We first check the investees' commitment to social and environmental goals through desktop review. During the following site visit and due diligence process we further analyze their performance on social and environmental issues, using our in house developed Sustainable Banking Assessment tool (SBA tool). This tool helps us in assessing how the investees have embedded their mission and goals in the organization, and the extent to which the investees targets sustainable and responsible financing.
In 2015 we started using the improved version of the tool. It takes into account the diverse range of institutions we invest in, from ‘traditional’ microfinance institutions to larger banks targeting small and medium-sized enterprises. It also challenges us and our clients to dive deeper into the role of governance to better determine the transparency, board efficiency, and policy setting of the companies we’re evaluating. A number of important topics are also addressed such as fair pricing, balanced returns, and executive compensation. These themes are grouped in three ESG dimensions: Environment, Social (HR practices, product range, and responsible finance), and Governance.
The result of this analysis is taken into account when making investment decisions, and included in our ongoing monitoring and annual review process.