Microfinance Reports

European Green Microfinance – Report 2014

microfinance europe 2014 report

European Green Microfinance


In this paper we provide the first study on the development and trends of green microfinance in Europe: member, candidate and potential candidate countries. The study contains, but it is not limited to, information about environmentally friendly initiatives developed by institutions that provide microfinance services in Europe and elaborates on their motivations, constraints and strategies. Their environmental engagement is analysed along five dimensions: environmental policy, ecological footprint reduction, environmental risk assessment, green microcredit provision and environmental, non-financial services. The results for European green microfinance are compared to green microfinance in developing countries when possible. The potential of European green microfinance is discussed and some possible policies to foster the development of this field are presented. Specific topics include: green jobs, microfinance and privat epublic partnerships.

The study is based on: extensive literature review, web-research, an online survey submitted to European institutions and one-to-one interviews.

The web-research shows that approximately one quarter of institutions providing microfinance services in Europe have an initiative associated with environmental protection. The on-line survey illustrates that the environmental performance of the respondent institutions depends on a few institutional characteristics and that, on average, European institutions are comparable with those operating in developing countries.

Social responsibility, competitiveness, and legitimacy are the central motivations for institutions to go green. Lack of funding, inadequate human capital and low client interest are among the major constraints. Partnerships with specialized institutions and trainings for employees are the principal strategies stated to mitigate these challenges.

The results of the study suggest that European green microfinance is a young but promising sector . Some interesting initiatives have already been initiated. The sector holds particular promise if policies and incentives are carefully implemented and can be integrated in the European environmental strategies. The main policies advocated by European microfinance practitioners are: the creation of a discussion forum, sharing of examples and best practices, the provision of adequate funds and trainings, and the support of partnerships creation among different actors. However, the process could be quite lengthy and more studies and pilot programmes are needed to assess the feasibility, efficiency and outcomes of the European green microfinance sector.

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