Why Do Microfinance Institutions Go Green? An Exploratory Study

Abstract

In recent years, in addition to financial and social objectives, the microfinance industry has started to look at its environmental bottom line. The objective of this paper is to identify why microfinance institutions (MFIs) decide to go green. Data was collected through a quantitative survey of 160 MFIs and qualitative semi-structured interviews of 23 MFIs’ top managers. Basing our analysis on the model of ecological responsiveness developed by Bansal and Roth (Acad Manag J 43(4):717–736, 2000), we discover that MFIs for which legitimation (stakeholder pressure) is the dominant driver tend to adopt a defensive approach and set up more superficial negative strategies to appear green. In contrast, MFIs for which social responsibility is the dominant driver tend to be more proactive and innovative and develop adapted financial and non-financial services to promote environmentally friendly practices.

This is a preview of subscription content, access via your institution.

Fig. 1

Notes

  1. 1.

    Cf participants’ feedbacks during the “Microfinance & Environment” panel at the European Microfinance Week 2009 and the Oxford University—CERMi “Microfinance & Environment” Learning Workshop in 2010.

  2. 2.

    For more details on ‘proactive’ versus ‘reactive’ postures in Corporate Social Responsibility, see Aragón-Correa et al. (2008), Buysse and Verbeke (2003) and Clarkson (1995).

  3. 3.

    For a discussion on the social mission of MFIs and ethical issues, see Armendáriz and Szafarz (2011) or Hudon (2011).

  4. 4.

    The MIX Market (www.mixmarket.com) is a website that provides access to operational, financial and social performance information on more than 2,000 MFIs, covering over 92 million borrowers globally.

  5. 5.

    This is what Jones (1991) identifies as the moral intensity of an issue.

  6. 6.

    The debate around the mission definition and the position between the minimalist and integrated approaches is not new in microfinance (Servet 2006). As highlighted by Labie (2005), such controversial debates around mission definition are actually typical of non-profit organizations, which pursue several simultaneous objectives and have to define their priorities, the missions that they want to handle themselves, and the ones that they would better leave to others.

  7. 7.

    For more details on the role of leadership in Corporate Social Responsibility, see Aragón-Correa and Rubio-López (2007), D’Amato and Roome (2009), Hemingway and Maclagan (2004), Husillos and Álvarez-Gil (2008), Logsdon and Yuthas (1997), Maon et al. (2009), and Nidumolu et al. (2009).

Abbreviations

CSR:

Corporate Social Responsibility

FMO:

Dutch Development Bank

MEPI:

Microfinance Environmental Performance Index

MFI:

Microfinance institution

MIX:

Microfinance Information eXchange

UNEP-FI:

United Nations Environment Programme-Finance Initiative

References

  1. Allet, M. (2012). Measuring the environmental performance of microfinance: A new tool. Cost Management, 26(2), 6–17.

    Google Scholar 

  2. Allet, M., & Hudon, M. (2013). Green Microfinance. Characteristics of microfinance institutions involved in environmental management. CEB Working Paper No. 13/005.

  3. Aragón-Correa, J., Hurtado-Torres, N., Sharma, S., & García-Morales, V. (2008). Environmental strategy and performance in small firms: A resource-based perspective. Journal of Environmental Management, 86, 88–103.

    Article  Google Scholar 

  4. Aragón-Correa, J., & Rubio-López, E. (2007). Proactive corporate environmental strategies: Myths and misunderstandings. Long Range Planning, 40, 357–381.

    Article  Google Scholar 

  5. Araya, M. C., & Christen, R. P. (2004). Microfinance as a tool to protect biodiversity hot-spots. Washington, DC: CGAP.

    Google Scholar 

  6. Armendáriz, B., & Morduch, J. (2005). The economics of microfinance. Boston: MIT Press.

    Google Scholar 

  7. Armendáriz, B., & Szafarz, A. (2011). On mission drift in microfinance institutions. In B. Armendáriz & M. Labie (Eds.), The handbook of microfinance. London: World Scientific.

    Google Scholar 

  8. Bansal, K., & Roth, P. (2000). Why companies go green: A model of ecological responsiveness. The Academy of Management Journal, 43(4), 717–736.

    Article  Google Scholar 

  9. Benjamin, C., & Wilshusen, P. (2007). Reducing poverty through natural resource-based enterprises: Learning from natural product value chains. Washington, DC: USAID.

    Google Scholar 

  10. Blackman, A. (2000). Small is not necessarily beautiful. Coping with dirty microenterprises in developing countries. Resources, 141, 9–13.

