loan clients 135,508
percentage female clients 100%
percentage rural clients 34%
average loan amount n.a.
number of savings clients -

Shubham Housing Development Finance Company in India (new debt)

Shubham Housing Development Finance Company Private Limited (Shubham) is a housing finance company, established in 2010. The company provides retail home loans to low income borrowers for a period of up to 15 years. Its primary products are mortgages, home-improvement loans and loans against property. Shubham focuses on rural, self-employed or micro entrepreneur customers who are moving away from being tenants to becoming owners. This also opens the door for further financial inclusion, as banks only provide credit to people with their own property. Moreover, the rental money that clients save now goes towards the equity of their home, thus building real wealth which can be used for funding retirement.

Shubham marks an important milestone for Triodos Microfinance Fund and Triodos Fair Share Fund as the funds enter the affordable housing finance space. It fits with the funds’ strategy, both in regards to inclusive finance and increased focus on SMEs, especially in India.

Key indicators as of 31 December 2016:

number of loan clients 14,849
percentage female clients 9%
percentage rural clients 46%
average loan amount EUR 7,334
number of savings clients -

Sonata Finance in India (new equity)

With an ambitious social mission towards financial inclusion, Sonata Finance is a credit-only microfinance institution focusing on the underserved northern states of India. The institution provides loans to over 700,000 clients, of which 100% are women and 80% earn below USD 1.25 per day.

Triodos Fair Share Fund and Triodos Microfinance Fund hold an equity stake in Sonata, thereby sharing sustainable banking knowledge and expertise and participating in Sonata’s governance and strategic development.

Key indicators as of 31 December 2016:

number of loan clients 702,737
percentage female clients 100%
percentage rural clients 67%
average loan amount EUR 225
number of savings clients -

Urmatt in Thailand

Urmatt Limited was founded in 1999 by Arvind Narula, a Thai farmer with a deep connection to the community. Urmatt produces and processes fully certified organic rice, while also producing chia and coconut during the rice off-season and sells the rice largely to the USA, Denmark, and Germany.

It is located in the northern region of Thailand and has grown to become one of the largest organic jasmine rice producers in the world. Urmatt’s transition to 100% organic operations has made it a leader in its environmental practice.

The loan from Hivos-Triodos Fund enables Urmatt to expand its processing capacity.

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Credits

Text

Triodos Investment Management, Zeist, The Netherlands

Photography

Photos in this impact report have been organised in close cooperation with the following investees in our portfolio:

  • Annapurna Microfinance, India (Satyjit Das)
  • Kashf Foundation, Pakistan
  • Shubham Housing, India
  • Credo Bank, Georgia
  • Vistaar Finance, India (Opmeer Reports)
  • ACLEDA Bank, Cambodia
  • Dawn Microfinance, Myanmar
  • Arvand, Tajikistan
  • M-KOPA Solar, East Africa (Allan Gichigi and Georgina Goodwin)
  • FUNDEA, Guatemala
  • BancoSol, Bolivia
  • Aldea Global, Nicaragua
  • Runa, Ecuador (Opmeer Reports)

Film production

Opmeer Reports

Design

Icemedia, Amsterdam, The Netherlands

What can we do for you?

Are you an investor who wants to find out more about opportunities for investing in inclusive finance?
We’d be happy to answer any questions you may have.
Please, contact our Investor Relations team:

E triodosinvestmentmanagement@triodos.nl
T +31 (0)30 694 2400

Are you a microfinance institution or bank looking for finance, whether equity, subordinated debt or a loan?
We’d be happy to discuss your needs and objectives.
Please, contact our Emerging Markets team:

E microfinance@triodos.com
T +31 (0)30 693 6500

Available by the end of July 2017