Sustainability as a core value

Triodos Microfinance Fund strives to contribute to the development of an inclusive sustainable financial sector in developing countries. To this end, it invests in financial institutions that demonstrate a sustainable and responsible approach to providing financial services to the underserved population, while also incorporating practices that demonstrate care for the earth.


of clients
in rural areas

The fund applies a triple-bottom line approach in its investment policy, aiming for a well-balanced mix between people, planet, and prosperity, translated into practices, tools and indicators that constitute the fund’s Sustainability Management System. The Sustainability Management System is used throughout the investment process, from the initial screening to the due diligence analysis, investment decision making, monitoring and reporting.

Sustainability Banking Assessment

Triodos Microfinance Fund uses the Sustainability Banking Assessment (SBA) scorecard to assess the sustainability performance of a financial institution. The second version of this tool was launched in 2015 to better capture the changing market circumstances and different financial institutions that the fund invests in. SBA 2.0 consists of 25 questions, covering environmental, social (management and staff, product range, responsible finance) and governance issues, and takes into account relevant industry initiatives, such as the Principles for Investors in Inclusive Finance1, the Universal Standards for Social Performance Management2, and the SMART Campaign’s Client Protection Principles© 3.

The addition of JFS in India, which serves 3.2 million female borrowers, has significantly contributed to the increase in the number of loan clients reached and the proportion of female loan clients. Furthermore, some of the new institutions in the portfolio have a greater outreach to underserved people living in urban and semi-urban areas, such as BancoSol, Finca DRC, Ipak Yuli Bank, and JFS, thus decreasing the proportion of clients in rural areas.

1 The United Nations-supported Principles for Responsible Investment (PRI) Initiative is an international network of investors working together to put the six Principles for Responsible Investment into practice. For more information please visit:

2 The Universal Standard for Social Performance Management is a comprehensive manual of best practices to help financial service providers put clients at the centre of all strategic and operational decisions and align their policies and procedures with responsible business practices.

3 The Smart Campaign is a global effort to unite microfinance leaders around a common goal: ensuring that clients remain the driving force of the industry. For more information please visit:

Fair pricing and transparency

To ensure fair pricing by the MFIs, the fund monitors their pricing levels, using the annual percentage rate (APR) as an indicator. The fund acknowledges that interest rates vary across countries, and across different regions within countries, influenced by the specific nature of markets, macroeconomic conditions, and institutional landscapes. The investees in Africa and the Middle East, for instance, are generally facing higher operating costs relative to the loan sizes. These require them to charge higher rates in order to cover the costs, which comes on top of the already high inflation rate in some countries. As an investor, the fund encourages MFIs to become more efficient, as lower operational costs allow them to reduce the rates that they charge their end-clients. As of the end of December 2015, the median APR of Triodos Microfinance Fund’s investees is 33%.

APRs of MFIs per region in the portfolio of Triodos Microfinance Fund

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Source: Triodos Investment Management B.V.

Africa & Middle East


Eastern Europe & Central Asia


Latin America


East Asia & Pacific


South Asia




Given the nature of the activities that MFIs engage in, it is not uncommon for them to serve clients that have limited financial literacy. The fund always encourages its investees to offer their end clients financial literacy training programmes. In 2015, 84% of the fund’s investees offered regular or ad-hoc financial literacy training programmes to their clients.

Access to financial services

In recent decades, the financially underserved population was limited to low-income groups, inhabitants of rural areas and women. SMEs can now also be added to these groups. SMEs are generally considered too small for financing from local banks, but too large for MFIs. As of the end of December 2015, 30% of the aggregated loan portfolio of the fund’s investees is allocated to financing SMEs.

Aggregated portfolio allocation per market segment

Portfolio allocation per market segment (bar chart)

Source: Triodos Investment Management B.V.

% of MFIs offering other financial products and services

% of MFIs offering other financial products and services (pie chart)

Source: Triodos Investment Management B.V.

Financing agriculture

Financial inclusion and a sustainable economic landscape mutually reinforce each other. Access to finance should allow the end clients to procure the products and services that they need and also be financially independent. In developing countries, the agriculture sector and SMEs play a big role in creating job opportunities, contributing to local taxes, and stimulating local creativity.

Volatility in temperatures and raw materials prices and unanticipated natural disasters increase the risk that financing the agriculture sector entails, thus preventing many farmers from obtaining adequate financial products and services for their farming activities. As of the end of December 2015, 16% of the aggregated loan portfolio of the fund’s investees is allocated to financing agricultural activities.

The fund will continue to encourage its investees to finance the sector, given the sector’s important contribution to achieving a robust and sustainable economic landscape.

Microfinance portfolio Triodos Microfinance Fund

31 December 2015

Diversity and modernisation

Financial inclusion has long been associated with providing access to basic financial services only. Changing markets and institutional landscapes, however, in combination with technological developments, have paved the way for the development of more financial products and services that can complement and modernise the existing financial products being offered. Technology in particular has facilitated financial inclusion through mobile banking as an alternative distribution channel.

% of MFIs in the portfolio focussing on the environment

% of MFIs in the portfolio focussing on the environment (bar chart)

* List of exclusion criteria used by MFIs when deciding whether or not to provide loans to customers.

Care for community and earth

The many negative effects of unsustainable business practices on the environment have further emphasised the importance of greater awareness of this issue. MFIs have the opportunity to raise environmental awareness amongst themselves and their clients and to propagate ideas and practices with regard to responsible use of financial products and services.

Core indicators MFIs in the portfolio of Triodos Microfinance Fund

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Source: Triodos Investment Management B.V.

Total number of loan clients reached by MFIs in the portfolio



Total number of savings clients reached by MFIs in the portfolio



Average loan (EUR)



Percentage of female loan clients



Percentage of clients in rural areas



Number of people employed by MFIs in the portfolio






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