The IFC’s approach to sustainability has gender embedded deeply within it. Andrew McCartney, IFC’s Global Product Specialist for Gender Finance and SME Banking, leads IFC’s technical advisory efforts to support banks implement Women’s Market Programs, shares his perspectives on why women are so vital to any bank’s sustainability strategy; the dangers of having a women’s market program as part of a bank’s Corporate Social Responsibility (CSR) and not fully embedded in the business; and the most important elements that needs to be in place for the successful implementation of a Women’s Market Program.
GBA: Can you tell us a little about the IFC’s approach to ‘sustainability’?
Andrew McCartney: Sustainability is a fundamental requirement if economic development activities with the private sector are to yield widespread benefits in the emerging markets in which we operate. IFC has had a sustainability framework in place since 2006 to help clients achieve success and profitability, with a strong eye on environment, social and governance issues.
The framework itself contains a policy on environmental and social sustainably as well as performance standards which define client responsibilities around managing environmental and social risks. It also provides and an access to information policy which articulates IFCs commitment to transparency. This framework, most recently updated in 2012, is publically available information on our website.
GBA: How do women fit into your approach to sustainability?
Andrew McCartney: Gender or “Women in business” as we call it, is a core part of the World Bank strategy. It is also a core pillar of our Sustainability Business Advisory practice, which is focused upon strengthening the role of women as leaders, entrepreneurs, employees and consumers. Women are part of IFC’s commitment towards supporting the underserved and disadvantaged in communities as a way of creating employment and alleviating poverty.
In terms of the how, I think we are perhaps unique in adopting a 360 view of the issue. Traditionally, there has been a silo view around the issue: it has been about “access to finance” or it has been about “business training”. Over time we have realized we need to take a broader view. IFC works with a range of stakeholders including corporations, governments, banks, business associations, research groups, the Global Banking Alliance for Women and other partners in development. IFC interventions around women in business focus upon three main areas:
Firstly, from an investment climate perspective, we seek to identify and remove the barriers women face in growing their businesses including for example, making it easier for them to register their businesses, have equal rights to property for collateral purposes. We tackle these kinds of issues in conjunction with our World Bank colleagues, and this all takes place at a policy and governmental level.
Secondly, we have a range of offerings looking at developing the women entrepreneurs themselves, through our Sustainable Business Advisory practice, whether it is supporting supply chain initiatives, skill enhancement through our SME Toolkit or our Business Edge training program, and other initiatives around integrating women in the workforce.
Thirdly, and this is the area that I am primarily responsible for, we work on supporting banks to create strong value propositions for women-owned small and medium enterprises. As the research clearly demonstrates, traditional banking to a great extent fails the financial needs of women, particularly on the borrowing side. We work with banks to develop, test and replicate where possible business models that cater towards women. The IFC offers credit lines for on lending to women, and we develop the capacity within the banks themselves to provide not just credit, but the full range of financial services for women.
GBA: 26% of the Global Reporting Initiative (GRI) Sustainability reports are from financial institutions. Why is sustainability (or at least it’s reporting) emerging as being so important for the financial sector?
Andrew McCartney: I think particularly since the Global Financial Crisis there has been a growing realization in emerging market banks of the need for greater corporate responsibility and transparency, extending not only to the environment, but also to revisiting the role a bank can and should play within a community and society at large. There are two things that are really driving this. First, brand and reputation enhancement has become very important post-crisis. Secondly, and in many ways more importantly, there is also a realization that there really are tangible benefits for banks in going into this space, in terms of increased profitability and market value. One can argue around causality, but there is no doubt from the research that organizations that are good on sustainability are also good in terms of market value and profitability.
GBA: You have worked with many banks across different geographies – what are some of the best approaches to sustainability that you have seen?
Andrew McCartney: A key requirement is to have a strong business case for sustainable banking, and to build a very clear business strategy around it. Banks in emerging markets are starting to address not just the environmental protection areas, but are going much broader with their sustainability strategies to look at social inclusion of some of the underprivileged groups like youth, indigenous populations and of course women.
Having established a clear strategy and business case that makes it sustainable; there is a need for a clear framework that is owned by the businesses themselves. Where banks fail is when they push sustainability and financial inclusion into a marginalized unit, rather than embedding the framework and responsibilities into the businesses themselves, as profitable business opportunities in their own right. So marrying sustainability with a clear view on profitable business ventures is critical to success. Communicating the framework so that employees are aware that this is not charity, so that if we are going after women, its not just about ” the right thing to do”, but it is actually viewed as a profitable business opportunity in its own right is important. Finally the whole transparency piece needs to be addressed with clear reporting and accountability, with appropriate governance around that.
GBA: How is ‘sustainability’ different to ‘CSR’?
Andrew McCartney: The problem with these two concepts is that they are both defined very broadly, which invariably creates definitional issues. In my view, the fundamental difference is that CSR is really a voluntary thing that entities will do, over and above what they really are directly responsible by law for. Typically such initiatives are grant funded and loss making by nature but are targeted at a specific theme of interest to the organization. It is difficult to sustain such approaches if there are a lot of costs involved. Sustainability however is about an enduring, strategic approach that is funded, and with a clear business case.
GBA: In the past you have said that a Women’s Market Program will not survive if it is done purely as part of CSR activities. Why have you found this to be the case?
