BNP Paribas, a global leader in banking and financial services, has recently taken a significant step in the microfinance sector.
According to FinTech Finance, the bank, renowned for its expertise in Sustainability-Linked Loans (SLL), has now expanded this innovative financing approach to microfinance through its Inclusive & Sustainability-Linked Financing (ISLF) scheme.
This groundbreaking initiative was announced during the European Microfinance Week. BNP Paribas has granted three ISLFs to microfinance institutions (MFIs) in France, Italy, and Brazil. These loans are distinct in that they incorporate environmental, social, and just transition objectives, reinforcing the commitment of BNP Paribas to sustainable finance.
Delving deeper into the bank’s activities, BNP Paribas has been a steadfast supporter of microfinance institutions for over three decades. The ISLF initiative leverages the bank’s proficiency in SLLs, aiming to adapt these financial tools for microfinance. By achieving specific environmental, social, and just transition goals, the MFIs can benefit from reduced interest rates or receive technical assistance. The JuST Institute collaborates with BNP Paribas in this endeavor, ensuring the achievement of these objectives is rigorously evaluated.
The ISLFs have been allocated to three notable institutions: L’Adie in France, PerMicro in Italy, and Banco da Familia in Brazil. Each institution has tailored objectives, such as increasing loans to women entrepreneurs, financing environmentally sustainable projects, and supporting renewable energy initiatives. These goals underscore a commitment to fostering inclusive and sustainable economic growth.
BNP Paribas’ Head of CSR and Deputy Head of Company Engagement, Laurence Pessez, highlighted the significance of microfinance in supporting microentrepreneurs who lack access to traditional banking. She emphasized the innovative aspect of ISLF, stating, “Microfinance plays a fundamental economic role for microentrepreneurs who do not have access to traditional bank financing and are suffering from climate change and biodiversity loss.
“The most innovative aspect of Inclusive & Sustainability-Linked Financing launched with the JuST Institute is to provide reduced interest rates or technical assistance if environmental, social and just transition goals are met. A winning approach that benefits both microfinance institutions and their clients.”
Additionally, BNP Paribas has been a frontrunner in sustainable finance, ranking No. 1 worldwide and in EMEA by the end of September 2023. This latest initiative further cements its position as a leader in responsible and inclusive financial practices.
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