Transparency in Sustainability and Finance (TSF)

For information, contact Geert Schuite at Triodos Facet: gj.schuite@facetbv.nl or Teodorina Lessidrenska at GRI: Lessidrenska@globalreporting.org

Conceptual framework
Triodos Bank and the Global Reporting Initiative (GRI)¹ have initiated a project called Transparency in Sustainability and Finance (TSF). The purpose of this project is to assist microfinance institutions (MFIs) in sustainability management through implementation of sustainability reporting based on the GRI Guidelines. GRI's reporting handbook High 5! served as a hands-on tool during the project. A sustainability report explains company’s social, environmental and economic aspects of performance, in the context of its commitments, strategy and management approach towards the goals of sustainable development – a principle known as Triple-Bottom Line (TBL). Currently, there are no standards for reporting on sustainability specifically designed for microfinance. The TSF project is considering the development of a GRI sector supplement² to meet the needs of the microfinance industry for standardized sustainability reporting.

Users and use of information
Participants in the TSF project are twelve investee MFIs of the three microfinance funds – Triodos-Doen, Hivos-Triodos Fund and Triodos Fair Share Fund - managed by Triodos Investment Management: Acleda Bank and CEB (Cambodia), XAC Bank (Mongolia), BAsix and Bellwether (India), K-Rep Bank (Kenya), Centenary Rural Development Bank (Uganda), Akiba (Tanzania), FIE FFP (Bolivia), Mibanco (Peru), Banco Solidario (Ecuador) and Findesa (Nicaragua). In their respective countries, they are leaders in the field of microfinance, specialised in providing financial services to low-income groups that have limited or no access to financial services. They were the first banks in their countries to follow the double-bottom line principle, combining social objectives with goals of profitability. With the recent forecasts from trend watchers pointing out renewable energy, clean water, sustainable agriculture, eco tourism, to mention a few, as examples of sectors where substantial growth will take place, it now becomes clear that MFIs are in a very specific position to take on this new opportunities and to encourage development of micro-businesses by taking environmental issues into account and providing finance for ‘green’ business solutions. Thus by adopting the triple-bottom line concept, the banks participating in the TSF project are positioning themselves among the leading financial institutions addressing the challenges and opportunities of the social, environmental and economic dimensions of sustainable development.

Progress to date
So far all TSF participating banks have made a commitment to include non-financial information in their annual reports and to develop Sustainability Reports based on the GRI Guidelines. As a first step the banks were asked to select relevant social, environmental and economic indicators from the GRI framework. Further, within each organisation was created a taskforce for sustainability reporting and implementation of a sustainability management system. The main conclusions from the project meetings and discussions with the project participants are that: a) GRI reporting is a very useful tool for improving goal-setting, evaluation, strategic management and decision-making in MFIs and banks; b) Social and environmental indicators are important for measuring MFIs progress toward their respectable social missions; c) The TSF project should continue its work on reaching agreement on specific MFI indicators to measure how successful each MFI is in achieving its 'sustainability' targets; d) The MF sector would benefit greatly from development of a GRI sector supplement addressing the MFI's specific TBL performance and impact measurement needs.

In the next phase GRI and Triodos Bank look forward to expanding the group of participating microfinance institutions. Future activities would also include the formation of a TBL experts group and facilitation of web-based knowledge exchange on GRI reporting and sustainability management. Triodos Bank would like to make a next step and see how this project can further develop from a reporting mechanism on social and environmental aspects to a more integrated concept of 'Banking on Values.'

1 The Global Reporting Initiative (GRI) is an independent institution and a global multistakeholder process whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. These Guidelines are for voluntary use by organisations for reporting on the social, environmental, and economic dimensions of their activities, products, and services. The GRI is a Collaborating Centre of the United Nations Environmental Programme. Its trademark multistakeholder process for continuing implementation, consultations and improvement of the GRI Guidelines incorporates the active participation of representatives from business, investment, accountancy, environmental, human rights, research and labor organisations from around the world.

2 The GRI sector supplements provide indicators specific for certain industry sectors that are applied in addition to the GRI Guidelines. See www.globalreporting.org/InDevelopment/SectorSupplements/.