Universal

Standards for
Social and
Environmental
Performance
Management
February 2022

cerise-SPTF.org
 Universal Standards for Social and Environmental Performance Management

Dear Reader,

Thank you so much for being part of the Cerise+SPTF community. We are delighted to
share this important resource with you.

The Universal Standards for Social and Environmental Performance Management (“the
Universal Standards”) is a comprehensive manual of best practices that cover seven
different dimensions of a financial institution’s operations—strategy, governance, client-
centric product design, client protection, responsible human resource development,
responsible growth and profits, and environmental performance management.
Collectively, the Universal Standards help financial service providers put clients and the
environment at the center of all strategic and operational decisions, with the result that
clients benefit from using financial products and services. Additionally, implementing
the Universal Standards strengthens providers’ financial sustainability, because doing
good for people and planet is also good for business.

The Universal Standards were developed, tested, refined, and finalized by financial
service providers all over the world, so they are highly practical. They do not just
describe a vision or set forth high-level principles. Instead, the Universal Standards
provide a clear roadmap that financial service providers can follow to achieve their
goals. First launched in 2012 and now in their third edition, the Universal Standards
have stood the test of time and proven relevant in many different geographic contexts,
for many different types of providers.

This is a very rich and detailed resource. You may ask yourself, “Where to begin?“ The
answer is there is no one right place. Two common choices are to start with relatively
simple and inexpensive changes (“quick wins”), or by addressing gaps where you see
urgent need for improvement. Or, you may want to begin with an assessment of your
current state of practice across all dimensions. In all cases, you will choose where to
begin based on your priorities, resources, and current state of practice.

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 Universal Standards for Social and Environmental Performance Management

Whether you are interested in one dimension, or a few, or all of them, strengthening
social and environmental performance has four basic stages:

Please visit our website for resources that will help you at every stage of your journey.

We love to hear from you, so please do not hesitate to email us to ask questions or to
share your experiences.

Wishing you well,

Laura and Cecile

3
 Universal Standards for Social and Environmental Performance Management

1
Dimension

Social Strategy
1A. The provider has a strategy to achieve its social goals.
1B. The provider collects, analyzes, and reports data that are specific to its social goals.

2
Dimension

Committed Leadership
2A. Members of the board of directors hold management
accountable for achieving the provider’s social goals.
2B. Senior management is responsible for implementing the
provider’s strategy for achieving its social goals.

3 Client-Centered
Dimension

Products and Services

3A. The provider collects and analyzes data to understand clients’ needs.
3B. The provider’s products, services, and channels benefit clients.

4 Client Protection
Dimension

4A. The provider does not overindebt clients.

4B. The provider gives clients clear and timely information to support client
decision making.
4C. The provider enforces fair and respectful treatment of clients.
4D. The provider secures client data and informs clients about their data rights.
4E. The provider receives and resolves client complaints.

4
 Universal Standards for Social and Environmental Performance Management

5 Responsible Human
Dimension

Resource Development
5A. The provider creates a safe and equitable work environment.
5B. The provider’s Human Resource Development system is designed to attract and
maintain a qualified and motivated workforce.
5C. The provider’s Human Resource Development system supports its social strategy.

6
Responsible Growth
Dimension

and Returns
6A. The provider manages growth in a way that promotes its social goals and
mitigates risks to clients.
6B. The provider sets prices responsibly.
6C. The provider uses profits responsibly.

7 Enviromental Performance
Dimension

Management
7A. The provider has an environmental strategy and systems in place to implement it.
7B. The provider identifies and manages environmental risks and opportunities.
7C. The provider offers financial and non-financial products and services to achieve its
environmental goals.

5
 Universal Standards for Social and Environmental Performance Management

Social
7 Strategy 2
Environmental Committed
Performance Leadership
Management

Client-
Responsible Centered

6 Growth and
Returns
Products and
Services 3

Responsible
Human Client
Resource Protection
Development

5 4

6
 1

Social
7 Strategy 2
Environmental Committed
Performance Leadership
Management

Client-
Responsible Centered

6 Growth and
Returns
Products and
Services 3

Responsible
Human Client
Resource Protection
Development

5 4

Dimension 1

Social Strategy

1A. The provider has a strategy to achieve its social goals.

1B. The provider collects, analyzes, and reports data that are
specific to its social goals.
 DIMENSION 1 | Social Strategy

STANDARD

1A. THE PROVIDER HAS A STRATEGY TO ACHIEVE ITS

SOCIAL GOALS.

Essential Practice Indicators / Details

1.A.1 THE STRATEGY 1.A.1.1 The strategy defines the demographic and socioeconomic
SPECIFIES THE characteristics of target clients.
PROVIDER’S TARGET
CLIENTS, SOCIAL 1.A.1.2 The strategy identifies the benefits that the provider seeks to
create for clients, such as:
GOALS, AND HOW
- providing access to the previously excluded
THE PROVIDER WILL
- reducing vulnerability to shocks
ACHIEVE THOSE
- building assets / Investing in economic opportunities
GOALS.
- creating jobs

1.A.1.3 The strategy describes how the provider’s products and services
create positive change for clients.

1.A.1.4 The provider defines a “do no harm” strategy that articulates how
it will mitigate the social risks connected to the use of its products and
services:

1.A.1.4.1 Negative effects on clients and their households

1.A.1.4.2 Human rights violations
1.A.1.4.3 Corruption and bribery

Essential Practice Indicators / Details

1.A.2 THE STRATEGY DEFINES 1.A.2.1 The provider has at least one measurable indicator for each social
INDICATORS AND goal.
TARGETS TO MEASURE
THE PROVIDER’S 1.A.2.2 The provider has at least one measurable output and/or outcome
target for each social goal.
PROGRESS TOWARD
SOCIAL GOALS.

Universal Standards for Social and Environmental Performance Management 8

 DIMENSION 1 | Social Strategy

STANDARD

1B. THE PROVIDER COLLECTS, ANALYZES, AND REPORTS

DATA THAT ARE SPECIFIC TO ITS SOCIAL GOALS.

Essential Practice Indicators / Details

1.B.1 THE PROVIDER 1.B.1.1 The provider has protocols for social performance data
COLLECTS DATA collection that identify who collects the data, how, and when.
ON OUTCOMES FOR
CLIENTS AND THEIR 1.B.1.2 The provider ensures the accuracy of the social performance
data that it collects.
HOUSEHOLDS.

1.B.1.2.1 Employees in relevant positions receive specific training on

social performance data collection and entry.
1.B.1.2.2 The provider validates client data by periodic internal audit
or management review, including some field-level checks.

1.B.1.3 The provider collects data on an ongoing basis to measure

whether it is achieving its social goals.

1.B.1.3.1 The provider collects quantitative data that measure both

positive and negative changes for clients and their households.
Minimum frequency: annually
1.B.1.3.2 The provider collects qualitative data that measures both
positive and negative changes for clients and their households.
Minimum frequency: annually

Universal Standards for Social and Environmental Performance Management 9

 DIMENSION 1 | Social Strategy

Essential Practice Indicators / Details

1.B.2 THE PROVIDER 1.B.2.1 The provider stores data on social performance in its
ANALYZES OUTCOMES management information system (MIS) in a way that allows for
DATA BY CLIENT combined analysis of a client’s financial and social data.

SEGMENT.
1.B.2.2 The provider analyzes outcomes for different segments of
clients according to their profile and financial behavior. Minimum
frequency: annually

1.B.2.2.1 By client profile: gender; age; location (urban/rural); poverty/

income level
1.B.2.2.2 By financial behavior: types of products or services used;
tenure with the provider
1.B.2.2.3 Other segments that are relevant to the provider’s social
goals (please specify):

Essential Practice Indicators / Details

1.B.3 THE PROVIDER 1.B.3.1 The provider conducts a social audit. Minimum frequency: every
REPORTS SOCIAL three years

PERFORMANCE DATA
1.B.3.2 The provider publishes a report that includes social
INTERNALLY AND
performance data. Minimum frequency: annually
EXTERNALLY.

