Advancements in Principles for Investors in Inclusive Finance: February 2013 Update

1. 27 February 2013 Putting Principles into practice PIIF update

2. PIIF update Putting the Principles into practice • Guidance and support to accompany the Principles • Signatories’ actions: sharing practice • Results of PIIF pilot Reporting Framework

3. Principles for Investors in Inclusive Finance Signatories commit to adhering to and promoting the following: • Expanding the range of financial services available to low-income people • Integrating client protection into all policies and practices • Treating investees fairly, with clear and balanced contracts, and dispute resolution procedures • Integrating ESG factors into policies and reporting • Promoting transparency in all operations • Pursuing balanced long-term returns that reflect the interests of clients, retail providers and end investors • Working together to develop common investor standards on inclusive finance

4. 1. Guidance and support • Client protection initiative • For MIVs only* • Client protection initiative • For MIVs only* • Social commitment initiative • Social commitment initiative • Key:

5. 2. Signatories’ actions: sharing practice

6. 3. Results of Reporting Framework pilot • 28 pilot participants – 15 direct investors and 13 indirect investors • Summary report presents information provided by direct investors only: • Mainly based in Europe and N America • Directly manage US$ 6.5bn in inclusive finance • Findings cannot be generalised to all signatories: • The data is self-reported and not audited • Small sample size • Self-selecting nature of participation in the pilot • Not all signatories reported against all indicators

7. Highlights Strong evidence of implementation, with room for improvement • The pilot found high commitment among direct investor participants to: • invest in retail providers that offer a range of services; • adopting client protection practices; • providing both debt and equity with a range of terms and conditions to investees; • participating in industry-wide initiatives to develop common standards. • Areas where there is room for improvement include: • incentivising social returns; • playing an active role in corporate governance; • investors’ transparency and their encouragement of investees’ transparency on pricing and other terms and conditions to the ultimate client.

8. PIIF 4: Including ESG issues in our investment policies and reporting Environmental performance • Nearly 90% of participants have a procedure to integrate environmental issues into their investment decision making. • This is a larger % than reported by MIVs in Symbiotics 2012 survey (66%).

9. PIIF 4: Active involvement in corporate governance

10. PIIF 5: Actively promoting transparency • Over 90% of participants disclose their policies, criteria and related conditions of products and services to investees and other stakeholders on their websites. • Nearly 70% provide information aligned to the MIV Disclosure Guidelines, whilst half provide information aligned with the Impact Reporting and Investment Standards (IRIS). • 14 out of 15 (93%) of participants report that they ensure that investees adequately disclose the pricing and 13 out of 15 (87%) ensure disclosure of other terms and conditions of financial products offered.

11. PIIF 6: Striving for balanced, long-term social and financial returns

12. Next Steps • Launching October 2013 • Outputs include: • Individual responsible investment reports (public) • Individual assessment reports, carried out by PRI(private) – in development • Aggregated Report on Progress (public) • Transparency tool, intended to encourage dialogue between asset owners and investment / fund managers

13. Discussion