In pursuing its development goal MEF observes principles of sustainability.

Sustainability-Related Disclosures


Microfinance Enhancement Facility SA, SICAV-SIF (the “Fund” or “MEF”) aims to improve access to finance for microenterprises and households by contributing to the debt financing of microfinance institutions (“MFIs”), to support these institutions in providing microfinance services, including (without limitation) credit, savings, deposits, insurance, remittances, and housing loans, to the working poor in developing countries (hereinafter referred to as the “Sustainable Investment Objective” in accordance with Article 9 of the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector or “SFDR”).

The Fund expects that investments in MFIs should represent a minimum of 70% of its total assets. Detailed investment criteria to support MEF’s Sustainable Investment Objective are set forth in its investment guidelines to ensure that MEF:

  • supports economic development and prosperity globally through the provision of additional development finance to micro-enterprises and private households engaged in entrepreneurial activities via qualified financial institutions, and
  • observes principles of sustainability and additionality, combining development and market orientations in pursuing its development goal.

To achieve its Sustainable Investment Objective, MEF first screens and selects eligible target countries. These only include countries which are not members of the European Union and that are not classified as high-income on the World Bank list. Further, MEF requires a set of quantitative and qualitative criteria to be met by eligible MFIs to ensure that they follow good governance practices, such as:

  • compliance with national laws, including those related to environmental and social performance, healthy and safety in the work environment, and microfinance regulations where applicable, and
  • presence of adequate policies and procedures regarding lending to micro, small and medium-sized enterprises to adhere to the principles of responsible finance and prevent over-indebtedness.

MEF actively engages its partner MFIs to ensure that they have minimum standards in place and are well positioned to improve their practices over time. The social performance of our investments in partner MFIs is periodically evaluated based on evolving social performance standards. Non-financial key performance indicators used by the Fund to measure the attainment of its Sustainable Investment Objective include:

  • outreach (the number of final borrowers reached by MEF funding)
  • average and median loan amount per final borrower
  • percentage of women and rural final borrowers

As a global microfinance impact fund, MEF tracks its impact both as a Fund and, more importantly, through impact achieved at the MFIs’ level, as key actors in the delivery of impact. This builds on MEF’s vision of supporting microfinance markets in developing countries around the globe by offering a reliable and flexible source of debt to carefully selected MFIs that support microenterprises and low-income households.

Adherence to constantly evolving social performance standards is a core component of MEF’s approach to responsible finance. As a global fund, MEF has engaged four investment advisors (the “Investment Advisors”) – each a reputable leader in the impact asset management field – to identify, appraise, structure, and negotiate MFI investments, and to perform ongoing monitoring of the portfolio and risk management. Further, the Investment Advisors provide all reporting required by the Fund in accordance with the Fund’s issue document, articles of incorporation, investment guidelines and any other applicable Fund policies and procedures.

No significant harm to the sustainable investment objective

Sustainable investment objective of the financial product

Investment strategy

Proportion of investments

Monitoring of sustainable investment objective


Data sources and processing

Limitations to methodologies and data

Due diligence

Engagement policies

Integration of Sustainability Risks

Taking account of environmental, social or governance events or conditions that, should one occur, could cause a negative material impact on the value of the Fund’s investments (sustainability risks) lies at the heart of the MEF’s investment philosophy. This is demonstrated through the systematic integration of sustainability risks into our decision-making processes, as well as the way we leverage the power of MEF funding to actively engage our partner MFIs to improve the livelihoods of the working poor in developing countries.

As a global self-managed fund, MEF has engaged four Investment Advisors – each a reputable leader in the impact asset management field – to identify, appraise, structure, and negotiate MFI investments and opportunities, perform ongoing monitoring of the portfolio and risk management, as well as provide all reporting required by MEF, in accordance with MEF’s legal documents, investment guidelines and any other applicable policies and procedures.

Partner MFIs shall comply with the Minimum Safeguards of the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector and be classified by the Investment Advisors according to the IFC risk categorisation for Financial Institutions. MFIs are also required to comply with the EDFI Exclusion List,* the Client Protection Principles,** and MEF’s Principles of Responsible Finance. These requirements are reviewed by MEF from time to time and are reflected in the agreements entered into by MEF with its Investment Advisors and its partner MFIs.

Before proceeding with any new investment, Investment Advisors are required to first complete their respective due diligence on a prospective partner MFI, including the identification and evaluation of environmental, social and governance aspects, risks and opportunities. The pricing of investments shall reflect market conditions, risk profiles, and each prospective partner MFI proposal is screened by the investment committee of the respective Investment Advisor. Final proposals of all potential MFI investments are then submitted to MEF’s Investment Committee for decision-making, and as the case may be, to the Board of Directors of MEF.

Monitoring at the level of the Fund furthermore includes the monitoring of the overall portfolio quality and sustainability portfolio risks based on the MFI risk categorisation as disclosed in the Fund’s risk management policy. The Board must be informed in case of a deterioration of the overall level of risk below that standard and shall strive to re-establish the overall level of risk in line with the required standard. The Fund regularly reviews its risk management framework and assesses its portfolio according to evolving standards.

For more information regarding MEF’s investment decision-making process, governance set-up and organisational structure, please visit:


Remuneration Practices

MEF’s culture for responsible finance and ESG management is reflected in its remuneration practices. For the members of MEF’s Board of Directors and Investment Committee, a basic pro-rata temporis annual remuneration scheme, benchmarked to rates in comparable development finance funds and organisations, is subject to approval by the Shareholders or the Board of MEF, as the case may be.

As a responsible lender and signatory to the Operating Principles for Impact Management (OPIM;, MEF remunerates its four Investment Advisors according to competitive market rates, whereby the Investment Advisors integrate assessing sustainability risks as part of their core duties and are each a signatory to OPIM.