Building a Sustainable Financial Future at EMW 2024

Focus on Digital Finance, Client Protection, Governance, Outcomes Management and Impact Reporting Regulation

On November 13-15, the European Microfinance Platform (e-MFP) hosted the 2024 edition of the European Microfinance Week in Luxembourg. This event is a one-stop shop for all financial inclusion and impact investing stakeholders (financial services providers, investors, support service providers, development agencies, regulators). Like every year, the program was rich and covered key topical issues ranging from focus on women, young, refugees to tools and innovations in regulation, fintech, insurance, climate finance.

Cerise+SPTF teams brought again expertise and key findings with partners, highlighting the new tools and resources we offer for environment, social and governance (ESG) risks and performance management, the responsible provision of digital financial services, strong client protection practices and customer-centric approaches for decision making to enhance a solid culture of outcomes management and impact reporting, aligned with the Sustainable Development Goals (SDGs).

In this article, we share some insights discussed during the sessions Cerise+SPTF has participated in.

Watch Session Videos Below

Enhancing Sustainable Outcomes Measurement and Management

November 13 was the day dedicated to outcomes measurement and management, a momentum Cerise+SPTF had anticipated 10 years ago with our working group and e-MFP Action Group. Célia Fernandez, Head of Impact Program and Communication at Cerise+SPTF, moderated a panel discussion with Charley Clarke, Impact Measurement and Management Specialist at CGAP, Caterina Giordano, Chief Impact Officer at Alterfin, and Cécile Lapenu, Executive Director at Cerise+SPTF. The panel was complementary with the morning workshop lead by Amarante Consulting on “Institutionalizing Impact-Driven Change”. The objective was to share field experiences from investors and insights from recent research including CGAP’s paper on Investing for Financial Inclusion: Four Enablers for Outcomes Measurement and Management and the related Global Partnerships Case Study: Measuring and Managing Financial Inclusion Outcomes, a resource developed in partnership with The Good Economy and Cerise+SPTF.

In a context of a growing demand for more transparency on the actual outcomes of financial inclusion, we intended to explore the following challenges:

How to push for better alignment of practices among FSPs, investors, regulators to ensure coherence and reduce reporting burden?
How to ensure outcomes management guide decision-making within the organizations?
How different methods can be used and combined depending on when, why, how outcomes management is necessary.

In its working paper, CGAP proposes to push Impact Measurement and Management (IMM) towards a more outcomes-focused IMM. IMM is the strategy and process by which investors should consider the positive and negative effects of products and services on people and the planet, and then figuring out ways to mitigate the negative and maximize the positive.

“When considering the effects of one's investments on people and planet, we mean the changes in people's lives resulting from use of financial services. [But today] the status quo [of IMM] remains largely to measure and manage for outputs such as reach and access, and when outcomes are explicitly considered, the mainstream approach is to use proxies to estimate outcome performance.”

Charley Clarke for CGAP

Outcomes-focused IMM means that the organization integrates client outcomes data – poverty reduction and economic empowerment as development outcomes, or shorter-term intermediate outcomes such as improved financial health and resilience – into its culture, strategy, governance and processes.

Efforts are now necessary to support investors and FSPs in building their readiness to collect, interpret, and use clear, verifiable, and comparable data on the social and environmental effects from investment on both positive and negative outcomes. The paper by CGAP identifies 4 enablers (see graph below).

Our effort should also push to value customer-centric approaches to make informed decisions and adapt products and services to customer needs and constraints.
As another concrete example from the Sustainable Outcomes Working Group, Alterfin shared its innovative experience using SenseMaker, a mixed methodology for data collection that considers the narratives of customers – and not just a standard closed survey – and combines those first-hand narratives with the statistical authority of quantitative data. Alterfin used this method to collect and analyze customer-level outcomes data for Nyamurinda Coffee Growers, a women-led business in Rwanda providing market access to smallholder farmers. Through this experience, Alterfin shared some key learnings:

SenseMaker mixed methodology is adapted to discover complex social change, because it helps capture nuance
The impact is both tangible and intangible
Impact doesn’t always look like what we imagine, and Alterfin discovered the safety-net role of Nyamurinda.
Impact is deeply context-specific and cannot always be standardized

Still, the willingness to promote harmonized outcomes management practices among financial institutions is coherent to ease the reporting to the various investors and innovate for more outcomes-focused strategic and operational decision-making . Maintaining the extensive collaboration with e-MFP action group and exchanging knowledge and practical experiences with a diverse range of practitioners, Cerise+SPTF develops pragmatic guides and tools for outcomes management. Cerise+SPTF presented the upcoming toolkit that will help the organizations select and combines the most appropriate collection methods to capture customer outcomes data.

