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Luxembourg Microfinance and Development Fund

PRI reporting framework 2020

You are in Direct - Inclusive Finance » PIIF Principle 6: Balanced returns

PIIF Principle 6: Balanced returns

IFD 28. How social performance of investees affects decision making and portfolio management

Possible action:

Strive for a balanced long-term social and financial risk-adjusted return that recognises the interests of clients, retail providers and investors.

28.1. Indicate if the social performance of investees affects your:

Investment decision making

28.2. Explain how social performance of investees affects investment decision making.

Social performance, broken down into outreach and impact criteria are core part of the Investment Committee decision making. ALINUS is integrated into the Investment Committee due diligence file to shed further light on this aspect of investments. We also use our own bespoke metrics which focus on particular areas of social performance which are fundamental to decision making.  Social performance is also integrated into our analysis of financial performance - notably the analysis of interest rates and profitability.

Portfolio management

28.3. Explain how social performance of investees affects portfolio management.

Social performance criteria affect regional and country allocation targets. One of the criteria for country selection is the Human Development Index score (with a higher weight for less developed countries) or its presence on the DAC List for least developed countries. We also consider market saturation and dynamics of microfinance markets to see whether our investment adds value to a particular market.

28.4. Additional information. [Optional]

IFD 29. Staff incentives linked to social performance measures (Private)

IFD 30. Collecting data regarding social outcomes of investees work (Private)

IFD 31. Incentivise investees to track social performance (Private)