Major Dutch pension funds, TIAA-CREF launch microfinance principles

40 investors sign up to new Principles for Investors in Inclusive Finance

A group of global investors including major Dutch pension funds and US pension giant TIAACREF have signed up to a new set of principles governing microfinance that have been developed with the United Nations-backed Principles for Responsible Investment.

The initial signatories to the seven principles include some of largest Dutch institutional investors: Achmea, APG, MN Services, Pensioenfonds Zorg en Welzijn (PFZW), PGGM and SPF Beheer.

Also in at the launch are TIAACREF, microfinance specialist BlueOrchard, the Calvert Foundation, and the Nedlloyd, Vervoer, PNO Media and SNS Reaal pension funds among others.
The principles cover: range of services; client protection; fair treatment; responsible investment; transparency; balanced returns and harmonised investor standards.

The development comes as perceptions about microfinance are shifting amid reports of suicides among borrowers in India struggling to repay their loans. And the BBC has quoted Alok Prasad, the CEO of India’s microfinance association MFIN, as saying claims that microcredit could put poverty in the musuem were “hyperbole”.
The new principles – the brainchild of a core group ofinvestors and Her Royal Highness Princess Máxima, the UN Secretary General’s Special Advocate for Inclusive Finance for Development – were formally launched today at the Responsible Finance Forum, hosted by the Dutch government.

“Signing the Principles will guide responsible institutional investors when investing in inclusive finance,” said Else Bos, Deputy Chair of the Executive Committee at PGGM.
She added: “It will also help to clarify their rationale for investing in this asset class: expect market rate but not excessive returns through (indirect) investments in sustainable microfinance institutions that put the wellbeing of the ultimate client first.”

The principles were developed with the UN PRI and in consultation with the Consultative Group to Assist the Poor. The signatories commit themselves to promoting them in the market and among “peer networks”.

“Principles for Investors in Inclusive Finance make an important first step to mainstream microfinance in a way that safeguards all stakeholder interests,” said PRI Executive Director James Gifford. Links to signatories and principles