The toolkit will be shared as a public good with a refined version of the social outcomes questionnaire to generate actionable outcomes data (2025).

Sustainable Outcomes Management (SOM) program led by Cerise+SPTF with e-MFP:

Build local capacities
Provide actionable outcomes data
Disseminate tools and resources

Our guides and tools are accessible through the e-MFP website and the Cerise+SPTF SPI Online Resource Center.

Cerise+SPTF also continues sharing experiences through webinars and working group sessions. Join us!

Aligning Impact Reporting with the Capacities and the Reality of the Global South

Microfinance has long been a pioneer in targeting both financial and social results, with over four decades of expertise in evaluating social performance voluntarily. A pivotal moment in impact reporting arrived in 2019 when the European Commission launched its first regulation on sustainability-related disclosures in the financial sector. This marked a fundamental shift in our financial and economic systems, putting sustainable finance at the forefront. Today, the challenge is to ensure that the inclusive finance industry remains at the heart of these evolving frameworks while retaining flexibility and materiality.

On November 13, Jurgen Hammer, Managing Director of SPTF Europe, moderated a panel on “The Future of Social Impact Reporting and Its Implications for the Inclusive Finance Industry” brought together: Ahmed Ouamara, CFA (LuxFLAG), Christophe Bochatay (Triple Jump), Tatiana Kalinina (Triodos Investment Management), Linda van Goor (Independent Advisor on EU Finance Regulation). The session aimed to explore the evolving landscape of social impact reporting, including regulatory developments and their implications for funds; and mobilize stakeholders (asset managers, funds, donors, and boards) to proactively shape emerging regulations to direct investments toward impactful social and environmental projects. The discussions covered the various regulatory frameworks, such as the Sustainable Finance Disclosure Regulation (SFDR) and Taxonomy.

Few takeaways:

Shifting focus: standardization and increased data points are welcome but must balance rigor with flexibility to assure relevance and implementability.
Data evolution: The availability and quality of data have improved, but comparability and affordability remain difficult.
Critical concepts: Defining additionality and attribution is crucial for meaningful comparisons of impact performance across products and strategies.
The SFDR and Taxonomy are both under revision:
- For SFDR, the European Commission is gathering evidence for an impact assessment. We can expect SFDR 2.0 by 2027.
- On Taxonomy, usability in the Global South and the development of a Social Taxonomy are pressing issues. Progress is being made, but we need more.

Positive developments:

Advances in outcome measurement and impact management standards are promising for the financial inclusion sector. Pleased to see that Cerise + SPTF's long-term work on this issue is now being recognised.
Regulatory curiosity: Great to witness the openness of entities like DG FISMA and CSSF to engage with field experts.

Together, notably with Cerise+SPTF's Social Investors Working Group, we need to invest more time and resources to shape a future where social impact reporting remains a catalyst for meaningful transformation.

Strengthening Client Protection through Governance: Insights from Industry Leaders

On November 14, experts gathered to discuss the role of governance in embedding strong client protection (CP) practices within Financial Service Providers (FSPs). Moderated by Anne-Laure Behaghel, Client Protection Pathway Manager at Cerise+SPTF, the panel included Vidary Inthamone (Gojo&Co), Daniel Rozas (e-MFP), Milena Loayza Amorin (BIO S.A.) and Jon Sallé (SIDI). This dynamic session, moderated by Anne-Laure Behaghel, Client Protection Pathway Director at Cerise+SPTF, explored the responsibilities of boards, senior management, and investors in fostering sustainable, client-centric approaches.

Discussions addressed:

The critical role of governance in embedding CP practices, beyond just procedures
The importance of planning for responsible exits to safeguard clients’ interests.
Practical tools and global standards that support the identification, analysis, and mitigation of risks related to CP.

