LAPO Microfinance Bank lays foundation for sustainable finance

Being that its clients need support beyond access to financial services, LAPO Microfinance Bank limited under the Environment, Social Governance (ESG) initiative acts to transform its customers to be agents of environmental conservation, Godwin Ehigiamusoe, managing director/chief executive officer said in this interview with HOPE MOSES-ASHIKE. Excerpt.

Question: LAPO has since 2013 began the implementation of sustainable finance initiative; what is it all about?

Answer: Our sustainable microfinance activities are within LAPO’s Environment, Social, Governance (ESG) Initiative. It consists of a series of activities to promote the welfare of LAPO’s people, and preserve the planet in addition to our quest for superior financial performance. We began by developing a sustainability statement for our microfinance bank.

Question: What is this sustainability statement

Answer: Our sustainability statement states that LAPO MfB is “to be a sustainable Microfinance Bank that supports its partners to become proactive participants in positively impacting the environment and society through sustainable practices, meeting the economic and social needs of its clients while fulfilling the expectations of its stakeholders”. The statement will provide direction for all activities directed at achieving the triple bottom-line of People, Planet and Profit.

 Question: Why is LAPO Microfinance Bank interested in sustainable microfinance?

Answer: As a microfinance institution, LAPO Microfinance Bank cannot afford not to be involved in sustainable finance. This is for a number of reasons. First, is the fact that by the nature and manner of business activities, our clients are active agents on the environment. They often need support beyond access to financial services. LAPO therefore under the Environment, Social Governance (ESG) initiative acts to transform its clients to be agents of environmental conservation. We also seek to enhance our social empowerment activities and encourage transparency in all operations with all our stakeholders.

Question: What are these activities?

Answer: There are many activities that can enable us to achieve the objective of environmental conservation and social empowerment, however through a series of discussion and review sessions we identified some specific activities in the market and workplace domains. In the market domain, we seek to take our clients away from firewood and kerosene as sources of energy particularly for cooking and lighting. LAPO is a major partner in financing our female clients to purchase cooking gas cylinders through our O’Gas initiative with Oando. Our microfinance bank has financed over 21,000 clients and disbursed over 140 million naira which totals 24,200 units of 3kg O’Gas cylinders. We also lend to our clients to acquire solar powered lamps. For the past six months over 1,100 clients have benefited from D.lites solar lamps with disbursement of over 6.7 million naira. On social empowerment and as part of our CSR (corporate social responsibility), the microfinance bank is increasing its contribution to the scholarship awards to children of our clients. This year we are initiating the LAPO Professional Development Scheme (LPDS) in addition to our on-going scholarship programme which will develop existing skill acquisition for our client’s children. We recognise the children are the future of our clients and LAPO is committed to assisting them to secure their future.

In the workplace domain, firstly we have initiated policies that seek restriction on paper usage. To enforce this, we are purchasing industrial printers which will result in reduction of printers in our offices. This centralisation will not only minimize our cost but also result in the diminution of emissions produced. Secondly, to reduce our energy consumption, we are currently implementing key/card electronic meters in all our branches. Thirdly, we realise it is essential to produce a conducive and safe environment for our clients and staff. To implement this, LAPO is driving health and safety measures in the workplace by displaying key signs and training various staff in first aid. Through the listed activities, LAPO aims to determine the impact and her contribution to the bottom-line of Planet, People and Profit.

 Question: how is LAPO MfB sure of the success of the sustainable finance?

I feel we have taken adequate steps to ensure that the objectives of the initiative are realized. First, a standing Board Committee has been established. This is to obtain board buy-in, and sustain its commitment. The committee has been quite supportive of the implementation team. Second, was extensive sensitization of staff at various cadres of microfinance with the intervention of experts, third, is the creation of the ESG Implementation Team. Some of the team members have attended sustainability programmes at the Lagos Business School and University of Edinburgh. They have also attended other capacity enhancing programmes. In addition, LAPO has developed an Environment, Social and Governance (ESG) strategy which sufficiently capture the scope, contents and goals of LAPO MfB’s ESG Initiative.

Question: Is this different from the Social Performance initiative that microfinance community is known for?

Answer: I do not think so. What LAPO MfB is doing under the ESG initiative is to expand the scope of our current social performance initiative to include environmental protection. Our current social performance activities come under the social component of Environment, Social and Governance (ESG) Initiative.

 Does this initiative not involve cost?

Answer: Sure, it does. Implementation of these activities has cost implication. However, we equally believe that ultimately there is net benefit. Properly implemented, ESG’s activities could lead to superior financial performance in addition to the invaluable contribution to environmental conservation and social empowerment of our clients

 How do you see the future of the initiative and implication for the Nigerian microfinance industry?

Answer: With good foundation laid for the initiative, we will focus on two tasks. These are measurement; and reporting and communication. It is only through effective measurement the impact can be tracked and determined at any point in time. We want to know whether the goals are being realized. For instance we want to determine the project’s impact on climate change; the level of social empowerment of our clients, and if activities under the ESG initiative have impact on our financial performance. We shall be willing to share our experience among desiring microfinance banks. The next is to communicate and propagate the concept and practice of sustainable microfinance. I am optimistic that many actors in the Nigerian Microfinance sector will adapt to sustainable finance. It is already popular among commercial banks.