1.B.3.3 The provider discusses social performance results with

employees. Minimum frequency: annually

Universal Standards for Social and Environmental Performance Management 10

 Client
protection
indicator

Social
7 Strategy 2
Environmental Committed
Performance Leadership
Management

Client-
Responsible Centered

6 Growth and
Returns
Products and
Services 3

Responsible
Human Client
Resource Protection
Development

5 4

Dimension 2

Committed
Leadership

2A. Members of the board of directors hold management

accountable for achieving the provider’s social goals.
2B. Senior management is responsible for implementing
the provider’s strategy for achieving its social goals.
 DIMENSION 2 | Committed Leadership

STANDARD

2A. MEMBERS OF THE BOARD OF DIRECTORS HOLD

MANAGEMENT ACCOUNTABLE FOR ACHIEVING THE
PROVIDER’S SOCIAL GOALS.
Essential Practice Indicators / Details

2.A.1 BOARD COMPOSITION 2.A.1.1 The board has an active social performance management (SPM)
REFLECTS THE committee or equivalent body.
PROVIDER’S SOCIAL
STRATEGY AND 2.A.1.2 At least one board member has direct work experience with the
provider’s target clients.
SOUND GOVERNANCE
PRACTICES.
2.A.1.3 At least 20% of board members are women.

2.A.1.4 The board includes members whose nationality/ethnicity is

representative of the provider’s target clients.

Essential Practice Indicators / Details

2.A.2 THE PROVIDER TRAINS 2.A.2.1 During new member orientation or subsequent training, the
BOARD MEMBERS provider trains each board member on the following:
ON THEIR SOCIAL
2.A.2.1.1 The provider’s social goals.
PERFORMANCE
2.A.2.1.2 The board’s role in managing the provider’s social performance.
MANAGEMENT
2.A.2.1.3 The Universal Standards for Social and Environmental
RESPONSIBILITIES.
Performance Management.

2.A.2.2 Each board member signs an agreement that details his/her

social performance responsibilities.

2.A.2.3 New board members have direct exposure to clients within the
first year of joining the board.

Universal Standards for Social and Environmental Performance Management 12

 DIMENSION 2 | Committed Leadership

Essential Practice Indicators / Details

2.A.3 THE BOARD MAKES 2.A.3.1 The board uses the following data, provided by management, to
STRATEGIC DECISIONS monitor client protection. Minimum frequency: annually
BASED ON SOCIAL AND
FINANCIAL DATA. 2.A.3.1.1 Analysis of the risk of client over-indebtedness.
2.A.3.1.2 Analysis of client dissatisfaction: rates of client dormancy and
drop-out, results of exit surveys, and client complaints.
2.A.3.1.3 Interest rates and whether they are responsible.
2.A.3.1.4 Reports on the provider’s systems for data privacy and
security, particularly any failures or breaches.
2.A.3.1.5 Reports on any fraud or corruption, including extortion
and bribery.

2.A.3.2 The board uses the following data, provided by management,

to monitor the provider’s social strategy (with the listed minimum
frequency):

2.A.3.2.1 Outcomes data. Minimum frequency: annually

2.A.3.2.2 The provider’s most recent social audit. Minimum frequency:
every three years
2.A.3.2.3 How profits are allocated, and whether profit allocation is
aligned with the provider’s social strategy. Minimum frequency: annually

2.A.3.3 The board uses the following data, provided by management, to

monitor decent work conditions for employees (with the listed minimum
frequency):

2.A.3.3.1 Employee turnover rate, by gender. Minimum frequency:

annually
2.A.3.3.2 Analysis of employee satisfaction surveys. Minimum frequency:
every two years

2.A.3.4 The board takes corrective action when it identifies risks to

clients, risks to employees, or when the provider is not achieving its
social goals.

Universal Standards for Social and Environmental Performance Management 13

 DIMENSION 2 | Committed Leadership

Essential Practice Indicators / Details

2.A.4 BOARD OVERSIGHT OF 2.A.4.1 The board includes social targets in the CEO/Managing Director’s
SENIOR MANAGEMENT performance evaluation.
IS ALIGNED WITH THE
PROVIDER’S SOCIAL 2.A.4.2 The board formally assesses the CEO/Managing Director on
GOALS. achievement of social performance targets. Minimum frequency: annually

2.A.4.3 The Board oversees executive compensation.

2.A.4.3.1 If executive compensation is in part incentive-based, executives

are incentivized on both social and financial performance criteria.
2.A.4.3.2 The board calculates the difference between the average
annual compensation of executives and field employees and is able to
justify any ratio higher than 25:1. Minimum frequency: annually
2.A.4.3.3 The board reviews the compensation of the CEO/Managing
Director and senior executives to ensure that compensation is
comparable to providers with similar social commitment. Minimum
frequency: annually

Essential Practice Indicators / Details

2.A.5 THE BOARD IS 2.A.5.1 During times of crisis, the board monitors how clients and
RESPONSIBLE FOR employees are affected and takes action to protect and support them.
PRESERVING THE
PROVIDER’S SOCIAL 2.A.5.2 During periods of institutional change, the board uses client data
GOALS DURING
to check whether strategic decisions are consistent with the provider’s
TIMES OF CRISIS
OR INSTITUTIONAL social goals and target clients.
CHANGE.

Universal Standards for Social and Environmental Performance Management 14

 DIMENSION 2 | Committed Leadership

STANDARD

2B. SENIOR MANAGEMENT IS RESPONSIBLE FOR

IMPLEMENTING THE PROVIDER’S STRATEGY FOR
ACHIEVING ITS SOCIAL GOALS.

Essential Practice Indicators / Details

2.B.1 THE PROVIDER 2.B.1.1 The provider includes its social goals and targets in the business
INCLUDES SOCIAL plan or operational plan.
GOALS IN ITS
OPERATIONAL 2.B.1.2 The CEO/Managing Director formally assesses senior managers
on their achievement of social performance targets. Minimum frequency:
PLAN AND THE
annually
CEO/MANAGING
DIRECTOR HOLDS
SENIOR MANAGERS
ACCOUNTABLE FOR
ACHIEVING SOCIAL
TARGETS.

Universal Standards for Social and Environmental Performance Management 15

 DIMENSION 2 | Committed Leadership

Essential Practice Indicators / Details

2.B.2 MANAGEMENT 2.B.2.1 Senior management analyzes the following data and
MAKES STRATEGIC assesses risks. Minimum frequency: annually
AND OPERATIONAL
DECISIONS BASED 2.B.2.1.1 Analysis of client protection risks (over-indebtedness, unfair
treatment, lack of transparency, privacy of client data, complaints, fraud,
ON SOCIAL AND
corruption and bribery)
FINANCIAL DATA.
2.B.2.1.2 Analysis of outcomes for clients and their households
2.B.2.1.3 Analysis of decent work conditions (health and safety,
compensation and benefits, working conditions)

2.B.2.2 Internal audit and/or risk management integrates the following

criteria into regular monitoring activities:

2.B.2.2.1 Client repayment capacity, loan approval analysis,

prevention of aggressive sales
2.B.2.2.2 Transparency to clients
2.B.2.2.3 Compliance with code of conduct; prevention of fraud and
corruption
2.B.2.2.4 Collateral seizing and appropriate debt collection practices
2.B.2.2.5 Client data misuse and fraud
2.B.2.2.6 Complaints handling, including review of a sample of cases

2.B.2.3 Management takes corrective action when it identifies risks to

clients, risks to employees, or when the provider is not achieving its
social goals

Universal Standards for Social and Environmental Performance Management 16

 Client
protection
indicator

Social
7 Strategy 2
Environmental Committed
Performance Leadership
Management

Client-
Responsible Centered

6 Growth and
Returns
Products and
Services 3

Responsible
Human Client
Resource Protection
Development

5 4

Dimension 3

Client-Centered
Products and
Services
3A. The provider collects and analyzes data to understand clients’ needs.
3B. The provider’s products, services, and channels benefit clients.
 DIMENSION 3 | Client-Centered Products and Services

STANDARD

3A. THE PROVIDER COLLECTS AND ANALYZES DATA TO

UNDERSTAND CLIENTS’ NEEDS.

Essential Practice Indicators / Details

3A1. THE PROVIDER 3.A.1.1 Before introducing new products, services, or delivery channels,
CONDUCTS MARKET the provider conducts market research that includes gathering the
RESEARCH AND PILOT following data about its target clients:
TESTING.
3.A.1.1.1 Analysis of market share, market saturation, and potential
market
3.A.1.1.2 Client profile data, including gender, age, location (urban/rural),
and poverty/income level
3.A.1.1.3 Data on clients’ needs, goals, and any obstacles to using
financial services

3.A.1.2 The provider conducts pilot tests before introducing a new

product or making significant changes to an existing product.