Andrew McCartney: Many gender programs start as an extension of CSR, but the challenge then is to create a situation where Women In Business is actually viewed as a real business opportunity. Banks that look at gender as CSR, typically sound very different than those doing it as a sustainable business opportunity. There tends to be a preoccupation about launch and about making “market noise and hype”. They are generally less interested in real impact and figures or cost. When it comes to the research and needs assessment, the focus moves away from the business case and the financial services side, towards the non-financial services side more, particularly around the education piece and seminars. These initiatives tend to make noise in the market, but rarely are turn into a critical mass of profitable banking clients. The other key aspect is around subsidized credit. In our view, this undermines the whole business proposition and reinforces the view: here is the poor disadvantaged gender segment.
GBA: What are the minimum things that must be in place to make a Women’s Market Program work? What needs to happen to make that program really successful?
Andrew McCartney: Having completed 20+ projects in this space, IFC has a clear view on what works and what does not. There are five key things though that typically determine program success:
- Leadership. There has to be clear buy-in from the top and a clear sponsor to run the program.
- SME banking capability. The bank really needs a strong SME banking platform, if it is going to stand a chance at doing a Women’s Market Program well. This is because the same infrastructure and capabilities need to be tapped into typically to make this proposition a success.
- Deep market research. The bank really needs to be preoccupied with understanding the customer. This is an area where bank’s often under resource. In any given market, there are a variety of different sub-segments of women, whether it be sub-sector, geography, business size (micro, small, medium), and banks need to be very careful to identify the opportunities and to develop real value propositions for different sub-segments. A blanket wide approach will not work, it is too rudimentary.
- Gender disaggregated data. This is an area we see our bank clients really trip up on very early on and leads to a lot of delay: the data-reporting piece and the need to disaggregate by gender. It sounds simple but some 80% of our clients have challenges in this area. To get the women entrepreneurs identified in the database, to get the account opening forms adjusted and embedded in the systems, establishing the baseline and then to report on that baseline on a monthly basis. This is where we bring in our IT and Data Analytics experts to tackle the issue at a very granular field level.
- Front-Line Network Focus. Great things can happen at the Head Office often in innovation and incubation areas, but ultimately it’s about how women clients are treated by staff in the branches. All too often there is a rush to market, but the branch network itself is left out of the equation in all the excitement. There may have been gender sensitization training at the HQ, and even new products and sales approaches developed for women, but these have not been filtered down to the branches. If women come in to the branch and get the same poor service as before this erodes the whole credibility of the proposition very early on.
Beyond this, there is often a lot of work that needs to take place, depending on the market, around the product offering and innovation, branding and communications, and last but not least, around the service offer on the non-financial side. If you already have elements of this, like a for example a corporate university, these can be adapted.
GBA: Speaking of the data analytics piece, many of our banks that are being mentored in our GBA Mentoring Program, cited this as a big challenge. Can you detail how you do this in practice?
Andrew McCartney: There may be some parts of the portfolio where there is sufficient data being captured. We may be able to do a search by common first names; that will allow us to identify the prospective women entrepreneurs, this then gets fed through to the branches, for confirmation, and then to make sure that there is a tag there so we can identify them on the borrowing and saving side. So we’ll use proxies with volume, with names, whatever we can to make that job easier. As well as sorting out what’s not working in terms of the account opening process to make sure what we have going forward the mechanisms to capture what we need. It is messy. Finding SMEs is troublesome but finding women-owned SMEs is even more difficult. Often clients have to go through quite a lengthy data quality and cleansing process, and it can take 6 – 9 months to establish a baseline that can be relied on.
GBA: What is your vision for the Women in Business program at the IFC?
Andrew McCartney: We firmly believe that we have developed a fairly unique combination of investment and advisory to support our clients. We led the piece of work with the G20 in 2010, looking at what worked for financial inclusion for women and we are now committed to at least 25% of our lending from within our portfolio of banks going to women entrepreneurs. This is what drives our vision. If you then look at what came out of that G20 work, there is a three-point action plan that in many ways epitomizes where we want to be. In terms of creating the environment that enables women entrepreneurs. Going forward we need to be doing much more at a country level, so doing country level diagnostics. In conjunction with other partners and the World Bank group we’ll be doing a lot more around the legal and regulatory environment. You will have seen the IFC Women Business and the Law report that came out a few weeks ago. Dealing with women’s access to collateral and trying to make more women formal. 60% to 80% of women are still informal today and this is a major barrier. So having initiatives in conjunction with our banking and other development partners to increase the whole level of formalization are also important. Continuing on the capacity building with financial institutions, as well as increasing the level of research out there and to continue to raise awareness around the opportunity.
The second point is around the need to identify more innovative areas, such as mobile and agriculture, which would allow us to develop more scalable business models.
The third area is around the data side. We are issuing our baseline survey report next month on March 5th, which took 34 banks from across IFC’s portfolio, and assessed their level of gender lending. There is a need to continue to lead efforts to get more gender-disaggregated data, with our clients and our partners, to provide that level of transparency and see where the challenges and opportunities are.
GBA: How can GBA support you in achieving that vision?
Andrew McCartney: Obviously we view the GBA as very much a key strategic partner in the work we do in this space. We are keen always to promote GBA membership, when we talk to our clients. Further opportunities to partner we believe exist in areas like technical assistance and the research side. We look forward to continuing to work closely with the GBA.
—As told to the Global Banking Alliance For Women
