Fostering just transition with ISLF+ contracts
BNP Paribas has been supporting microfinance institutions for more than 35 years, with expertise developed in Sustainability-Linked Loans or SLL, and has been adapting this financial incentive mechanism for over a year, through the ISLF+ contracts. By definition, sustainable and inclusive financing aims to support and accelerate the just transition, while empowering vulnerable people to achieve more ambitious environmental (climate and biodiversity), but also social (inclusiveness) goals. Clients benefit from reduced interest rates or technical assistance and are supported in their actions by the JuST Institute to achieve their predefined objectives, which are then measured against key environmental and social performance indicators.
Two new contracts signed in 2024 ...
BMCI grants a loan of 200 million dirhams to the microfinance institution (MFI) al Amana Microfinance
BMCI, in partnership with the JuST Institute, has launched the first sustainable inclusive financing in the Moroccan market. How? By granting funding of 200 million dirhams (€20 million) over two years in the form of an ISLF+ to the al Amana Microfinance association. The aim of this loan is to expand the sustainable development of microenterprises in Morocco and grow the MFI's network of mobile branches to reach out people living in remote rural areas. This action will be a major step in BMCI's ambition to support Morocco's economic growth, while preserving the environment and contributing to an inclusive and sustainable economy. According to the very principle of the ISLF+ contracts, al Amana Microfinance will benefit from the loan at a preferential rate if it respects the social and environmental performance indicators: the average MFI loan must remain low and in line with the standard of living in Morocco, loans must be targeted at the poorest sections of the population, and al Amana Microfinance is obliged to participate in the JuST Institute certification programme.
Mûre, the first ISLF+ contract signed with an Act For Impact client company
An integral part of the partnership between BNP Paribas and the JuST Institute, this recent transaction with the Mûre community 'restaurant-farm' embodies the extension of ISLF+ type contracts beyond microfinance, to SMEs. This newly signed agreement will refinance the purchase of the Mûre farms in Seine et Marne and the renovation of the buildings necessary for their operation. The ISLF+ will also encourage the production of fruit and vegetables using methods that reduce greenhouse gas emissions, the certification of Mûre's AB (Organic Agriculture) production, and the payment of farm workers above 110% of the minimum wage. The Mûre loan will benefit from a reduced interest rate if this set of “just transition” objectives are achieved.
The aim of these ISLF+ tools is to meet the needs of our clients who have strong social and environmental ambitions. We help them to accelerate their just transition trajectory, which is transformative for their business, by offering them a financial product that incorporates this transition objective.”
… Which follows three initial 'historic' contracts
At the end of 2023, BNP Paribas had already granted three initial loans to three microfinance players in Europe and Brazil: Adie in France, PerMicro in Italy and Banco da Familia in Brazil.
Adie in France
Since the beginning of the partnership between BNP Paribas in France and Adie, dating back more than 30 years, some 180,000 entrepreneurs have been supported by the Group. As part of its 2023 ISLF+ contract, two loans were granted and several objectives are monitored, such as the number of professional loans granted to women or the share of microcredits that finance the environmental transition of its clients and the reduction of the carbon footprint of its activities.
Banco da Familia in Brazil
Banco da Familia is the largest microcredit provider in southern Brazil. The microfinance institution promotes economic development through entrepreneurship in this region, by granting loans to small entrepreneurs. If Banco da Familia meets the performance indicators and their predefined targets, such as the volume of loans dedicated to renewable energy projects or the number of agricultural loans analysed with climate and biodiversity indicators during the year, it will benefit from technical assistance. This will enable its staff to receive training from the JuST Institute training on factoring in climate risk and related to biodiversity erosion.
PerMicro en Italie
PerMicro is also a financial intermediary, specializing in granting microcredits. Designed for people who do not have easy access to traditional bank loans, the company provides small loans to entrepreneurs or households throughout the country. PerMicro’s mission is to create employment opportunities and promote social inclusion. The MFI's services include financial education and support for young businesses. As part of its ISLF+ contract with BNP Paribas, several targets are monitored, such as the volume of microcredits granted to microenterprises run by young people and women, or the value of the portfolio dedicated to financing green technologies and practices.
About the JuST Institute:
Founded in 2022, the Just Sustainability Transitions Institute (JuST Institute) is a non-profit organization whose mission is to develop finance that is inclusive and biodiversity-friendly while contributing to the fight against climate change. To this end, the Institute implements specific tools to increase the volume and quality of sustainable financing for the benefit of people most vulnerable to climate change and biodiversity loss.