3.A.1.2.1 The provider pilot tests products among clients with different
socioeconomic and demographic characteristics.
3.A.1.2.2 The provider collects feedback on pilot products from both
employees and clients.

Universal Standards for Social and Environmental Performance Management 18

 DIMENSION 3 | Client-Centered Products and Services

Essential Practice Indicators / Details

3A2. THE PROVIDER USES 3.A.2.1 The provider analyzes transactional data (PAR, average loan size,

DATA TO IDENTIFY loan repayments, savings deposits and withdrawals) by demographic and
socioeconomic segments of its clients.
PATTERNS OF
FINANCIAL BEHAVIOR
3.A.2.2 The provider analyzes product use (types and frequency) by
BY CLIENT SEGMENT.
demographic and socioeconomic segments of its clients.

Essential Practice Indicators / Details

3A3. THE PROVIDER 3.A.3.1 The provider conducts client satisfaction surveys. Minimum

COLLECTS CLIENT frequency: every other year

FEEDBACK ON THEIR
3.A.3.2 The provider conducts interviews with dormant and/or exiting
EXPERIENCES USING
clients to look for evidence of product design failures.
THE PROVIDER’S
PRODUCTS AND
3.A.3.3 The provider investigates whether stresses at the household level
SERVICES. make it more difficult for clients to use its products and services.

Universal Standards for Social and Environmental Performance Management 19

 DIMENSION 3 | Client-Centered Products and Services

STANDARD

3B. THE PROVIDER’S PRODUCTS, SERVICES, AND

CHANNELS BENEFIT CLIENTS.
Essential Practice Indicators / Details

3B1. THE PROVIDER USES 3.B.1.1 The provider designs new products, services (financial and non-
INSIGHTS FROM CLIENT financial), and delivery channels using insights from market and pilot
DATA TO DESIGN studies, client feedback, and client outcomes data.

PRODUCTS, SERVICES,
3.B.1.2 The provider modifies its existing products and services in
AND DELIVERY
response to clients’ needs, feedback, and outcomes.
CHANNELS.

3.B.1.3 The provider dedicates resources (funds and employee time)

for ongoing development and improvement of products, services, and
delivery channels.

Essential Practice Indicators / Details

3B2. THE PROVIDER 3.B.2.1 The provider offers loan sizes and loan terms that are suited to
REMOVES BARRIERS the client’s economic profile, cash flow, and business type.

THAT PREVENT
3.B.2.2 The provider offers delivery channels that reduce barriers to
ACCESS TO FINANCIAL
access for clients.
PRODUCTS AND
SERVICES.
3.B.2.2.1 The provider offers clients multiple delivery channels.
3.B.2.2.2 The provider uses technologies that are appropriate to the
digital literacy of the target clients.

3.B.2.3 If the provider offers savings, it sets minimum requirements and

withdrawal conditions that are compatible with the cash flows of the
target clients.

Universal Standards for Social and Environmental Performance Management 20

 DIMENSION 3 | Client-Centered Products and Services

Essential Practice Indicators / Details

3B3. THE PROVIDER’S 3.B.3.1 The provider tailors repayment schedules to the client’s cash
PRODUCTS, SERVICES, flows and type of business.
AND CHANNELS
3.B.3.2 The provider’s collateral and guarantor requirements do not
PROTECT CLIENTS
create severe hardship for clients.
FROM HARM.

3.B.3.2.1 The provider has a list of assets that cannot be pledged as

collateral, which includes items that would create severe hardship or
significant loss of income earning ability for the client.
3.B.3.2.2 Collateral valuation is based on a verifiable market price/
resale value. The credit committee or second level approval verifies
the collateral valuation.
3.B.3.2.3 The minimum requirement for the value of collateral does
not exceed two times the loan amount, and cash collateral does not
exceed 20% of the loan amount.
3.B.3.2.4 If the provider collects title documents, it returns them to
the client once the loan is repaid.

3.B.3.3 The provider accepts alternative forms of collateral from clients

whose gender or age creates barriers to access in the local context.

3.B.3.4 If the provider lends in hard currency, it informs clients of the

foreign exchange risk using cost scenarios. The provider can also justify
the decision not to lend in local currency.

3.B.3.5 If the client business is related to sectors known to have high

social risks, the provider conducts additional due diligence to mitigate
risk.

Universal Standards for Social and Environmental Performance Management 21

 DIMENSION 3 | Client-Centered Products and Services

3.B.3.6 If the provider offers voluntary insurance, it assesses the value

of insurance products to clients.

3.B.3.6.1 The provider analyzes data on product use: product uptake,

claims ratio, renewal rate, and coverage ratio.
3.B.3.6.2 The provider analyzes data on how it processes claims:
claims rejection ratio, average time for claim’s resolution, reasons for
rejection of claims, reasons for lapses in coverage.
3.B.3.6.3 The provider analyzes data on client experience with
insurance: demographics of those covered, complaints, client
satisfaction.
3.B.3.6.4 If the claims ratio for life insurance is below 60%, the
provider asks the insurance provider to justify the reason.

3.B.3.7 If the provider uses agents, it monitors agent liquidity and

whether agents respect client protection practices, and has mechanisms
to address problems as needed.

3.B.3.8 If the provider uses digital channels, it monitors whether the

following problems occur and has mechanisms to address problems as
needed:

3.B.3.8.1 Transaction errors such as transactions that are not

completed or are incorrectly completed; funds transferred to an
incorrect account; funds sent to a receiver who was not able to cash
out the funds within a certain period of time
3.B.3.8.2 System malfunctions such as extended outage, scheduled
downtime, or processing delays

Universal Standards for Social and Environmental Performance Management 22

 DIMENSION 3 | Client-Centered Products and Services

Essential Practice Indicators / Details

3B4. THE PROVIDER’S 3.B.4.1 The provider offers products and services for basic needs, such as
PRODUCTS AND housing, energy, and education.

SERVICES HELP
3.B.4.2 The provider offers products and services that help clients
CLIENTS REDUCE THEIR
maintain stable levels of expenditure despite income fluctuation or
VULNERABILITY TO
emergencies. Select all that apply:
SHOCK AND SMOOTH
CONSUMPTION.
3.B.4.2.1 Emergency loans
3.B.4.2.2 Savings with an easy withdrawal process
3.B.4.2.3 Voluntary insurance
3.B.4.2.4 Non-financial services

Essential Practice Indicators / Details

3B5. THE PROVIDER’S 3.B.5.1 The provider offers training to clients in areas where they have

PRODUCTS AND skill gaps that prevent them from achieving their goals.

SERVICES HELP
3.B.5.2 The provider offers products/services that enable clients to
CLIENTS ACHIEVE
invest in economic opportunities such as business loans for start-up,
THEIR GOALS.
working capital, and investment.

3.B.5.3 The provider offers products/services for major life events such
as weddings, maternity care/child birth, housing, higher education, and
funerals.

Universal Standards for Social and Environmental Performance Management 23

 1

Social
7 Strategy 2
Environmental Committed
Performance Leadership
Management

Client-
Responsible Centered

6 Growth and
Returns
Products and
Services 3

Responsible
Human Client
Resource Protection
Development

5 4

CP
Dimension 4

Client Protection

4A. The provider does not overindebt clients.

4B. The provider gives clients clear and timely information to
support client decision making.
4C. The provider enforces fair and respectful treatment of clients.
4D. The provider secures client data and informs clients about
their data rights.
4E. The provider receives and resolves client complaints.
 DIMENSION 4 | Client Protection

STANDARD

4A. THE PROVIDER DOES NOT OVERINDEBT CLIENTS.

Essential Practice Indicators / Details

4A1. THE PROVIDER MAKES 4.A.1.1 The provider has a policy and documented process for loan
LOAN DECISIONS approvals.
BASED ON A CLIENT’S
REPAYMENT CAPACITY. 4.A.1.1.1 The percentage of a borrower’s disposable income that
can be applied to debt service may not be higher than 70%,
including debt from the provider and other lenders.
4.A.1.1.2 Loan approval decisions are made by at least two people,
one of whom does not interact directly with the client.
4.A.1.1.3 If a credit bureau exists, the provider reports client data to
credit bureaus and uses credit reports in the approval process for
loans.
4.A.1.1.4 If the provider offers group loans, either the provider or
fellow group members conduct due diligence for each group
member.

