Green Microfinance: Characteristics of Microfinance Institutions Involved in Environmental Management

Understanding drivers and barriers to MFIs' involvement in environmental management
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This paper seeks to identify the characteristics of MFIs involved in environmental management. More particularly, the assessment was on whether the environmental bottom line only concerns larger, profitable, mature, and regulated MFIs. It aims to help donors and technical assistance providers in identifying where to orient their technical and financial support for the promotion of a triple bottom line approach. The paper assesses the relationships between MFIs' environmental performance and their size, financial performance, age, and legal status. It empirically identifies the characteristics of these 'green' MFIs on a sample of 160 MFIs worldwide. Basing its analysis on various econometric tests, the study finds that:

  • Larger MFIs tend to perform better in environmental policy and environmental risk assessment;
  • More mature MFIs tend to have a better environmental performance, in particular in the provision of green microcredit and environmental non-financial services;
  • Financial performance is not significantly related to environmental performance, suggesting that 'green' MFIs are not more or less profitable than other MFIs;
  • MFIs registered as banks are more likely to have a better environmental performance.

About this Publication

By Allet, M. , Hudon, M.