First three inclusive & sustainability-linked financing granted by BNP Paribas
In partnership with the Just Sustainability Transitions Institute (JuST Institute)(1), BNP Paribas is innovating in microfinance by launching inclusive & sustainability-linked financing. Presentation of the first three financing lines granted to players in inclusive finance.
BNP Paribas has acquired considerable experience in sustainable loans (notably sustainability-linked loans), which, by tying the financial terms of the loans granted to the achievement of predefined environmental, social or just transition objectives, encourage companies to improve their ESG(2) performance.
Transposing sustainable loans to microfinance players
Building on this expertise, the Group is adapting this financial mechanism to microfinance institutions (MFIs) by launching inclusive & sustainability-linked financing (ISLF+) in partnership with the JuST Institute. When achieving predefined environmental, social and just transition objectives, microfinance institutions will be able to benefit from reduced interest rates or technical assistance from BNP Paribas and the JuST Institute.
Granting initial financing to three recognised institutions
During the European Microfinance Week in November 2023, BNP Paribas announced it was granting the first three inclusive & sustainability-linked financing. The MFIs chosen were Adie in France, PerMicro in Italy and Banco da Familia in Brazil.
Founded in 1989, Adie (“Association pour le droit à l’initiative économique” - Association for the right to economic initiative) has already financed over 180,000 small businesses in France (see page 64). As part of its inclusive & sustainability-linked financing, several goals are monitored: the number of business loans granted to women; the number of loans granted to entrepreneurs from priority urban areas and to recipients of minimum social benefits; and the share of microloans that finance the environmental transition of its customers and reduce the carbon footprint of its activities.
Founded in 2007, PerMicro grants microloans to entrepreneurs and households throughout Italy. Through its ISLF+, PerMicro will strive to increase the number of microloans for microbusinesses run by young people and women, the value of the portfolio dedicated to financing green technologies and practices, as well as the volume of loans with an environmental impact and climate vulnerability assessment.
The third MFI, Banco da Familia, has been promoting economic development in southern Brazil through loans to small businesses since its inception, in 1998. As part of its ISLF+, several indicators are monitored: the number of loans dedicated to renewable energy and water access projects; the percentage of loan officers trained in managing biodiversity risks and opportunities; and the number of agricultural loans analysed with climate and biodiversity indicators during the year.