4.A.1.2 The provider conducts a cash flow analysis to evaluate

repayment capacity.

4.A.1.2.1 The provider conducts a cash flow analysis that considers

income, expenses and debt service related to business and
family, and any other sources of revenue, including informal
sources.
4.A.1.2.2 The provider does not use guarantees, guarantor income,
collateral, and/or insurance coverage as proxies for repayment
capacity or as the main basis for loan approval.

Universal Standards for Social and Environmental Performance Management 25

 DIMENSION 4 | Client Protection

4.A.1.3 The provider’s policy on loan prepayment specifies the

conditions under which it is acceptable for clients to pay a loan early
in order to take a new loan.

4.A.1.3.1 When the client applies for prepayment to get another loan,
the provider specifies a time period and/or percentage of the active
loan’s principle that must be repaid before being eligible for a new
loan.
4.A.1.3.2 When the client is taking another loan immediately after
prepayment, the provider conducts a new cash flow analysis.

4.A.1.4 If the loan approval analysis is done through an algorithm,

the provider reviews how well the algorithm functions. Minimum
frequency: annually

4.A.1.4.1 The provider reviews the effectiveness of the algorithm for

predicting client repayment.
4.A.1.4.2 The provider checks its algorithms for bias against Protected
Categories and corrects as needed.

Essential Practice Indicators / Details

4A2. THE PROVIDER 4.A.2.1 Senior management monitors portfolio quality to identify over-
MONITORS THE indebtedness risk. Minimum frequency: monthly
MARKET AND
RESPONDS TO 4.A.2.1.1 The provider analyzes portfolio quality by branch, product, and
HEIGHTENED OVER- client segment.
INDEBTEDNESS RISK. 4.A.2.1.2 The provider tracks restructured, rescheduled, or refinanced
loans.

4.A.2.2 The provider defines PAR levels that trigger additional internal
monitoring and response.

4.A.2.3 If the provider’s total credit risk has averaged more than 10%
during any quarter in the past three years, the provider has taken
corrective measures.

Universal Standards for Social and Environmental Performance Management 26

 DIMENSION 4 | Client Protection

STANDARD

4B. THE PROVIDER GIVES CLIENTS CLEAR AND TIMELY

INFORMATION TO SUPPORT CLIENT DECISION MAKING.
Essential Practice Indicators / Details

4B1. THE PROVIDER IS 4.B.1.1 The provider gives a Key Facts Summary Document to borrowers
TRANSPARENT ABOUT before they sign a contract. The document contains the following
PRODUCT TERMS, information:
CONDITIONS, AND - Total loan amount
- Pricing, including all fees
PRICING.
- Total cost of credit: all principal, interest, and fees plus cash
collateral
- Disbursement date and loan term
- Repayment schedule with principal and interest amounts, number,
and due dates of all repayment installments
- All deductions from principal disbursement (e.g., first installment,
commissions, fees, cash collateral, taxes), if applicable
- How cash collateral / manadatory savings can be used in case of
default, if applicable
- Moratorium interest rates, terms, and conditions, if applicable

4.B.1.2 Loan contracts include the following information, as applicable to

the product:
- Grace period
- Mandatory savings / mobile wallet amount
- Automatic account debiting mechanisms
- Linked products
- Member or guarantor obligations
- Collateral requirements and seizing procedures
- Consequences of late payment and default
- Prepayment conditions: whether it is possible and how it affects the
cost
- Whether terms and conditions can change over time and how that
would affect clients

4.B.1.3 Loan contracts are available in the major local languages.

Universal Standards for Social and Environmental Performance Management 27

 DIMENSION 4 | Client Protection

4.B.1.4 The provider communicates product information in a way that

supports informed decision making by clients.

4.B.1.4.1 The provider publishes basic product information, including

pricing, at branch or agent locations, or digitally as applicable.
4.B.1.4.2 The provider communicates APR/EIR (or MPR if the majority of
loans are under 3 months) in the Key Facts Summary and/or the loan
contract.
4.B.1.4.3 The provider’s communications are in simple and local
language; oral information is used for less literate clients.
4.B.1.4.4 The provider’s marketing materials do not deceive or mislead
clients.

4.B.1.5 If the provider uses agents, it verifies that they provide to clients
documentation of their fees, terms of service, and cancellation
conditions.

4.B.1.6 If the provider offers savings, documentation includes the

following:
- Fees, including closure fees
- Interest rate and how amounts will be calculated
- Minimum and maximum balance requirements
- Whether deposits are governmentally insured

4.B.1.7 If the provider offers payments, it gives the following information

to clients who are initiating or receiving money transfers, or using
other payment services:
- Amount paid by sender, in sender’s currency
- Estimated exchange rate
- Amount to be received in the destination currency
- Fees
- Instructions for collecting payment
- Cancellation conditions
- Instructions for resolving errors
- Transaction confirmation
- Taxes
- Linked products (if any)

Universal Standards for Social and Environmental Performance Management 28

 DIMENSION 4 | Client Protection

4.B.1.8 If the provider offers insurance, it gives clients the following

information at the time of enrollment:
- A certificate of coverage which states, at minimum, the premium,
amount and term of coverage, who are the beneficiaries, which events
are covered, any major exclusions, and when and how to file a claim
- An explanation of the documentation required to prove damage, if
applicable
- Terms related to cancellation and prepayment, if applicable

4.B.1.9 If the provider offers insurance, it provides beneficiaries with

timely information during the claims process.

4.B.1.9.1 The provider notifies the beneficiary within 30 days of making

a decision about the claim.
4.B.1.9.2 When the claim decision results in a settlement, the provider
notifies the beneficiary within 30 days of the settlement. If the claim is
denied, the provider notifies the beneficiary of the reason and gives an
opportunity for appeal.

Essential Practice Indicators / Details

4B2. THE PROVIDER 4.B.2.1 The provider gives clients the opportunity to review the terms
COMMUNICATES and conditions of products.

WITH CLIENTS AT
4.B.2.1.1 The provider offers a channel for clients to ask questions and
APPROPRIATE TIMES
receive additional information prior to signing contracts.
AND THROUGH
4.B.2.1.2 The provider gives clients notice and the opportunity to opt
APPROPRIATE
out before automatically renewing a voluntary product.
CHANNELS.
4.B.2.2 The provider gives clients a completed, signed copy of the
contract and makes the contract accessible anytime in an online
account or in physical form.

Universal Standards for Social and Environmental Performance Management 29

 DIMENSION 4 | Client Protection

4.B.2.3 The provider gives clients clear and accurate account balance
information in the following ways:

4.B.2.3.1 Providing access to their up-to-date loan or savings balance

upon request.
4.B.2.3.2 Sending automatic messages to clients whenever there is an
automatic deduction from the client account.
4.B.2.3.3 Providing receipts, on paper or electronically, for every
transaction.

4.B.2.4 If loan repayments are automatically debited from a client

account, the provider sends clients a loan repayment reminder at
least one day before loan repayments are due.

Universal Standards for Social and Environmental Performance Management 30

 DIMENSION 4 | Client Protection

STANDARD

4C. THE PROVIDER ENFORCES FAIR AND RESPECTFUL

TREATMENT OF CLIENTS.
Essential Practice Indicators / Details

4C1. THE PROVIDER’S CODE 4.C.1.1 The provider’s code of conduct states the organizational values,
OF CONDUCT REQUIRES standards of professional conduct, and treatment of clients that it

FAIR AND RESPECTFUL expects of all employees, and defines the sanctions to apply in case
of a breach.
TREATMENT OF
CLIENTS.
4.C.1.2 The provider’s policies prohibit the following:

4.C.1.2.1 Corruption, theft, kickbacks, fraud

4.C.1.2.2 Client intimidation: using abusive language, using physical
force, limiting physical freedom, sexual harassment, shouting at the
client, entering the client’s home uninvited, publicly humiliating the
client, using threats
4.C.1.2.3 Discrimination against all internationally recognized Protected
Categories. [Note: Protected Categories are as follows: People over
40 years old; Sex; Race/ethnicity/national extraction/social origin /
caste; Religion; Health status, including HIV status; Disability; Sexual
orientation; Political affiliation/opinion; Civil/marital status; Participation
in a trade union.]

