Finance, Environment and Sustainable Development First Western European Forum La Caixa, Barcelona Barcelona, 19 May 2005 The first Western European Forum Qualitative Risk • Microfinance • Climate Change was convened to build on previous events in the region, such as the European Seminar on Finance, Environment and Sustainable Development held in Paris in January 2003. The aim was to provide European Signatories, a key section of UNEP FI’s membership, with a renewed space to obtain and exchange information on a number of key sustainability issues specific to the finance and insurance sectors. The Forum was attended by Signatory organisations from a total of 12 European countries and proved to be an adequate means for bring- ing together Signatories and partners from the region and thereby responding to the need for exchanges on the regional level. On this basis UNEP FI will endeavour to maintain the Forum as a yearly occur- rence that would travel within Europe. Meetings and exchanges taking place on a sub-regional and national level would be geared to feed into the overall, region-wide Forum. This report provides the key points made by each of the speakers as well as detailed transcripts of the ques- tions & answers periods which fol- lowed each session. The speakers’ presentations are available online on the UNEP FI website. Aknowledgements UNEP FI would like to thank both Antonio Massanell Lavilla, Senior executive Vice-President and President of the Environmental Committee, la Caixa, and Hanns Michael Hoelz, Deutsche Bank, for their support of the Western European Forum. The Forum was hosted by la Caixa just two years after the company joined the Initiative, while Deutsche Bank’s support tops five dedicated years at the head of UNEP FI’s A joint event by: Steering Committee. UNEP FI would also like to thank the speakers for their valuable inputs and the attendees for their participation, both of which contributed to making this event a success. Finance, Environment and Sustainable Development Qualitative Risk • Microfinance • Climate Change Luís Rullán, Senior Vice President, La Caixa Hanns Michael Hoelz, Managing Director, Global Head Sustainable Development, After officially welcoming participants, Luis Deutsche Bank Rullan briefly introduced la Caixa, one of the main financial institutions in Spain, and which As a member of the UNEP FI Steering Opening has just celebrated its 100th anniversary. Committee – SC having chaired the SC for five years, Michael Hoelz briefly introduced La Caixa’s aims are not just financial but also UNEP FI as a leading institution in the area social: founded in April 1904 its initial goal of finance and sustainability and reflected was to provide security to the less well-off. upon the strong added value brought by This social concern has been maintained and membership to the Initiative. remains a key element in the institution’s success. According to its current by-laws, la Deutsche Bank’s – DB activities and Caixa’s corporate aim is to encourage all approach to sustainability were then forms of savings, to foster beneficent work described, highlighting DB’s commitment to for the well being of the community and to fulfilling its responsibilities as a corporate citi- invest related profits in safe and profitable zen by integrating sustainability issues assets for the general interest. (including environmental concerns) directly into the company’s risk management La Caixa carries out three main types of processes. activity: DB is a firm believer in the impact of busi- • banking (universal banking) – 9.2 million ness activity on the natural and social envi- customers, including individuals, companies, ronment and has performed well in manag- and numerous SMEs. Types of subsidiaries ing this impact, as shown by ratings by include: banks, credit establishments, insur- indices and research institutions. DB also ance, mutual funds, management compa- complies with key ISO norms and is a mem- nies. ber / partner in numerous organisations and • investment - current portfolio of 11.6 bil- initiatives. Moreover, DB’s sustainability work lion euros. Diverse sources of income chosen is shown to be well–functioning by a number according to following criteria: security, sta- of audits; it is seen as creating benefits for all bility and profitability. Strategic sectors cho- stakeholders. sen, such as: infrastructure, energy, telecom- munications and real estate. “The on-going suc- • community – 1.2 billion euros in 2004, 25% cess of la Caixa is of which to finance community projects and based on the key with a priority for socially oriented projects principles of hon- dealing with marginalisation, integration, esty, trust, solidarity, and the elderly. This is the ultimate aim of la Caixa – the