Making Microfinance Investment Responsible: State of the Practice in Europe

This issue of European Dialogue offers perspectives on responsible microfinance investment. It is a follow-up to the 2008 issue, which discussed the role of investors in promoting social performance.

The articles in this issue are organized into 3 sections. They discuss approaches to assessing responsible microfinance investment, methods used by European investment funds to collect social performance data on MFI investees, and various cross-cutting issues on responsible investment. The articles indicate that:

• Chain of responsible microfinance, including MFIs, investors, technical assistance providers, rating and labelling agencies and investment funds, is growing stronger;
• Investors adopt a pragmatic approach to social responsibility to respond to public scrutiny and reconcile social and financial objectives;
• Social performance data is primarily used to help investors know their investee partners better.

Challenges for the future include standardizing concepts and procedures, defining responsible investment criteria and providing support to MFI investees.