4.C.1.3 The provider informs clients, verbally or in writing, about the

prohibited behaviors found in the code of conduct.

4.C.1.4 If the provider partners with third parties, it reviews the third
party’s code of conduct prior to signing a contract to check for
commitment to fair and respectful treatment of clients.

Universal Standards for Social and Environmental Performance Management 31

 DIMENSION 4 | Client Protection

Essential Practice Indicators / Details

4C2. THE PROVIDER DOES 4.C.2.1 The provider has internal controls to monitor whether
NOT USE AGGRESSIVE employees or agents are engaging in aggressive sales.
SALES TECHNIQUES.
4.C.2.2 The provider’s incentive structure does not promote aggressive
sales.

4.C.2.2.1 When front-line employees’ salaries are comprised of a fixed

and a variable portion, the fixed portion must represent at least 50% of
total salary.
4.C.2.2.2 The provider monitors front-line employees’ productivity
ratios and investigates those that are above a predetermined
threshold.

Essential Practice Indicators / Details

4C3. THE PROVIDER 4.C.3.1 The provider’s collections policy includes the following:
PROTECTS
CLIENTS’ RIGHTS 4.C.3.1.1 A list of appropriate and inappropriate debt collections
TO RESPECTFUL practices, including collateral seizing practices.
4.C.3.1.2 A schedule for the collections process that allows time for the
TREATMENT DURING
debt collector to determine the reasons for a client’s default and for
THE LOAN COLLECTION
the client to find solutions.
PROCESS.
4.C.3.1.3 The provider informs the client prior to seizure of collateral,
allowing the client to attempt to remedy the default.
4.C.3.1.4 A prohibition on sales of the clients’ collateral to the provider,
the staff of the provider, to their relatives, or to third parties involved in
the seizing process.

4.C.3.2 The provider restructures or writes off loans on an exceptional

basis, based on a list of cases of specific distress.

Universal Standards for Social and Environmental Performance Management 32

 DIMENSION 4 | Client Protection

STANDARD

4D. THE PROVIDER SECURES CLIENT DATA AND

INFORMS CLIENTS ABOUT THEIR DATA RIGHTS.
Essential Practice Indicators / Details

4.D.1.1 The provider has data security and confidentiality policies that
4D1. THE PROVIDER
cover the gathering, use, distribution, storage, and retention of client
MAINTAINS THE
information.
SECURITY AND
CONFIDENTIALITY OF
4.D.1.2 The provider maintains physical and electronic files in a secure
CLIENT DATA.
system.

4.D.1.2.1 System access is restricted to only the data and functions that
correspond to an employee’s role (“least privilege” principle).
4.D.1.2.2 The provider controls employee use of files outside the office
and the provider keeps records of the names of employees who
request/are granted access to client files.
4.D.1.2.3 The provider defines a clear process to safeguard client data
when employees leave the organization.

4.D.1.3 The provider conducts a risk assessment to identify the data-

related risks to clients. Minimum frequency: every year

4.D.1.4 If the provider works with third parties that have access to client
data, the provider’s agreements specify that third parties will maintain
the security and confidentiality of client data.

Universal Standards for Social and Environmental Performance Management 33

 DIMENSION 4 | Client Protection

Essential Practice Indicators / Details

4D2. THE PROVIDER 4.D.2.1 The provider explains to clients how it will use client data, with
INFORMS CLIENTS whom it will share the data, and how third parties will use the
ABOUT DATA PRIVACY data. The provider receives clients’ consent before using or sharing
AND DATA RIGHTS. their data.

4.D.2.2 Information about data use and consent is easy for clients to
understand.

4.D.2.2.1 When requesting consent from clients to use their data, the
provider explains in simple, local language, either in writing or orally,
how it will use the data. Internet links to disclosure statements are not
sufficient.
4.D.2.2.2 The provider trains clients on the importance of protecting
their personal information including Personal Identification Numbers
(PINs), savings account balances and information on repayment
problems.
4.D.2.2.3 The provider gives clients the right to withdraw their
permission to use data and explains any consequences of withdrawal.

4.D.2.3 The provider notifies clients of their right to review and correct
their personal and financial data.

Universal Standards for Social and Environmental Performance Management 34

 DIMENSION 4 | Client Protection

STANDARD

4E. THE PROVIDER RECEIVES AND RESOLVES CLIENT

COMPLAINTS.
Essential Practice Indicators / Details

4E1. THE PROVIDER HAS 4.E.1.1 Clients have a way to submit complaints to persons other than
A COMPLAINTS their loan officer/product officer and that person’s supervisor.

MECHANISM THAT IS
4.E.1.2 The provider has at least two complaints channels that are free
EASILY ACCESSIBLE TO
of charge and accessible to clients.
CLIENTS AND ADAPTED
TO THEIR NEEDS.
4.E.1.3 The provider informs clients how to submit a complaint.

4.E.1.3.1 The provider displays information on how to submit

a complaint in branch offices, at agent locations, in product
documentation, and in all digital channels it uses to provide services to
clients.
4.E.1.3.2 At the time when clients are applying to use a product, the
provider informs clients on how to submit a complaint both to itself
and to any third party partner.

4.E.1.4 If the complaint mechanism initially handles complaints through

automated means, the provider makes a channel with live, human
interaction available to clients.

Essential Practice Indicators / Details

4E2. THE PROVIDER 4.E.2.1 The provider’s complaints policy identifies levels of severity and
RESOLVES COMPLAINTS requires that severe complaints are escalated immediately to senior
EFFICIENTLY. management.

4.E.2.2 The provider’s complaints mechanism ensures that all formal

complaints are registered in a secure system that reaches the
complaints handling staff and/or management.

Universal Standards for Social and Environmental Performance Management 35

 DIMENSION 4 | Client Protection

4.E.2.3 The provider resolves client complaints quickly.

4.E.2.3.1 The provider sends to clients a confirmation of receipt of their

complaints and a notification when the complaint has been resolved.
4.E.2.3.2 If a provider receives complaints via call centers or chat, it
monitors the average wait time.
4.E.2.3.3 The provider resolves at least 90% of complaints within one
month. If the resolution takes longer than one month, the provider
notifies the client of the reason for the delay.

4.E.2.4 Complaints handling staff have access to relevant client data,

including transaction details and notes from previous complaint
conversations.

Essential Practice Indicators / Details

4E3. THE PROVIDER USES 4.E.3.1 The complaints system creates a report for management and
INFORMATION FROM customer care staff. Minimum frequency: monthly
COMPLAINTS TO
MANAGE OPERATIONS 4.E.3.2 Management reviews complaints reports and key performance
AND IMPROVE indicators (e.g., average time to resolve, percent resolved) and
PRODUCT AND takes corrective action to resolve systematic problems leading to
complaints. Minimum frequency: annually
SERVICE QUALITY.

4.E.3.3 If the provider partners with third parties, the provider helps its
clients to resolve complaints they have with those third parties.

Universal Standards for Social and Environmental Performance Management 36

 Client
protection
indicator

Social
7 Strategy 2
Environmental Committed
Performance Leadership
Management

Client-
Responsible Centered

6 Growth and
Returns
Products and
Services 3

Responsible
Human Client
Resource Protection
Development

5 4
Dimension 5

Responsible
Human Resource
Development
5A. The provider creates a safe and equitable work environment.
5B. The provider’s Human Resource Development system is designed
to attract and maintain a qualified and motivated workforce.
5C. The provider’s Human Resource Development system supports
its social strategy.
 DIMENSION 5 | Responsible Human Resource Development

STANDARD

5A. THE PROVIDER CREATES A SAFE AND EQUITABLE

WORK ENVIRONMENT.
Essential Practice Indicators / Details

5A1. A WRITTEN HUMAN 5.A.1.1 The provider’s Human Resource policy explains employees’ rights
RESOURCES POLICY and responsibilities related to the following:

IS AVAILABLE TO
5.A.1.1.1 Work rules and disciplinary procedures
ALL EMPLOYEES
5.A.1.1.2 Grievance resolution
THAT EXPLAINS AND
5.A.1.1.3 Collective bargaining agreements and freedom of association
PROTECTS THEIR
5.A.1.1.4 Whistle blower safeguards
RIGHTS. 5.A.1.1.5 Anti-harassment safeguards
5.A.1.1.6 Conditions for dismissal and exit formalities

5.A.1.2 The provider meets or exceeds local regulations in the following areas:

5.A.1.2.1 Competitive wages

5.A.1.2.2 Transparent salary scale
5.A.1.2.3 Benefits/social protection
5.A.1.2.4 Limits on working hours and overtime hours
5.A.1.2.5 Overtime pay and paid leave
5.A.1.2.6 Maternity / paternity leave

5.A.1.3 The provider’s non-discrimination policy towards employees

covers all internationally recognized Protected Categories. [Note:
Protected Categories are as follows: People over 40 years old; Sex;
Race/ethnicity/national extraction/social origin /caste; Religion; Health
status, including HIV status; Disability; Sexual orientation; Political
affiliation/opinion; Civil/marital status; Participation in a trade union.]

