Responsible Investment Management and Advisory Services

ESG & Impact

By intertwining our impact filters in our investment and selection processes, we predict positive social impact. And the likelihood that the companies we invest in, will contribute to the socio-economic development of their clients – micro and small & medium sized companies, is what we assess. In this regard, we developed the Interest Traffic Light as a tool to assess our investees’ social performance and to prevent high interest rates. In addition, we developed the assessment of CEO-compensation, signed the Principles for Investors in Inclusive Finance, endorsed Microfinance Transparency and the Client Protection Principles, and we are an active member of the Social Performance Task Force and the Global Impact Investing Network.

Social Performance Management

Our portfolio companies have an explicit social mission. The set of processes and systems in place within these institutions that ensure they fulfill their social mission is called Social Performance Management. The assessment of the social performance of potential Triple Jump investees constitutes an integral part of the investment process. Triple Jump uses a proprietary model to assess the likelihood that the companies financed contribute to socio-economic development and act responsibly towards their stakeholders.  Along with this social performance assessment, all institutions in the portfolio are specifically screened to ensure their pricing policy and management remuneration are in line with responsible practice.

FOTO ONDERSCHRIFT 1

Social Performance Assessment Tool

Assessing the social performance of our portfolio companies is inherent to our investment process. We want to assure that the financing we provide to our clients is translated into appropriate products that reach our target end-clients. In cooperation with Oxfam Novib, we have developed an in-depth social performance assessment tool which is used to evaluate all Triple Jump portfolio companies. Our social performance tool assesses the financial intermediary’s social intent, the implementation of these social intentions, and the social results achieved. Results are assessed in terms of: mission, governance & management, targeting and outreach, client service, client protection, human resources and enviroment.

Interest Rate Traffic Light

We were the first responsible investment management company to launch an Interest Traffic Light. This tool is for responsible investment professionals to help them evaluate the level of interest rates charged by financial intermediaries. In order to assess if a financial intermediary will provide an appropriate level of social and financial returns, investors must determine if the financial intermediary is practicing responsible pricing. The Interest Traffic Light proposes a framework to evaluate and eventually score financial intermediaries, according to the interest rates they charge. The tool yields a recommendation on whether to approve investments without further conditions (Green), with specific conditions (Yellow), or not at all (Red).

Executive Compensation Questionnaire

We were the first responsible investment management company to launch an Executive Compensation Questionnaire. This questionnaire is meant to standardize the assessment of the salaries of the CEOs of our portfolio companies. Excessive CEO compensation can lead to lesser value added to micro borrowers. As part of each appraisal for a new financing, we require our portfolio companies to be transparent about the compensation of its CEO. Six questions guide Triple Jump’s analysis. The responses to these six questions help us frame the discussion in our investment committee, in order to decide if a CEO compensation is justified or not. In all cases, the analysis is focused on determining the appropriate balance between social and financial returns.

Triple Jump’s Networks and Standards

Client Protection Principles. We endorse the Client Protection Principles (CPPs). The principles describe the minimum measures that microfinance institutions should take to protect low income clients from potentially harmful financial products, and to ensure that clients are treated fairly. By endorsing the priciples, we commit ourselves to promoting and incorporating them into our own procedures. A specific client protection questionnaire is now part of the standard loan appraisal process for all funds. We raise awareness among financial intermediaries about the steps they can take to protect their clients, and thus help ensure that they benefit from the potential of microfinance.

Microfinance Transparency. We endorse MFTransparency and promote the MicroFinance Transparency Effective Interest Rate calculator amongst our portfolio companies. We believe that transparency in pricing is essential for end-clients (micro, small & medium sized enterprises) to be able to compare interest rates, which in turn is necessary for competition to lead to a decrease in interest rates. Although regulation is the most important and effective way of achieving transparency, there are few countries where this is addressed. Where regulation does not adequately address pricing transparency, initiatives like Microfinance Transparency have an important role to play. MFTransparency works with financial Intermediaries, central banks and investors to bring about pricing transparency in the (micro) finance industry.

Principles for Investors in Inclusive Finance. We endorse the Principles for Investors in Inclusive Finance. As a social investor, we ensure that our own policies and operations comply with the highest standards of social performance. In January 2011, along with 40 global investors, we signed the newly launched Principles for Investors in Inclusive Finance, an initiative of a core group of investors, Her Royal Highness Princess Máxima, and the United Nations-backed Principles for Responsible Investment (PRI). In signing the principles, we publicly commit to fair treatment and protection of the interests of the end-clients – micro, small & medium sized companies.

Global Impact Investing Network Triple (GIIN). We are a member of the Global Impact Investing Network. This network is a non-profit organisation, dedicated to increasing the scale and effectiveness of impact investing. Impact investments are investments in companies, organisations and funds, with the aim of generating measurable social and environmental impact, alongside a financial return. The network addresses systemic barriers to effective impact investing, by building critical infrastructure and developing activities, education and research, that attract more investment capital to poverty alleviation and environmental solutions.