An Overview of Microfinance and Environmental Management

Finding out possibilities for microfinance institutions to promote environmental management
This paper focuses on options and opportunities for microfinance institutions to promote environmentally sustainable development in the areas of their operation. Small businesses and the informal sector affect the local environment in a number of areas. They generate waste, cause pollution and result in land/resource degeneration. Some of the activities which are financed through micro credit and can harm the local environment are :
  • Cattle grazing;
  • Metal work;
  • Pesticide and chemical manufacturing;
  • Tanneries;
  • Mining.
Some of the steps which microfinance institutions can take to ensure environmental management of client business are:
  • Environmental Impact Assessment (EIA) to evaluate the environmental impact of any project and to identify mitigating measures;
  • Analysis of loan applications to understand types and sources of inputs, disposal methods and location;
  • Participatory sub sector analysis to understand production inefficiencies which can impact the environment;
  • Client trainings to impart of environmental awareness and providing incentives for adopting non-polluting measures and activities;
  • Continuously measuring impact to determine changes required in the inputs and outputs of enterprises which are being supported.

About this Publication

By Lal , A. & Meyer, B.