5.A.1.4 The provider analyzes employee data by gender and job position
to check that men and women are equally represented at different
levels of the organization.

5.A.1.5 The provider operates in accordance with national law on forced

labor and minimum age for employment, but in no case employs
workers under 14 years old. If national law does not address forced
labor, the provider complies with international law.

Universal Standards for Social and Environmental Performance Management 38

 DIMENSION 5 | Responsible Human Resource Development

Essential Practice Indicators / Details

5A2. EMPLOYEE 5.A.2.1 The provider pays salaries based on market rates, and never
COMPENSATION below the sectoral minimum wage.
IS EQUITABLE AND
5.A.2.2 Front-line employees’ base pay (before incentives) is at least a
ADEQUATE.
living wage.

5.A.2.3 The provider analyzes salary data to check that men and women
receive equal pay for equal work and have equal opportunities for pay
increase/promotion.

Essential Practice Indicators / Details

5A3. THE PROVIDER HAS A 5.A.3.1 The provider assesses the health and safety risks faced by
SAFETY AND HEALTH its employees and audits its existing safety measures. Minimum
MANAGEMENT SYSTEM. frequency: annually

5.A.3.2 The provider documents and reports to management all

occupational accidents, injuries, and illnesses. The results are
disaggregated by gender and by position. Minimum frequency:
annually

5.A.3.3 The provider takes necessary measures to mitigate hazards.

5.A.3.3.1 The provider offers health and safety equipment, training, and
adapted physical accommodations.
5.A.3.3.2 The provider has an emergency/disaster response plan
and trains management and employees on how to follow the plan.
Minimum training frequency: annually
5.A.3.3.3 The provider compensates employees who miss work due to
work-related injuries.

Universal Standards for Social and Environmental Performance Management 39

 DIMENSION 5 | Responsible Human Resource Development

STANDARD

5B. THE PROVIDER’S HUMAN RESOURCE DEVELOPMENT

SYSTEM IS DESIGNED TO ATTRACT AND MAINTAIN A
QUALIFIED AND MOTIVATED WORKFORCE.
Essential Practice Indicators / Details

5B1. THE PROVIDER GIVES 5.B.1.1 The provider communicates to employees their individual
EMPLOYEES COMPLETE employment terms:
EMPLOYMENT
DOCUMENTATION 5.B.1.1.1 Base salary and opportunities for any other type of
compensation (overtime, incentive pay)
AND TRAINING TO 5.B.1.1.2 Job description / scope of work
UNDERSTAND THEIR 5.B.1.1.3 Performance evaluation process
JOB REQUIREMENTS.
5.B.1.2 All new employees receive an orientation and job-specific training.

5.B.1.3 The provider makes professional development opportunities

available to employees at every level.

5.B.1.4 Men and women receive equal opportunities for training and skill
development.

Essential Practice Indicators / Details

5B2. THE PROVIDER GIVES 5.B.2.1 The provider has a formal mechanism for consulting with
EMPLOYEES FORMAL employee representatives on HR decisions and policy development.
OPPORTUNITIES TO The employee representatives have direct access to executive
COMMUNICATE WITH managers.

MANAGEMENT.
5.B.2.2 The provider has a formal grievance mechanism that allows
employees to raise workplace concerns in a confidential manner.

5.B.2.3 The provider surveys employees on satisfaction and concerns

with employment conditions. Minimum frequency: annually

Universal Standards for Social and Environmental Performance Management 40

 DIMENSION 5 | Responsible Human Resource Development

STANDARD

5C. THE PROVIDER’S HUMAN RESOURCE DEVELOPMENT

SYSTEM SUPPORTS ITS SOCIAL STRATEGY.
Essential Practice Indicators / Details

5C1. DURING THE 5.C.1.1 The provider assesses each candidate’s work and personal
RECRUITMENT AND experience related to the provider’s target clients.
HIRING PROCESS, THE
PROVIDER ASSESSES 5.C.1.2 The provider assesses each candidate’s motivation to achieve
the provider’s social goals.
EACH CANDIDATE’S
COMMITMENT TO
5.C.1.3 The new employee training/probation period for client-facing
ACHIEVING THE
employees includes an assessment of skills and and commitment to
PROVIDER’S SOCIAL
serving the provider’s target clients.
GOALS AND SERVING
ITS TARGET CLIENTS. 5.C.1.4 All employees sign a document acknowledging that they will
abide by the Code of Conduct.

Essential Practice Indicators / Details

5C2. THE PROVIDER 5.C.2.1 The provider trains all employees on its social goals and how
TRAINS ALL their work contributes to achieving these goals, and reinforces this on
EMPLOYEES ON an onging basis.

ITS SOCIAL GOALS

5.C.2.2 The provider trains employees on client protection, in line with
AND ON CLIENT
their roles and responsibilities. The training covers at minimum the
PROTECTION.
following topics:

5.C.2.2.1 Repayment capacity analysis and the credit approval process

5.C.2.2.2 How to avoid aggressive sales techniques, including how
to respect clients’ right to refuse products
5.C.2.2.3 How to explain pricing, terms and conditions to clients and
how to verify client understanding
5.C.2.2.4 Debt collections practices and loan recovery procedures
5.C.2.2.5 Confidentiality and data sharing policies and fraud risks,
including common frauds, fraud identification, and fraud reporting
5.C.2.2.6 How the complaints mechanism works, how to resolve
complaints against third party providers, and how to treat clients
respectfully during the process

Universal Standards for Social and Environmental Performance Management 41

 DIMENSION 5 | Responsible Human Resource Development

Essential Practice Indicators / Details

5C3. THE PROVIDER 5.C.3.1 Employee performance appraisals and incentives include client
EVALUATES AND protection or social performance criteria.
INCENTIVIZES
5.C.3.1.1 The performance evalution includes client protection criteria,
EMPLOYEES BASED ON
such as portfolio quality and customer service, including treating
SOCIAL AND FINANCIAL clients respectfully and without discrimination.
CRITERIA. 5.C.3.1.2 The performance evalution includes social performance
criteria, such as ability to recruit target clients, quality of data
collection, quality of non-financial services provided, and client
retention.

5.C.3.2 The provider reviews incentive schemes to check for negative

consequences such as fraud, customer mistreatment, agressive sales,
over-indebtedness, or high employee turnover.

Universal Standards for Social and Environmental Performance Management 42

 Client
protection
indicator

Social
7 Strategy 2
Environmental Committed
Performance Leadership
Management

Client-
Responsible Centered

6 Growth and
Returns
Products and
Services 3

Responsible
Human Client
Resource Protection
Development

5 4

Dimension 6

Responsible Growth
and Returns

6A.The provider manages growth in a way that promotes

its social goals and mitigates risks to clients.
6B. The provider sets prices responsibly.
6C. The provider uses profits responsibly.
 DIMENSION 6 | Responsible Growth and Returns

STANDARD

6A. THE PROVIDER MANAGES GROWTH IN A WAY THAT

PROMOTES ITS SOCIAL GOALS AND MITIGATES RISKS TO
CLIENTS.
Essential Practice Indicators / Details

6A1. THE PROVIDER’S 6.A.1.1 The provider adjusts growth targets to market saturation.
STRATEGIC AND/
OR BUSINESS PLAN 6.A.1.2 The provider aligns growth targets to demand, by client segment,
ESTABLISHES as identified in market research.

