Inclusive finance

We finance leading values-based organisations working in microfinance and financial inclusion across the world, because they provide access to fair and transparent financial services for people and small businesses. Bringing people into the financial system spurts social and economic development and contributes to achieving many of the Sustainable Development Goals.

Access to finance offers a lifeline to millions of people enabling them to better manage their daily life, cope with unexpected difficulties, fulfil aspirations and plan for the future. Yet, there are still two billion people worldwide who are excluded from basic financial products and services.

We have set priorities about what to finance and how to extend our impact through our activities based on our experience and expertise in these sectors.

Evolving and expanding sector

As an early and pioneering investor (since 1994), inclusive finance has always been a key priority for us. We have seen the inclusive finance sector rapidly evolve and expand, especially over the past decade. The sector has shown that those with low incomes are bankable and can be offered financial services in a sustainable way.

A rising number of global, national and local leaders have come to acknowledge that access to financial services is an important prerequisite for economic and social development in developing countries and emerging economies. Financial inclusion is therefore increasingly a priority for many governments and international forums, and also reflected in the United Nations’ Sustainable Development Goals. Not as a goal in itself but as a powerful tool to reach many of the most important development objectives.

What does the future of inclusive finance hold?

Two global trends in particular will impact and shape the inclusive finance sector with important implications for our activities. New technologies will impact on the financial services industry and the growth in purchasing power of lower income populations developing countries and emerging economies. The sector focuses on fulfilling basic needs, such as housing, water and sanitation, education and healthcare. As they have matured, financial institutions have also embraced opportunities to finance projects that have a positive impact on the environment. This makes inclusive finance a cross-cutting theme, taking in a range of issues.

We are also looking forward to further developing and executing multiple strategies to engage the small and medium enterprise market segment for their job creation capacity, with a particular interest in renewable energy and sustainable agriculture. By investing in these sectors and building on the in-depth knowledge and experience of Triodos Group as a result, we want to promote access to renewable energy and contribute to sustainable development of the agricultural sector in developing countries.

We aim to be a leader in impact-driven reporting in the financial industry. Our focus is on managing impact in ways that improve people’s quality of life and on communicating this impact to our stakeholders.

We believe that social inclusion improves with financial inclusion. We fund values-based organisations working for inclusive finance across the world, because they provide access to fair and transparent financial services for people and small businesses. Bringing people into the financial system spurs social and economic development and contributes to achieving multiple SDGs.

At year-end 2022, Triodos Investment Management’s financial inclusion funds financed 113 financial service providers (2021: 111) in 47 countries. These values-based institutions vary from small NGOs working in underdeveloped markets to digital lending platforms and fully fledged banks that offer access to a range of fair and transparent financial services for people and small businesses.

Together, these financial service providers reached approximately 19.9 million individuals in 2022, saving for unexpected expenses and their future (2021: 18.6 million).

Some 20.3 million borrowers were reached who used the funding to start or expand their business, generate income and better manage their daily lives (2021: 17.8 million). Two-thirds of them live in rural areas.

The increased number of savers and borrowers is coming from new investments and recovery and reactivation from COVID-19 and is related to highly qualified professionals and business from Russia, Ukraine and Belarus who have shifted their finance to financial service providers in neighbouring countries in which we invest.

Of the loan clients, 80% are female. Women in developing countries and emerging economies are often in a disadvantaged position. Giving women the freedom to manage their income and to support their families empowers their position and has been shown to have a greater economic impact overall.