BNP Paribas grants inclusive loans to European & Brazilian microfinance

By Gloria Methri

On the occasion of the European Microfinance Week, BNP Paribas has granted three Inclusive and sustainability-linked Financing (ISLF) to microfinance institutions in France, Italy, and Brazil. These loans incorporate environmental, social, and just transition objectives, reinforcing BNP Paribas’ commitment to sustainable finance.

L’Adie: Since its creation in 1989, over 180,000 entrepreneurs in France have received financing through this institution.

PerMicro: Founded in 2007, PerMicro grants microloans to entrepreneurs and households throughout Italy.

Banco da Familia: Created in 1998, Banco da Familia promotes economic development in southern Brazil (Santa Catarina, Rio Grande do Sul, and Paraná) through loans to small entrepreneurs.

Over the past several years, BNP Paribas has been very active in Sustainability-Linked Loans (SLL), which aim to foster companies to improve their ESG performance by directly linking the financial conditions of the loan to primarily environmental but also social or governance objectives.

The bank has been supporting microfinance institutions for over 30 years. By drawing on its expertise in Sustainability-Linked Loans, it aims to adapt this financial mechanism to microfinance through ISLF. By reaching the environmental, social, and just transition objectives predefined by the microfinance institution (MFI), BNP Paribas and the JuST Institute will help the MFI to benefit from reduced interest rates or from technical assistance.

Laurence Pessez, Head of CSR and Deputy Head of Company Engagement at BNP Paribas said, “Microfinance plays a fundamental economic role for microentrepreneurs who do not have access to traditional bank financing and are suffering from climate change and biodiversity loss. The most innovative aspect of the financing launched with the JuST Institute is to provide reduced interest rates or technical assistance if environmental, social, and just transition goals are met. A winning approach that benefits both microfinance institutions and their clients.”

Davide Forcella, Director of the JuST Institute said, “Climate change and biodiversity loss affect poor households, microenterprises, and small businesses in particular. This innovation seeks to equip microfinance institutions with the necessary capabilities, tools, and funds to enable their clients to adapt and protect their ecosystems and livelihoods. A key feature of the ISLF is its transformative nature: the combination and synergy of the dedicated technical assistance provided by the JuST Institute and the tailored financing provided by BNP Paribas will support inclusive finance players towards their transformation and the development of new capabilities to achieve higher social and environmental objectives.”