RESPONSIBLE GROWTH
6.A.1.3 The provider allocates funds and human resources to reinforce
TARGETS.
the following internal capacities to ensure responsible growth:

6.A.1.3.1 Internal control mechanisms/internal audit

6.A.1.3.2 Hiring and training employees, and third-party agents as
applicable
6.A.1.3.3 Management information system quality and capacity

Essential Practice Indicators / Details

6A2. DURING TIMES OF 6.A.2.1 The provider analyzes growth rates by branch/region. Minimum
HIGH GROWTH, THE frequency: annually
PROVIDER MONITORS
6.A.2.2 The provider monitors the following data during times of growth,
MORE FREQUENTLY
Minimum frequency: monthly
DATA RELATED
TO RESPONSIBLE 6.A.2.2.1 Outreach indicators, including average loan size of new clients
GROWTH. and share of new clients who are from the provider’s target client group
6.A.2.2.2 Quality of service indicators segmented by branch, including
portfolio at risk and number of complaints
6.A.2.2.3 Human resource capacity indicators, including clients per
field officer, ratio of internal audit staff to total number of staff, hours
of training for new employees (by position), and employee turnover (by
position)

6.A.2.3 When the provider identifies growth that is harmful to clients,

it takes mitigating action such as reducing growth targets, applying
more conservative loan approval criteria, or limiting the total number
of loans an individual can have at one time.

Universal Standards for Social and Environmental Performance Management 44

 DIMENSION 6 | Responsible Growth and Returns

STANDARD

6B. THE PROVIDER SETS PRICES RESPONSIBLY.

Essential Practice Indicators / Details

6B1. THE PROVIDER 6.B.1.1 The interest rate takes into account the following costs
CHARGES FAIR required to deliver credit: funding costs, operating costs, loan
PRICES. losses, and returns to capital.

6.B.1.2 Annual Percentage Rate (APR) for all of the provider’s major
credit products (> 20% portfolio) is within 15% of its peers. If it is
outside the range, the provider can provide a valid justification.

6.B.1.3 The provider discloses loan interest on a declining balance and

according to the exact date of payment.

6.B.1.4 Loan interest (including arrears interest) does not accrue past
180 days in arrears, at maximum.

Essential Practice Indicators / Details

6B2. THE PROVIDER 6.B.2.1 The provider does not charge clients for confirmation of
CHARGES transactions and balance inquiries.
REASONABLE FEES.
6.B.2.2 Prepayment penalities do not include the interest that would have
accrued between time of prepayment and the end of the loan term.

6.B.2.3 Arrears interest and penalties do not compound debt; they are
calculated based on the principal amount only.

6.B.2.4 If the provider offers savings, it charges reasonable fees on

savings accounts.

6.B.2.4.1 Fees on deposit accounts are not disproportionately high

relative to small deposit balances.
6.B.2.4.2 The fee structure for deposit accounts does not allow
zeroing out accounts through repeated application of fees.

Universal Standards for Social and Environmental Performance Management 45

 DIMENSION 6 | Responsible Growth and Returns

Essential Practice Indicators / Details

6B3. THE PROVIDER DOES 6.B.3.1 Loan Loss Expense Ratio (LLER Ratio) is within the accepted
NOT TRANSFER performance range. If it is outside the range, the provider can provide
UNNECESSARY a valid justification.
COSTS TO CLIENTS.
6.B.3.2 Operating Expense Ratio (OER Ratio) is within the accepted
performance range. If outside of the range, the provider can provide a
valid justification.

6.B.3.3 Return on Assets (ROA) is within the accepted performance

range. If outside of the range, the provider can provide a valid
justification.

Universal Standards for Social and Environmental Performance Management 46

 DIMENSION 6 | Responsible Growth and Returns

STANDARD

6C. THE PROVIDER USES PROFITS RESPONSIBLY.

Essential Practice Indicators / Details

6C1. THE PROVIDER 6.C.1.1 The provider discusses its social goals with potential equity

ENGAGES investors and asks about their planned timeframe for investment and
exit strategies to assess alignment on social strategy.
WITH EQUITY
INVESTORS WHOSE
6.C.1.2 The board of directors prioritizes accepting investment offers
INVESTMENT
from investors whose investment strategy is aligned with the
STRATEGY IS
provider’s social strategy.
ALIGNED WITH THE
PROVIDER’S SOCIAL 6.C.1.3 The shareholder agreement specifies the following:
GOALS.
6.C.1.3.1 Commitment to social goals
6.C.1.3.2 Expected level and use of profits
6.C.1.3.3 Expected investment timeline / exit strategy

Essential Practice Indicators / Details

6C2. THE PROVIDER 6.C.2.1 The provider’s use of profits in the previous year included at
USES ITS PROFITS least one of the following investments: strengthening its social or

FOR EXPENDITURES environmental performance management practices, provision of non-

financial services, lowering of prices, or local community investment.
THAT BENEFIT
CLIENTS.
6.C.2.2 The provider has a policy that specifies when dividends may be
paid and in what amount, in alignment with its social goals.

Essential Practice Indicators / Details

6C3. THE PROVIDER HAS 6.C.3.1 The provider publicly discloses its annual audited financial
A TRANSPARENT statements.
FINANCIAL AND
SOCIAL STRUCTURE. 6.C.3.2 The provider discloses the results of its social audits and
outcomes measurement to all stakeholders, upon request.

6.C.3.3 The provider discloses the compensation of senior management

to donors, raters, investors and other stakeholders, upon request.

Universal Standards for Social and Environmental Performance Management 47

 SOCIAL
STRATEGY

ENVIRONMENTAL COMMITTED
PERFORMANCE LEADERSHIP
MANAGEMENT

UNIVERSAL
STANDARDS FOR
SOCIAL AND
ENVIRONMENTAL
RESPONSIBLE CLIENT-CENTERED
GROWTH AND PERFORMANCE PRODUCTS AND
RETURNS MANAGEMENT SERVICES

RESPONSIBLE
HUMAN CLIENT
RESOURCE PROTECTION
DEVELOPMENT

Dimension 7

Environmental
Performance
Management
7A. The provider has an environmental strategy and systems in
place to implement it.
7B. The provider identifies and manages environmental risks and
opportunities.
7C. The provider offers financial and non-financial products and
services to achieve its environmental goals.
 DIMENSION 7 | Environmental Performance Management

STANDARD

7A. THE PROVIDER HAS AN ENVIRONMENTAL STRATEGY

AND SYSTEMS IN PLACE TO IMPLEMENT IT.
Essential Practice Indicators / Details

7A1. THE PROVIDER 7.A.1.1 The provider has a documented strategy that specifies its

HAS A STRATEGY intention to achieve at least one of the following environmental goals:
- Reduce the provider’s own adverse impacts on the environment
TO ACHIEVE ITS
- Reduce clients’ vulnerability to climate change and environmental
ENVIRONMENTAL
degradation
GOALS.
- Reduce clients’ adverse impacts on the environment
- Foster the adoption of green practices and technologies, and meet
clients’ demands and needs for them

7.A.1.2 The strategy defines indicators and targets to measure the

provider’s progress toward its environmental goals.

7.A.1.3 The provider operates in accordance with national and

international laws and regulations on environmental protection.

Essential Practice Indicators / Details

7A2. THE PROVIDER 7.A.2.1 The provider collects the following data on an ongoing basis to
COLLECTS, measure whether it is achieving its environmental goals. Minimum
ANALYZES, AND frequency: annually

REPORTS DATA THAT

7.A.2.1.1 The provider’s own adverse impacts on the environment
ARE SPECIFIC TO ITS
7.A.2.1.2 Clients’ vulnerability to climate change and environmental
ENVIRONMENTAL
degradation
GOALS.
7.A.2.1.3 Clients’ adverse impacts on the environment
7.A.2.1.4 Outcomes related to its green products and services,
including both positive and negative changes for clients, their
households, and the environment

7.A.2.2 The provider reports environmental performance data internally

and externally. Minimum frequency: annually.

Universal Standards for Social and Environmental Performance Management 49

 DIMENSION 7 | Environmental Performance Management

Essential Practice Indicators / Details

7A3. THE PROVIDER’S 7.A.3.1 The board and management make strategic decisions based
GOVERNANCE AND on the following environmental performance data. Minimum
MANAGEMENT frequency: annually.
STRUCTURE
ENSURES THE 7.A.3.1.1 Analysis of the provider’s own adverse impacts on the
environment
IMPLEMENTATION
7.A.3.1.2 Proportion of the portfolio that is vulnerable to climate change
AND OVERSIGHT
and environmental degradation, and the proportion generating adverse
OF THE
impacts on the environment
ENVIRONMENTAL
7.A.3.1.3 Positive and negative outcomes for clients from implementing
STRATEGY. green practices and technologies

7.A.3.2 The provider defines roles and responsibilities for implementing

the environmental strategy.

