Measuring the Environmental Performance of Microfinance
This article proposes a new tool called the Microfinance Environmental Performance Index (MEPI) to measure environmental performance of MFIs. The idea to create the tool came from the observation that an increasing number of MFIs and microfinance stakeholders are becoming interested in the environmental bottom line, but no clear methodology exists to assess MFIs' environmental performance.
MEPI builds on the corporate environmental performance literature and on microfinance social performance. It is based on management performance indicators that have been adapted to suit the microfinance sector. The article demonstrates that MFIs that tackle environmental issues do it by:
- Adopting environmental policies;
- Reducing their internal ecological footprint;
- Managing environmental risks of clients' activities;
- Providing green microcredit to promote environment friendly activities and clean technologies;
- Implementing non financial services such as environmental awareness raising campaigns.
The article proposes a multi dimensional index that encompasses all types of strategies. MEPI can be a useful tool for research and serve as a basis for environmental strategy planning, progress monitoring and communication in the microfinance industry.
