Social Performance Map

Presenter:

Gary Woller

June 17, 2008 - Paris, France

Social Performance Working Group

1. Building Successful Microfinance Institutions by Assessing Clients’ Needs

2. Conceptual Note on Social Performance

3. Progress Briefs

4. Social Performance Glossary

5. Social Performance Map

Social Performance Map1. Corporate Social Responsibility

2. The Business Case for Corporate Social Responsibility

3. Socially Responsible Investing

4. Microfinance and the Environment

5. Social Performance Management in Microfinance

6. Social Auditing

7. Social Rating

8. Common Social Performance Assessment Framework

9. Consumer’s Guide to Social Performance Assessment Tools in Microfinance

10. Poverty Assessment Tools

11. Common Social Performance Indicators for Microfinance

12. Social Performance in Multisector Development Organizations

13. Social Performance Standards and Stakeholder Engagement

14. Organizational Governance

Corporate Social Responsibility• Microfinance latecomer to social performance• Outside microfinance social performance = Corporate

Social Responsibility = Triple Bottom Line=Sustainability

• CSR: A company’s obligation to be accountable to all of its stakeholders in all its operations and activities. It encompasses a multidimensional and global set of issues with strategic implications for business and policymakers, such as health, safety, diversity, gender equity, human resource policies, human rights, supply chain, the environment, and sustainable development.

Business Case for CSR• Normative case: All companies have a moral

duty to be good citizens and that CSR is, therefore, “the right thing to do.” – Normative case unlikely to persuade

organizations to do CSR• Business case: Organizations that do CSR earn

more than organizations that do not• Over 100 empirical studies confirm that a

positive relationship exists between financial performance and social performance

How Does CSR Produce Higher FP?• Protecting and enhancing reputation, brand

equity, and trust

• Attracting, motivating, and retaining talent

• Managing and mitigating risk

• Improving operational and cost efficiency

• Ensuring license to operate

• Developing new business opportunities

• Building stable and prosperous operating environments

How Does CSR Produce Higher FP?• Doing CSR broadens the firm’s horizon to consider

perspectives of multiple stakeholders rather than solely that of shareholders

• Enables firms to identify risks & opportunities that would otherwise miss

• Process of assessing multiple stakeholder perspectives in turn enhances firm’s ability to conduct stakeholder assessment

• Assumes integration into management and governance—more than data collection and reporting

Microfinance and the Environment• Microenterprise includes wide variety of businesses that create a

broad range of environmental effects including small-scale industrial pollution, land degradation, deforestation, and destruction of natural protective barriers (e.g., mangroves and swamps that help mitigate the effects of natural disasters).

• Although the environmental impact of a single microenterprise is small, the sheer number of microenterprises, their low technological level, the general lack of regulatory supervision, and the absence of a supporting infrastructure and services all combine to make the cumulative environmental impact of microenterprise activity significant.

• To extent microfinance succeeds in scaling up and facilitating widespread business growth, its potential environmental impact loom large. Thus important need to address the environmental consequences of microenterprise activity.

Microfinance and the Environment

• Fishing in Lake Titicaca

• Goat herding in Mongolia

• “When I see a forest, I see charcoal”

Social Auditing• The precise definition of social auditing varies. Common

to these definitions is the basic concept that social auditing is a process by which an organization accounts for its social performance to its stakeholders and seeks to improve its future social performance.

• Describes four social audit tools:1. USAID Social Audit Tool

2. MFC/Imp-Act Consortium Quality Audit Tool

3. Social Audit Network

4. Global Reporting Initiative (GRI)

• Quality Assurance—Accountability (AA)1000

GRI• De facto (most widely used) triple bottom line

reporting and management framework– Core Indicators– Additional Indicators– Sector Supplements

• Financial Sector Supplement

• Established and legitimate system of extensive stakeholder engagement

• Report or explain• Sustainability Report

– Integrated into Annual Report or Stand Alone

• Socially responsible investors may require GRI

Social Auditing at USAID

• USAID action research project on social auditing

• Participants range from commercial banks to self-help groups:1. Moznosti-Macedonia

2. Micro Development Fund-Serbia

3. Finance for Development-Azerbaijan

4. XacBank-Mongolia

5. HOFOKAM-Uganda

6. Kasese Women’s Desk-Uganda

7. Asasah-Pakistan

• Publications available at www.microLINKS.org

– “From Social Rating to Social Auditing” – “Social Audit Tool Handbook”

Social Rating at USAID

• Design social rating tool

• Social ratings with– Planet Rating in Bolivia and Mozambique– MicroRate in Bolivia and Tunisia

• Various publications available at www.microLINKS.org– “TAKING STOCK OF INVESTORS’

PERCEPTIONS OF THE SOCIAL RATING”

Consumer Guide to SPA Tools

• Offers reasonably comprehensive sampling of existing SPA tools

• Places tools along continuum of:

1. Intent & design

2. Internal systems/activities

3. Outputs

4. Outcomes

5. Impacts

Poverty Assessment Tools

• In-depth comparison of PPI and PAT

Standards and Stakeholder Engagement

• Reviews the importance and benefits of developing industry-wide social performance standards.

• Recommends an extensive and thorough process of stakeholder engagement (similar to those used by other standard-setting bodies, such as the ISO and GRI) as the appropriate process for developing industry social performance standards.

Organizational Governance• Describes the importance of sound organizational governance

in transforming social performance management into a meaningful exercise that fosters a culture of organizational social accountability.

• Outlines core principles for good organizational governance, and it raises important questions that organizations should address in creating their governance systems.

• Emphasizes risk of unrelenting focus on business case and management capture.

• Good governance systems are necessary to transform CSR into a meaningful exercise that influences organizational planning and operations and also helps create an organizational culture of social account ability.

Social Performance Map Available from SEEP at:

www.seepnetwork.org