Sustainable Investing

One of the major challenges for Development Finance Institutions (DFIs) is to help financed companies to become aware that good governance and environmental and social performance, in particular respecting workers’ rights, are essential components for their success and sustainability and that they must be permanently integrated into their strategy.

Corporate governance

BIO devotes itself to preserving and improving existing good practices in corporate governance. Good governance improves the performance of a company and their access to financing, which stimulates lasting economic growth.
BIO gives priority to strengthening existing procedures and developing performance evaluation tools, particularly during due diligence phases and, later, within the framework of monitoring projects to evaluate the progress made.
BIO plans to train its employees so that they are able to advise companies receiving support about these areas. They may also, if appropriate, receive grants for technical assistance from the Capacity Building Fund.

BIO adheres to the following directives:

  • Principles of good governance: 31 bilateral and multilateral DFIs, on 19 October 2007 in Washington D.C., signed a joint statement on the promotion of corporate governance.
  • The Institutional Limited Partners Association (ILPA) principles concerning venture capital: directives targeting the strengthening of investment fund management and harmonisation of interests, but also improving investment reporting and transparency.

Social and environmental responsibility

BIO defines environmental and social responsibility as a means to protect and promote the way of life of the communities in which the company and its clients are involved. BIO takes the environmental and social implications into account throughout the lifecycle of the project and incorporates the good practices principles at all levels, from the commercial strategy model through to daily decision making.

Within the framework of work groups for harmonising standards within the EDFI, the majority of European DFIs, including BIO, have adopted shared environmental and social recommendations under the name of the “Rome Consensus”. Notably, they target categorising risks then standardising actions to be taken according to the level of environmental and social risks identified and this during the various stages of an investment project cycle. According to the risk categories, actions to reduce these risks can take different forms: from the intervention of an independent expert to carry out a complete audit to carrying out a simple self-evaluation, or the regular writing of reports by an external body to writing of ad hoc reports – in the event of changes to conditions or during a specific incident.

BIO adheres to the following directives:

  • Responsible Financing Principles (EDFI): all investment activities must have positive impacts for the local community, particularly in the area of social rights and the environment
  • Basic social rights laid down by the International Labour Organisation (ILO).
  • Client Protection Principles (CGAP): Minimum service levels that microfinance organisation must provide to their clients.

Download the BIO's Responsible Financing Principles, E&S policy and Exclusion list.

Download EDFI's Principles for Responsible Investing