Review of impact assessment methodologies for ethical finance


1. INTRODUCTION

1.1. The sponsors of the Call: FEBEA and ISB

FEBEA (European Federation of Ethical and Alternative Banks and Finance companies)

FEBEA is the European Federation of Ethical and Alternative Banks and Finance companies, an international not for profit association incorporated under Belgian law, created in Brussels in 2001 with the goal of developing ethical and solidarity-based finance in Europe through dissemination of information and the participation of citizens. FEBEA was created by 6 financial institutions: Banca Popolare Etica (Italy), Crédit Coopératif (France), Crédal (Belgium), Hefboom (Belgium), Caisse Solidaire Nord Pas de Calais (France), Tise (Poland).
Today, FEBEA federates 24 members (13 banks, 6 savings and loan cooperatives, 4 investment companies and 1 foundation) based across 12 European Union countries.

In order to reach its goal of developing ethical and solidarity-based finance in Europe, FEBEA acts by:
- supporting the exchange of information and experiences and cooperation between national networks and practitioners of the social economy and finance sectors;
- representing its members before the European institutions and other financial and political organisations;
- creating specific financial and non financial instruments to address the needs of its members.

Additional information may be found on www.febea.org.

ISB (The Institute for Social Banking)

The Institute for Social Banking e.v. is a German charitable registered association, founded in 2006 by ten socially oriented banks and financial services providers from different European countries.

ISB promotes the concept of a model of banking and finance that is rooted in a social and ecological, as well as financial understanding of and responsibility for our actions. Through education and research the ISB fosters awareness, knowledge and competence in social banking and finance.

The ISB is supporting FEBEA in the organization and management of the Call with technical and scientific expertise.

1.2. The rationale for the Call

Attention on the impact of financial activities on our societies has increased steadily as the consequences of the financial and economic crises continue to be felt throughout communities. The debate has widened to include both political institutions and civil society.

The subject of the debate is very broad and includes a wide variety of actors working in the financial sector, with very different approaches and historical backgrounds.
Among these actors can be listed those representing that specific kind of financial activity which is often referred to as “ethical”, “solidarity-based”, “social” or “responsible”, according to the local operating context.

These actors have developed their activities in Europe mainly since the mid twentieth century, when the banking business, which originally had social connotations (cf. the monti di pietà, savings banks, cooperative or mutual banks, etc.), lost many of its original ethical features. This left a space that grass roots initiatives responded to through the creation of a new generation of banks and financial institutions, carrying out financial activity in a way that can be the defined as “ethical” . These institutions have the objective of achieving a positive impact in the collection and the use of money: they invest in activities such as organic farming, renewable energies, not-for-profit organizations, etc.; they try to respond to the needs of those who are excluded from the traditional banking system; they address the needs of savers and investors who are increasingly interested in the way their money is used.

Through these actors, finance once more returns to be an instrument of economic and social development as well as for innovation in social and environmental initiatives. This is in sharp contrast to the development of commercial banks in a quarterly reporting environment where maximisation of financial return is their primary objective, leading to alienation between banks and their customers. For simplicity, in the present Call we refer to this last kind of financial activity as “modern” finance.

Given the dominant position of finance in political thinking and that the consequences of the crises will continue to affect our communities for some time to come, it is timely to reflect on the specific role of ethical finance.

A starting point for the development of the debate must be the analysis of the impacts of “ethical” finance, particularly alongside that of “modern” finance.

However, the ethical finance sector is characterised by a strong heterogeneity of experiences and organisations, which reflects also in the wide range and variety of impact assessment methodologies used internally by ethical finance institutions themselves.

To date, at an academic level, only a few studies have been carried out on these issues, with little coordination among the researchers working on this field.

2. OBJECTIVES

With the joint aims of :
• contributing to the discussion on the impacts of financial activities,
• supporting the development of further studies on ethical finance and,
• developing a useful tool for ethical finance actors,
it is fundamental, as a first step, to undertake a comprehensive review of what has already been done in the field of impact analysis of financial activities (from the economic, social, environmental and organizational point of view), taking into consideration the specificities of ethical finance actors.

This review should then be integrated with an analysis of what is still missing and could be done in this field, in terms of impacts to be assessed and methodologies that could be used for the assessment.

Please note that this first Call may be followed by a second Call, to carry out an in-depth impact analysis for a selection of ethical finance institutions, using the results of this first Call as starting point.

3. EXPECTED RESULTS

The final result should consist of a review of the existing literature on the impacts of “ethical” finance, a gap analysis and exploration of other potential methodologies and impacts. This document should include a final template listing, in different columns, the following elements, listed in the first row here below (the examples in the other rows neither are exhaustive nor mandatory):


- Impacts addressed from an economic, social, environmental, organisational point of view (i.e.: employment/renewable energy production/clients relationship/ financial inclusion/non performing loans)

- Assessment methodologies for each specific impact (i.e.: analysis of job creation by beneficiaries of ethical finance investment/analysis of renewable energy produced per euro invested/lent by ethical finance institutions/ analysis of the clients relationship management (kind of information offered, way of informing clients, etc.) / analysis of the financial inclusions of people excluded from the banking system)/analysis of non performing loans ratio,Etc.)
- Main results (if already measured in any previous study)


4. TIMETABLE

Activity and Deadlines
Publication of the Call for proposals 13th January 2014
Submission of proposals by applicants 3rd February 2014
Selection of proposals by FEBEA-ISB 14th February 2014
Presentation of the results 27th April 2014

A monthly report should be provided during the research period.

The results of the research will be presented officially and discussed during the General Assembly of FEBEA, on the 12th and 13th of May 2014.

The results of the research will be freely available to the ISB and FEBEA for dissemination amongst their members and more widely and no copyright will be vested in the authors of the research beyond acknowledgement of their work.

5. BUDGET AVAILABLE

The total budget for this Call for Proposals is 6.000 € (taxes included), travel and accommodation involved in presenting the report excluded.

6. DOCUMENTS NEEDED FOR THE PROPOSALS

- Covering letter;
- Track record (up to two sides of A4);
- Work plan (up to one side of A4);
- CVs (up to two sides of A4 each) for named researchers where applicable;
- Contact details of the person responsible for the proposal;
- Host organisation statement if applicable

7. PROCEDURE FOR THE SUBMISSION AND AWARDING OF PROPOSALS

All documents must be submitted by 09.00 (CET) on 3rd February 2014 by sending an e-mail to febea@febea.org, cc malcolm.hayday@social-banking.org.
All proposals will be reviewed by a team drawn from the ISB and FEBEA informed by independent experts.
Following award of the Call all applicants will be notified by email of the result. The result will not be open to appeal and the awarding team’s decision will be final. The ISB and FEBEA reserve the right not to make an award.

8. AWARD CRITERIA

The proposals will be evaluated by taking in consideration:
- the competences of the researcher/s;
- previous work in the relevant field;

9. CONTACTS

For any additional info, please contact febea@febea.org