7.A.3.2.1 A dedicated senior management person or team is

responsible for the execution of the environmental strategy.
7.A.3.2.2 The provider integrates its environmental strategy in job
descriptions and objectives for all relevant roles.

7.A.3.3 The provider trains board members, management and

employees on their respective roles and responsibilities, and builds
capacity as needed, for implementing the environmental strategy.

Universal Standards for Social and Environmental Performance Management 50

 DIMENSION 7 | Environmental Performance Management

STANDARD

7B. THE PROVIDER IDENTIFIES AND MANAGES

ENVIRONMENTAL RISKS AND OPPORTUNITIES.
Essential Practice Indicators / Details

7B1. THE PROVIDER 7.B.1.1 The provider assesses the vulnerability of its properties,
IDENTIFIES AND buildings, and human resources to climate shocks.
MANAGES ITS OWN
ENVIRONMENTAL 7.B.1.2 The provider has a contingency plan to mitigate the vulnerability
of its properties, buildings, and human resources to climate shocks.
RISKS AT
HEADQUARTERS
7.B.1.3 The provider identifies the adverse impacts of its internal
AND BRANCH LEVEL.
activities on the environment.

7.B.1.4 The provider avoids, minimizes and/or offsets the adverse

impacts of its internal activities on the environment linked to
- Energy consumption
- Water consumption
- Paper consumption
- Transportation and fuel consumption
- Waste production
- Greenhouse gas emissions

Essential Practice Indicators / Details

7B2. THE PROVIDER 7.B.2.1 The provider identifies clients’ vulnerability to climate change
IDENTIFIES and environmental degradation related to the following:
AND MANAGES - climate change
- biodiversity loss
CLIENT-LEVEL
- pollution and other environmental degredation.
ENVIRONMENTAL
RISKS.

Universal Standards for Social and Environmental Performance Management 51

 DIMENSION 7 | Environmental Performance Management

7.B.2.2 The provider identifies clients’ adverse impacts on the

environment, related to the following:
- Greenhouse gas emission
- Air, water, or soil pollution, including the use and improper storage
of hazardous chemicals
- Deforestation, land degradation, biodiversity loss, protected wildlife/
areas, in particular linked to biodiversity-sensitive areas
- Waste production and management

7.B.2.3 The provider develops risk mitigation policies and processes

in response to identified vulnerability and adverse environmental
impacts and integrates them into its standard risk management
system.

7.B.2.4 The provider categorizes loan applications according to their

level of environmental risks and implements at least one of the
following actions for loan applications with high environmental risks:
- Conducts additional analysis of environmental risks.
- Excludes or limits financing, taking into account potential trade-offs
with the provider’s social and financial performance.
- Includes environmental clauses in the loan contract, conditioning
loan renewal or provision of incentives on the adoption of mitigation
solutions and/or green practices.

Essential Practice Indicators / Details

7B3. THE PROVIDER 7.B.3.1 The provider identifies green practices and technologies that
IDENTIFIES create benefits for clients in at least one of the following ways:

OPPORTUNITIES - improve access to basic services

- increase productivity, revenue, efficiency, or quality of production
TO FINANCE GREEN
- reduce adverse impacts on the environment and on health
PRACTICES AND
- reduce vulnerability to climate change or environmental degradation
TECHNOLOGIES.

Universal Standards for Social and Environmental Performance Management 52

 DIMENSION 7 | Environmental Performance Management

7.B.3.2 The provider ensures that the practices or technologies

identified are recognized as “green” by an environmental taxonomy
and/or comply with clear environmental criteria.

7.B.3.3 The provider conducts market research for the green practices
and technologies identified, with at least one of the following
objectives:
- Assess demand for green practices and technologies, and related
financial needs of target clients.
- Identify local technology or technical providers of green practices
and technologies, and the quality of their practices and technologies.
- Identify local market and regulation incentives or disincentives for
green practices and technologies.

Universal Standards for Social and Environmental Performance Management 53

 DIMENSION 7 | Environmental Performance Management

STANDARD

7C. THE PROVIDER OFFERS FINANCIAL AND NON-

FINANCIAL PRODUCTS AND SERVICES TO ACHIEVE ITS
ENVIRONMENTAL GOALS.

Essential Practice Indicators / Details

7C1. THE PROVIDER 7.C.1.1 The provider offers at least one of the following financial
OFFERS FINANCIAL products or services to help clients cope with climate shocks:

PRODUCTS AND
7.C.1.1.1 Emergency loans, loan rescheduling, or loan restructuring
SERVICES TO
7.C.1.1.2 Agricultural or climate insurance products
ACHIEVE ITS
7.C.1.1.3 Saving products, money transfer, remittances, or guarantees
ENVIRONMENTAL
GOALS.
7.C.1.2 The provider offers loans that allow its clients to implement or
maintain green practices and technologies, including:

7.C.1.2.1 Sustainable agriculture, animal breeding, or fishery practices

(“nature-based solutions”)
7.C.1.2.2 Clean energy and energy efficiency technologies
7.C.1.2.3 Improved access to clean drinking water and sanitation
7.C.1.2.4 Waste management and recycling (“circular economy”)

7.C.1.3 The provider offers dedicated green loans and promotes their
uptake and responsible use by doing the following:

7.C.1.3.1 Defining financial conditions (loan amount, term, repayment

schedule) adapted to the green practice or technology financed
7.C.1.3.2 Documenting the costs, return on investment, and benefits of
the green practices or technologies financed
7.C.1.3.3 Having dedicated marketing material and channels
7.C.1.3.4 Verifying that clients are using green loans to invest in green
technologies and practices
7.C.1.3.5 Entering into partnerships with third parties to increase the
provider’s ability to offer high quality green practices and technologies
to its clients

Universal Standards for Social and Environmental Performance Management 54

 DIMENSION 7 | Environmental Performance Management

Essential Practice Indicators / Details

7C2. THE PROVIDER 7.C.2.1 The provider raises awareness of its clients on their vulnerability
OFFERS NON- to climate change and environmental degradation, on their adverse
FINANCIAL SERVICES impacts on the environment, and/or on green practices and
technologies, through at least one of the following channels:
TO ACHIEVE ITS
- Leaflets, brochures, posters, videos
ENVIRONMENTAL
- Individual talks
GOALS.
- Awareness-raising events or activities

7.C.2.2 The provider builds the capacity of its clients to reduce their
vulnerability to climate change and environmental degradation, to
mitigate their adverse impacts on the environment, and/or to adopt
green practices and technologies, by offering at least one of the
following services:
- Field visits or peer-learning opportunities
- Trainings
- Technical assistance to implement or maintain green practices and
technologies, including after-sales services

7.C.2.3 The provider partners with third parties to offer training to

clients on environmental risks and opportunities, and/or technical
support to clients for the implementation or maintenance of green
practices and technologies.

Universal Standards for Social and Environmental Performance Management 55

 Universal Standards for Social and Environmental Performance Management

Cerise+SPTF is a joint venture between two of the global leaders in social and
environmental performance management. Founded in 2005, the Social Performance
Task Force, or SPTF, developed, and regularly updates, the Universal Standards for
Social and Environmental Performance Management (the Universal Standards).
First issued in 2012, the Universal Standards, like all SPTF’s efforts, guide impact-
driven financial service providers in making finance safer and more beneficial for
low-income customers. A membership organization, SPTF has more than 4,900
participating individuals from every region of the world. Cerise, a French nonprofit
created in 1998, pioneered the implementation of social performance management,
working with committed financial service providers to launch the Social Performance
Indicators initiative in 2001. As a social innovator, Cerise works with actors in inclusive
finance, social business and impact investing to co-create social standards and
social assessment tools that are free to all. Cerise also offers fee-based consultancy
services to all types of impact-driven organizations, equipping them with the skills
and tools they need to define and achieve their impact goals.

As the developers and champions of interdependent and complementary tools and

products, Cerise and SPTF have worked closely together since the mid-2000s. We
formalized our cooperation via a Memorandum of Understanding in 2021, and now
operate under a common strategic plan.

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