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 strategies - is the effect of our activities on society and the environment.
For our financial inclusion investment strategy, this impact is about providing access to finance to those traditionally excluded and building robust, sustainable and professional financial institutions. These are key actors in developing an accessible, well-functioning and inclusive financial sector that fuels social and economic development and promotes access to basic needs.
In a context of stories and numbers
Our role and efforts in this complex web of change can only be captured in quantitative metrics and indicators to a limited extent. We also believe that impact investing 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 other capital providers.
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’.
The information and data for the impact report are derived from our online investee portal. In this portal, the financial institutions in our portfolio provide extensive data on social and environmental topics, ranging from the number of clients and savers they serve, female loan clients, and rural outreach to the sectors they are active in and the loans they offer to promote access to basic needs, such as education loans and affordable housing loans. The indicators that we publish are, when possible, aligned with the IRIS Metrics of the Global Impact Investing Network, designed to measure the social, environmental and financial performance of an investment, or the calculations are based on existing IRIS metrics.
Furthermore, 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 SBA Scorecard consists of 25 indicators grouped in five dimensions: Environment, Management & Staff, Product Range, Responsible Finance, and Governance. The 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.
Part of the whole story
The quantitative indicators are a part of the whole story. That means indicators, such as number of loan clients reached, percentage of female clients and percentage of rural clients are not goals in themselves; they are pieces of information that are part of the broader picture. For that reason, we don’t set specific goals for indicators or compare them to last year figures, because a higher number doesn’t necessarily mean more impact. For instance, financing a small and innovative financial institution which drives 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 Financial Inclusion investments in a transparent and meaningful way.