Direct investor Private debt
The Global Social Finance group (“GSF”), within Deutsche Asset Management’s Sustainable Investments team, employs a series of emerging-market focused microfinance and social enterprise private debt strategies that finance the working capital needs of socially motivated investees, while offering investors an opportunity to place ‘impact capital’ into new and innovative business models that provide access to goods and services for low-income and underserved populations.
To understand more fully the extent to which a potential investee has built out internal infrastructure to support achievement of its social mission, GSF investment officers complete a social scorecard assessment during due diligence. The scorecard, with a version that targets MFIs and another version that targets social enterprises, comprises a total of 43 simple, multiple-choice questions covering topics such as social performance management and reporting, governance, client protection practices, employee treatment, outreach, responsible financial performance, and environmental protection policies. While developed as a proprietary internal tool, GSF has followed industry standards within microfinance, such as the Universal Standards for Social Performance Management, as well as the Client Protection Principles articulated by the Smart Campaign. GSF is in the process of examining a move to a newer industry-created scorecard tool based on the SPI4 assessment tool, in order to align more fully with industry standards.
While the social scorecard provides comfort related to an investee’s ability to deliver on its mission based on the processes, policies, and procedures it has built, in order to get an insight into the company’s progress in achieving its mission, GSF collects impact data on both cross-fund, standardized metrics and on company-specific, individualized metrics. The standardized metrics help the group analyze meaningful trends across a set of similar investments, whereas the individualized metrics help the investment officers manage the impact and business performance of particular borrowers. Refer to the next tab for additional details.
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