Social performance: "Choosing a partner is just the beginning"
The desire to achieve a positive social impact is the reason why people invest in Oikocredit. How does this goal become reality? We spoke to Oikocredit’s social performance team, Ging Ledesma, Kawien Ziedses des Plantes and Yolirruth Nuñez, about capacity building, trust, monitoring, the cooperative’s DNA and its successes.
Tell us about Oikocredit's approach to social performance.
Ging Ledesma: Oikocredit pursues social goals. We aim to enable disadvantaged people to improve their quality of life. In doing so, the first and most important step is to select the right partner organisations to cooperate with.
We do this very carefully. It's why we developed tools for the due diligence process. An example of these tools is the ESG (environmental, social and corporate governance) scorecard, which our local colleagues can use to assess the environmental sustainability, social performance and responsible governance of potential partners.
The questionnaire that accompanies the process also forms the basis for subsequent monitoring and helps us identify whether there's need for additional support through capacity building.
All Oikocredit partner organisations are regularly monitored for their social performance. What does that mean exactly? And how about impact measurement?
Yolirruth Nuñez: We gather comprehensive information during the initial assessment phase, when we select organisations to work with. This information is then regularly supplemented and updated. Staff members in charge of investments visit our partners at their premises. Working together, they assess the organisations using two tools – one on social performance and one on risk assessment.
During the monitoring phase, we ask our partners which data they collect and compile, which social goals they pursue and how they measure whether they reach these goals. If, for example, they say: "We serve low-income people," we then ask: "How do you measure this?"
If they are unable to measure their performance, then it would be part of our capacity building offering (i.e. training we offer to partners) to familiarise them with measurement tools, such as the Poverty Probability Index (PPI). If someone comes to our office and needs help using the PPI, we can support them with training and advice.
For impact measurement, our Client Outcomes Programme helps us work on social data in order to review changes in the lives of microfinance clients over time. Over the last few years we have analysed the PPI data which our partner organisations have gathered over time.
This is the work done at local level. How does social performance management work at the central office in Amersfoort?
Ging Ledesma: As for microfinance, we support models and tools to measure social performance, and work together with the Innovations for Poverty Action (IPA) and CERISE. We have contributed to the development of internationally recognised client protection principles, and our microfinance partner organisations have to commit to endorsing and implementing these principles. On this basis, we engage independent experts to analyse the social performance of selected partners.
Kawien Ziedses des Plantes: In addition, we track social performance indicators, such as the number of women reached or smallholder famers reached. Our partners report to us once a year. We collect, compare and evaluate the data. At the moment, we are working on improved filtering of data to facilitate the extraction of individual results. Certain capacity building programmes are developed in Amersfoort such as the Client Outcome Programme (editor's note: this programme examines results at client level), which largely focuses on statistics and methodological questions.
Our experts are based in Amersfoort and travel to participating partner organisations to provide training sessions.
How can you be sure your partner organisations provide accurate information?
Yolirruth Nuñez: With regard to a lot of the data we receive, we just have to assume that it is correct. But as we have comprehensive raw data from the decision-making phase, as well as regularly requesting updated data and keeping in close contact with our partners anyway, we are able to gauge quite well whether their reports are realistic.
We compare them to the previous year's data. For instance, if someone answers the question as to the outreach of their work one year by stating that 40% of their clients live in rural areas, and then states 80% in the following year, we would check that.
If an agricultural cooperative reports that 40% of their members are women, we would be sceptical, because that might be unusual in the specific region. During our visits we can also check this.
How do you define social impact?
Yolirruth Nuñez: Social impact for Oikocredit is related to improvement in the quality of life. But quality of life is not only a question of economics, it is also about participation and being able to make decisions.
For instance, women who help men to do the work in the fields often don't think of themselves as having a job. With training, and through their association with us, when women realise that the work they do is actually a job and that they are part of a business, this changes a lot.
We never tire of encouraging cooperatives to promote the increased participation of women. Sometimes it's really simple. For example, we might suggest organising a babysitter during training sessions. And no-one had thought of that. That would mean women were able to actively participate, and they did.
For me, this is measurable social impact.
Kawien Ziedses des Plantes: It's not just at an economic level that success manifests itself. During the FALS programme (editor's note: Financial Action Learning System, see article Bridging the Gender Gap……At Home), several female participants said: "No one has ever asked me what I want."
When someone realises that they have a right to say what they want, that in itself has a social impact. The example that I'm talking about was a pilot project, which we ran with two microfinance organisations in the Philippines. Both organisations said: "If you, as Oikocredit, can’t continue, we will do it on our own."
Impact investing has become mainstream. What does Oikocredit do differently?
Ging Ledesma: Many of our competitors realise now that capacity building is important for social impact. When we started this over 40 years ago, it was a non-issue. Now, everyone calls whatever they do "impact investing". Well, I guess there's always some kind of an impact. However, what we do is miles away from the mainstream.
Kawien Ziedses des Plantes: I'm pretty familiar with the territory in which we operate. And it's my experience that we do far more than other organisations, particularly in the way in which we have incorporated the ESG scorecard, for example, and our social goals, in our entire work – also in the assessment process for new partners. But we are not perfect and we too have to learn from mistakes to further improve.
Which of your current activities could become mainstream in a couple of years?
Kawien Ziedses des Plantes: I see a massive opportunity to develop truly social products and services using digitalisation in the area of financial business. We have to proceed cautiously, because it is a real challenge to turn quick access to loans via smartphone into a social endeavour – and, of course, to find good partners.
Ging Ledesma: The second area is providing finance to small and medium-sized enterprises as these are vital for a country’s economy.
If we are able to establish high social standards within the small and medium-size enterprises that we support, whether directly or indirectly, then we promote genuine social change. This also entails that taxes are paid and that profits are shared with staff – and that gender equality, fair wages, decent workplaces and working conditions, safety and health are all ensured.
Kawien Ziedses des Plantes: Working on those elements is basically never-ending. There's always something else that should be done, and that needs to continue to be done, in order to improve social impact. Ultimately, this is also a question of money. And it’s always a balance, something that's also reflected in Oikocredit's designation: we are both a financial institution and a development organisation. However, everything will work out, as long as we maintain this balance and keep the social mission focus.
Read more about Oikocredit’s social performance and capacity building work in our 2019 Impact Report.