27 February 2013

Putting Principles into practice

PIIF update

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PIIF update

Putting the Principles into practice

1. Guidance and support to accompany the Principles

2. Signatories’ actions: sharing practice

3. Results of PIIF pilot Reporting Framework

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Principles for Investors in Inclusive Finance

Signatories commit to adhering to and promoting the following:

1. Expanding the range of financial services available to low-income people

2. Integrating client protection into all policies and practices3. Treating investees fairly, with clear and balanced contracts, and dispute

resolution procedures4. Integrating ESG factors into policies and reporting5. Promoting transparency in all operations6. Pursuing balanced long-term returns that reflect the interests of

clients, retail providers and end investors7. Working together to develop common investor standards on inclusive

finance

Client protection initiativeKey: Social commitment

initiativeFor MIVs only*

1. Guidance and support

Stating commitment

Smart Campaign (Smart)

MicroFinance Transparency

(MFT)

Global Appeal

UN PRI’s Principles for Investors in

Inclusive Finance (PIIF)

Tools for self-assessment

PIIF

Tools for implementation

PIIF (incorporates Reasonable Covenants,

AVOID, Impact Reporting &

Investing Standards,

Smart Technical Guide for Investors)

Demonstrating commitment

MicroRate’s Luminis

platform*

PIIF Reporting Framework

Evaluation / Audit / Ratings

CERISE social audit*

Global Impact Investing Rating System (GIIRS)*

Luminis fund report*

MIV rating*

Certification

LuxFLAG*

Client protection initiative

Social commitment initiative

Self-assessment and implementation Reporting and external scrutiny

For MIVs only*

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2. Signatories’ actions: sharing practice

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3. Results of Reporting Framework pilot

• 28 pilot participants – 15 direct investors and 13 indirect investors

• Summary report presents information provided by direct investors only: • Mainly based in Europe and N America • Directly manage US$ 6.5bn in inclusive finance

• Findings cannot be generalised to all signatories:• The data is self-reported and not audited• Small sample size• Self-selecting nature of participation in the pilot• Not all signatories reported against all indicators

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Highlights

Strong evidence of implementation, with room for improvement

• The pilot found high commitment among direct investor participants to: invest in retail providers that offer a range of services; adopting client protection practices; providing both debt and equity with a range of terms and conditions to investees; participating in industry-wide initiatives to develop common standards.

• Areas where there is room for improvement include: incentivising social returns; playing an active role in corporate governance; investors’ transparency and their encouragement of investees’ transparency on

pricing and other terms and conditions to the ultimate client.

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PIIF 4: Including ESG issues in our investment policies and reporting

Environmental performance• Nearly 90% of participants

have a procedure to integrate environmental issues into their investment decision making.

• This is a larger % than reported by MIVs in Symbiotics 2012 survey (66%).

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PIIF 4: Active involvement in corporate governance

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PIIF 5: Actively promoting transparency

• Over 90% of participants disclose their policies, criteria and related conditions of products and services to investees and other stakeholders on their websites.

• Nearly 70% provide information aligned to the MIV Disclosure Guidelines, whilst half provide information aligned with the Impact Reporting and Investment Standards (IRIS).

• 14 out of 15 (93%) of participants report that they ensure that investees adequately disclose the pricing and 13 out of 15 (87%) ensure disclosure of other terms and conditions of financial products offered.

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PIIF 6: Striving for balanced, long-term social and financial returns

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Next Steps

• Launching October 2013

• Outputs include:

1. Individual responsible investment reports (public)

2. Individual assessment reports, carried out by PRI (private) – in development

3. Aggregated Report on Progress (public)

• Transparency tool, intended to encourage dialogue between asset owners and investment / fund managers

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Discussion