reason it was created and its social commitment, ongoing raison d’être. In 2007 it is aimed and human values – which have that 72% of the total budget should meet been passed on from generation to new community needs. generation within the company” Luís Rullán, La Caixa La Caixa’s social commitment includes pro- viding services throughout all parts of Spain, however remote, and to reach out to all lev- “Sustainability els of society. This includes a microloan experts react posi- scheme initiatied last year to facilitate hous- ing rental for the young and the elderly. In tively [to one year a thousand loans have been issued, microfinance] totalling1.2 million euros. while financial managers tend to La Caixa’s Strategic Plan for 2003-2006 aims be less engaged. There remain at implementing the triple bottom line some barriers in seeing microfi- approach in its operations. nance as a normal product.” Hanns Michael Hoelz, Deutsche Bank Finance, Environment and Sustainable Development Qualitative Risk • Microfinance • Climate Change Microfinance: a New Commercial Investment Opportunity? Jean-Philippe de Schrevel, Founder and COO, Dexia/BlueOrchard Finance s.a. • Microfinance is an integral yet largely untapped market, thus providing a clear commercial investment Session One opportunity (big demand for a whole series of products, dynamic, fast-growing, low volatility, limited credit risk and insulation form macroeconomic shocks). • Microfinance can be seen as a new asset class for the financial sector, with a unique combination of social and financial returns. • Key role of local microfinance institutions as specialised intermediaries that hold the local knowledge. • Key challenge: foreign exchange risk, which can impede access to entire regions. • Blue Orchard and Dexia microcredit programmes: Dexia Micro-Credit Fund (total assets US$60 mil- lion) and BlueOrchard Microfinance Securities (total assets US$80million). Microfinance: a Way to Reduce Poverty? Vincent van Assem, Senior Vice – President, ABN AMRO Holding N.V. • ABN AMRO’s position: firm belief in microcredit as one of a variety of tools for addressing poverty issues – is included in the company’s approach to sustainability. • ABN AMRO’s microfinance schemes targeted specifically at Brazil (joint-venture with Accion, loan portfolio of 1.8 million euro) and India (current loan portfolio 4.1 million euro). • Action in further countries is planned. Microfinance and sustainability Microfinance and Sustainability Hanns Michael Hoelz, Managing Director, Global Head Sustainable Development, Deutsche Bank • Dealing with emerging markets is both socially responsible and a manner of ensuring trade in the future. • Microcredit was launched at DB in 1997 via the DB Microcredit Development Fund (US$3.4 million invested so far); loans are directed at local Microfinance Institutions – MFI. • DB recently launched the Global Commercial Microfinance Consortium, which brings together all involved participants: local Financial Institutions – FI, MFIs and micro-entrepreneurs, for the purpose of alliance building and knowledge sharing. Finance, Environment and Sustainable Development Qualitative Risk • Microfinance • Climate Change . Question Natasha Landell-Mills, BlueOrchard has activities in a special fund was created and OTP Fund Management broad range of countries includ- steps were taken to promote Microfinance seems to make busi- ing Kazakhstan, Mongolia, employee engagement. (To ness sense – how exactly does it Uganda, etc. -there are opportu- Vincent van Assem) - does ABN compare with other sectors in nities everywhere. There are dif- AMRO have a system for building terms of performance? (To Jean ferences in risk – so you provide up corporate identity and values Q&As Philippe de Schrevel) – are no different products depending on around its microfinance activities? public sector funds needed at each client’s risk appetite, as for Answer Vincent van Assem, ABN BlueOrchard – or was it a con- any other portfolio. No country AMRO Holding N.V. Session One need be excluded. scious decision not to use such Employees are encouraged to funds? Question Jean Noël Guye, Axa participate, including through vol- Answer Jean-Philippe de Group untary action (over 10% of ABN Schrevel, BlueOrchard Finance s.a What of microfinance in situations AMRO staff is involved in volun- There was a decision to prove such as the December 2004 tary work). In the specific case of that microfinance is a perfectly tsunami? Mainly small businesses, the December 04 tsunami, money commercial product. However with nothing left… how do you was raised and a special fund was BlueOrchard does not exclude deal with such a situation? What created, however, when the com- cooperation – eg. IFC, US about microinsurance