Investors and boards were recognized as critical drivers of client protection. Speakers shared how embedding CP requires more than procedures—it demands a cultural shift within organizations. Practical examples illustrated how socially focused investors bring CP issues to board agendas through structured strategies, such as shareholder agreements, or sub-committees and capacity-building initiatives.

Daniel Rozas introduced the “Best Interest” approach for exits, where price should not be as important as alignment of mission and vision with the buyer. He also emphasized the responsibility of investors, in particular in overheated markets. Discussions highlighted the risks of new ownership diluting CP commitments, with panelists advocating for proactive exit strategies that prioritize client welfare from the outset.

Integrating client feedback into governance was deemed crucial. Tools like the Financial Diaries project conducted by Gojo & Co, and strong internal audit were spotlighted for bringing customer experiences directly to decision-makers, fostering strategies that align with client needs.

Achieving sustainable growth without compromising client protection emerged as a shared challenge. Panelists shared solutions, including holding management accountable on CP, and using tools (and Outcomes Measurement and Management) to amplify client voices and monitor the implementation of CP policies.

By highlighting best practices and Universal Standards for client protection, the session reinforced the importance of governance as a cornerstone for robust client protection. The insights shared not only guided industry leaders but also underscored that governance is not just a tool for oversight but a powerful mechanism to safeguard clients and promote sustainable, responsible practices in financial services.

More to come in a dedicated blog article… stay tuned!

Digital Financial Services: Trends and Solutions to Mitigate the Risks to Consumers

Digitalization of microfinance is a topic of growing importance, not just for MFIs but for all kinds of providers who deliver services for low-income people. However, to date little discussion has taken place regarding practices and beneficiaries. In June 2024, Cerise+SPTF published the final version of the Management Standards for the Responsible Provision of Digital Financial Services (the “DFS Standards”). For all digital financial services providers, implementing the DFS Standards is essential to risk management and customer protection.

On November 14, Amelia Greenberg, Deputy Director at Cerise+SPTF, moderated the session “Tools and Solutions for DFS Risks to Consumers.” In this session, the panelists Jade Potgieter (JUMO), Antoine Navarro (CGAP), Joëlle Hazoume Alao (Orange Money Group), discussed the large numbers of customers who are experiencing harm from use digital finance, and how implementing the comprehensive management practices outlined in the DFS Standards - focusing on transparency, prevention of over-indebtedness, cybersecurity, data privacy, recourse mechanisms, partnerships, fraud prevention, and many other areas - is a key solution to mitigating risk.

This session aimed to share what practices are included in the final version of the DFS standards, making the case that implementing these Standards is a risk management approach and essential to customer protection. CGAP presented a framework called the Responsible Digital Finance Ecosystem, which outlines how every stakeholders, from regulators to associations and FSPs, has a role to play. The panelists shared their experience about risks and solutions, with a particular focus on fraud prevention.

On that same day, Amelia Greenberg also took part in a workshop session on the recent trends in the digitization of microfinance, with Erin Taylor (Finthropology), Anette Broloes (Finthropology), and Anne Marie van Swinderen (L-IFT). The workshop addressed the key questions on which areas are digitizing most, for what purposes and how it benefits organizations and end users. The purpose was to foster cross-disciplinary and cross-industry discussion and identify potential for future research, innovation and collaboration.

Catapult: Inclusion Africa Program

On November 13 and 15, Jurgen Hammer and Anne-Laure Behaghel were at the LHoFT – the Luxembourg House of Financial Technology – to deliver trainings and mentoring sessions at the 7th edition of Catapult: Inclusion Africa, the one-week bootcamp which seeks to empower African startup fintechs driving financial innovation while also making a meaningful impact on inclusivity. Anne-Laure Behaghel introduced responsible financial service principles, highlighting the importance of client-centered practices that align business goals with social impact. This day was a great opportunity to discuss and promote responsible practices and encourage institutions to implement the new DFS Standards developed by Cerise+SPTF. On the last day of the bootcamp, Jurgen Hammer was a member of the jury for 10 inspiring fintech innovators selected from a pool of 309 applications, who came to EMW 2024 and pitch to win the program.

“DFS Standards are here to help start-up fintechs shape their models with a consumer protection mindset.”

Anne-Laure Behaghel from Cerise+SPTF