When Credit Suisse took its first steps into the microfinance sector more than 10 years ago, we were driven by what was then coined the “double bottom line” — investments with the objective of dual financial and social returns.
Since that time, many global banks have followed suit and now also engage in microfinance — and increasingly impact investing — to meet business or corporate responsibility objectives.
As the microfinance and impact investing industries evolved and matured, so has the approach of Credit Suisse. Today, our main driver extends beyond the “double bottom line” and into the creation of sustainable shared value with our stakeholders.
So how can a global bank create sustainable shared value in emerging markets?
By combining Credit Suisse’s business and corporate responsibility activities and the different types of funding opportunities these offer, we are able to work with our partners to build a stronger impact investing industry. This enables us to serve the base of the economic pyramid while connecting it to the very top, our clients.
Through the combination of Credit Suisse’s grant-making initiatives and our international skills-based volunteer programs like the Global Citizens Program, Credit Suisse and our employees help strengthen microfinance institutions and other local organizations, while gaining a better understanding in order to better serve our clients’ impact investing interests.
Building on our experience with microfinance, we continue to adapt this approach to other issues at the base of the pyramid such as education, agriculture and health.
1. To ensure sustainable shared value, align with a core business interest or opportunity.
Ten years ago, our private banking clients expressed an emerging interest in socially responsible investing. In response to this, in 2002, Credit Suisse moved into microfinance with the co-founding of responsAbility, which today is one of the leading social investment firms. Launched with seed funding from Credit Suisse, the first private banking microfinance funds also pushed our traditional banking units to innovate and think differently about how we do our work and how we can adapt it to this new sector.
2. Focus on building the foundation for sustainable institutions and systemic change.
By 2007, Credit Suisse investment banking led the first-ever initial public offerings in a growing and maturing microfinance industry. At the time, both client demand for and investment in this new sector were continuing to grow. Yet few microfinance institutions (MFIs) had the financial and management capability to absorb the incoming capital. Despite the opportunity presented, many MFIs were not in a position to scale to take on new clients and markets at the base of the pyramid.
In 2008, Credit Suisse launched the Microfinance Capacity Building Initiative (MCBI) to complement our existing work in private and investment banking. The MCBI was aimed at addressing the management capacity bottleneck that impeded the scalability of the microfinance industry. The objective was to enable more MFIs to serve the billions of financially excluded individuals and further develop the industry. For a bank, this was a “logical” choice from a corporate social responsibility perspective. Our core business is similar to the basic banking concepts of microfinance.
The MCBI’s goal is to enable MFIs to develop the people, products and processes they need to meet their social and financial goals. We work with partners such as Accion, FINCA, Opportunity, PlaNet Finance, Swisscontact, and Women’s World Banking, each of whom can leverage the grant support they receive from Credit Suisse to replicate their work around the world. For example, we support the training and development academies of FINCA and Accion, the research of the Center for Financial Inclusion and the development of electronic wallet strategies of Opportunity International. Through partnerships like these, over two million clients have benefitted from improved financial services.
Alongside our microfinance work, we also launched the Global Education Initiative to support this other vital driver of socio-economic development. Providing young people with a foundation in the basics of finance alongside education and life skills development will improve their ability to manage money and prosper as active members of their community. Since its launch, the Global Education Initiative has worked in partnership with six international not-for-profit organizations, and 2014 marks the beginning of a sharper focus within education: financial education for girls, which aligns with our work in microfinance.
3. Play to your strengths.
In addition to grant funding, our partners both need and benefit from a broad range of expertise, from human resources and technology to finance. The Credit Suisse Global Citizens Program, a skills-based volunteering and leadership development program which places high potential employees with our partners in emerging markets, brings this kind of value to our partners.
Employees address concrete business challenges: a product specialist from Zurich develops savings products in Tanzania, an IT professional from London will network Opportunity MFI branches across Ghana, or an HR specialist from New York may develop performance measurement systems in Colombia.
To have the most effective impact possible from a business and CSR perspective, it is important to leverage our unique strengths as financial services professionals and couple this with grant funding and traditional investment.
At the same time, by creating deep, multi-faceted relationships with each of our partners — such as through immersive employee expertise-sharing programs like the Global Citizens Program — Credit Suisse gains a better understanding of the challenges and opportunities in emerging economies. Investing in relationships with our partners also strengthens the risk management of our investments.
4. Projects founded in shared value speak to the needs of multiple stakeholders.
Credit Suisse’s skills based volunteering programs — including the Global Citizens Program in microfinance and education, virtual volunteering and senior management board positions —deliver thousands of hours of expertise to local partners. The commitment of individuals is exceptional and humbling, and often extends far beyond any single assignment.
In order to deliver this shared value, a holistic approach to partnership is critical. We must align Credit Suisse’s clients’ needs and interests with those of our NGO and impact partners, our employees and the impact industry.
However, our partners and those they serve are not the only ones who benefit. Strong grant relationships have led to partnerships in communications and awareness-raising, as well as in new investment product innovation, for example a local currency note with FINCA, ultimately benefitting the bank’s clients, our partners and the impact industry.
Increased knowledge of, and interaction with, our partners has improved our understanding of industry trends and our ability to manage the risk of our investments. It presents new business opportunities. Employees now drive new product and business development in markets or themes such as health and education. For Credit Suisse, assignments with our partners in the field present an opportunity to attract and develop a corps of responsible leaders and impact specialists who, through their participation in the program, are stretched, challenged and pushed to the next level.
The innovative nature of shared value means that much is still to be learned in this space. Our experience to date shows us that the opportunities are vast. Together with local partners, there are many untapped opportunities that this approach presents for the bank, the impact investment industry, our employees and our clients going forward.
Credit Suisse’s Paul Tregidgo, executive vice president and chairman for debt capital markets at Credit Suisse, will speak about powering business in new markets at Catalyzing Growth in Emerging Markets Conference, this April 7-8 in Washington, D.C. Join the conversation online or in person at pyxeraglobal.org. Follow along Twitter at #Catalyze14.