Posted by: François Ritchot, Analyst, Inclusive Finance
You might think that managing environmental and social performance would be a tough sell among hardboiled bankers incented mainly to drive revenue and portfolio growth. But when I participated in an introductory training on the topic this March in Tunis, led by Geert Jan Schuite, Enclude’s Global Group Lead of Outcomes Management & Strategy, I was surprised to find how open financial institution managers were to the concept. In fact, if I were to describe the experience in one word it would be openness: participants not only opened up to the subject – which was a completely foreign concept for many – but also to one another.
Delivered by Enclude and funded by the African Development Bank (AfDB), this training involved eleven banks and leasing companies from Northern Africa, as well as institutions working across Africa and several smaller Tunisian institutions. Understanding and current integration of E&S risk management in operations varied widely across the audience.
It was interesting to watch how attitudes and behaviors changed visibly over the three days of training. On the first day, many entered the training room looking reserved, and in some cases, even mildly annoyed. During the introduction, some participants bluntly admitted their skepticism, and others said they would not be there if E&S management were not a pre-requisite to get funding from AfDB. In fact, in providing this training, AfDB and Enclude had gathered a group of professionals who normally interacted as employees of competing institutions, rarely as learning partners.
Happily, peer-to-peer exchanges with others already immersed in E&S management and the highly interactive structure of the training helped kick-start the discussions. Despite some initial reluctance, all participants opened up to the E&S management concepts introduced and readily shared their institutions’ experiences, policies and procedures, best practices in place, and pitfalls encountered. Although initially secretive about internal policies (even on things such as the content of their exclusion list, i.e. the list of activities they would never finance the production of, use of, trade in, or distribution of – which is usually standard and very straightforward), on the third day participants shared their companies’ loan cycles, describing strengths as well as bottlenecks and areas for improvement! In short, during the training, barriers were broken-down, and participants began to think of each other not so much as competitors, but rather as colleagues.
By the end, even those who were most resistant at the beginning left with an action plan on steps to implement or improve E&S management in their respective institutions. The actions proposed ranged from briefing executive committees, to putting together an E&S taskforce or implementing energy saving strategies, to name a few. In addition to developing a better understanding of E&S tools and how they can be integrated into existing business processes, participants went away with a new web of peer-to-peer relationships that they can draw on for support in implementing E&S management systems.
Enclude was engaged from 2012-2015 by the African Development Bank (AfDB) to provide technical expertise on Environmental and Social Management in Financial Intermediaries and Microfinance Institutions in Africa. The project assists selected African FIs and MFIs to better manage E&S risks throughout the investment cycle, including through this training in Tunis and 9 additional trainings in other countries.