    Google Scholar 

  11. Borge, J. A. (2004). Designing integrated conservation and development projects (ICDPs): Illegal hunting, wildlife conservation and the welfare of the local people. Working Paper Series No. 2/2004, Department of Economics, Norwegian University of Science and Technology.

  12. BRAC. (2006). Environmental assessment of SMEs of BRAC Bank. Dhaka: BRAC.

    Google Scholar 

  13. Buysse, K., & Verbeke, A. (2003). Proactive environmental strategies: A stakeholder management perspective. Strategic Management Journal, 24, 453–470.

    Article  Google Scholar 

  14. Castelo, B. M., & Lima, R. L. (2006). Corporate Social Responsibility and resource-based perspectives. Journal of Business Ethics, 69, 111–132.

    Article  Google Scholar 

  15. Céspedes-Lorente, J., De Burgos-Jiménez, J., & Álvarez-Gil, M. J. (2003). Stakeholders’ environmental influence. An empirical analysis in the Spanish hotel industry. Scandinavian Journal of Management, 19, 333–358.

    Article  Google Scholar 

  16. Chen, G., Rasmussen, S., & Reille, X. (2010). Growth and vulnerabilities in microfinance. CGAP Focus Note No. 61.

  17. Chowdury, J. (2008). Microfinance and environment: Does the participation in the microcredit based social forestry of Proshika in Bangladesh improve environmental literacy? Centre for Microfinance and Development Working Paper 5, University of Dhaka.

  18. Clarkson, M. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. The Academy of Management Review, 20(1), 92–117.

    Google Scholar 

  19. Copestake, J., Greeley, M., Johnson, S., Kabeer, N., & Simanowitz, A. (2005). Money with a mission. Microfinance and poverty reduction. London: Intermediate Technology Publications.

    Google Scholar 

  20. Coulson, A., & Dixon, R. (1995). Environmental risk and management strategy: The implications for financial institutions. The International Journal of Bank Marketing, 13(2), 22–29.

    Article  Google Scholar 

  21. D’Amato, A., & Roome, N. (2009). Leadership of organisational change. Towards an integrated model of leadership for corporate responsibility and sustainable development: A process of corporate responsibility beyond management innovation. Corporate Governance, 9(4), 421–434.

    Article  Google Scholar 

  22. Doligez, F., & Lapenu, C. (2006). Stakes of measuring social performance in microfinance. SPI3 Discussion Paper No. 1, CERISE Discussion Paper, Paris.

  23. Donaldson, T., & Preston, L. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. The Academy of Management Review, 20(1), 65–91.

    Google Scholar 

  24. Eisenhardt, K. (1989). Building theories from case study research. Academy of Management, 14(4), 532–550.

    Google Scholar 

  25. Elijido-Ten, E. (2007). Applying stakeholder theory to analyze corporate environmental performance: Evidence from Australia listed companies. Asian Review of Accounting, 15(2), 164–184.

    Article  Google Scholar 

  26. Fineman, S., & Clarke, K. (1996). Green stakeholders: Industry interpretations and response. Journal of Management Studies, 33, 715–730.

    Article  Google Scholar 

  27. FMO. (2008). Environmental and social risks management tools for MFIs. www.fmo.nl/esg-tools.

  28. Freeman, R. E. (1983). Strategic management: A stakeholder approach. Advances in Strategic Management, 1, 31–60.

    Google Scholar 

  29. Freeman, R. E. (1984). Management: A stakeholder approach. Boston: Pitman.

    Google Scholar 

  30. Gadenne, D., Kennedy, J., & McKeiver, C. (2009). An empirical analysis of environmental awareness and practices in SMEs. Journal of Business Ethics, 84, 45–63.

    Article  Google Scholar 

  31. Garriga, E., & Melé, D. (2004). Corporate Social Responsibility theories: Mapping the territory. Journal of Business Ethics, 53, 51–71.

    Article  Google Scholar 

  32. González-Benito, J., & González-Benito, O. (2005). An analysis of the relationship between environmental motivations and ISO14001 certification. British Journal of Management, 16(2), 133–148.

    Article  Google Scholar 

  33. GreenMicrofinance. (2007). Microfinance and the environment: Setting the research and policy agenda. Roundtable May 5–6, 2006. GreenMicrofinance-LLC, Philadelphia.

  34. Guérin, I., Roesch, M., Héliès, O., & Venkatasubramanian, (2009). Microfinance, endettement et surendettement. Une étude de cas en Inde du Sud. Revue Tiers Monde, 197, 131–146.

    Article  Google Scholar 

  35. Gutiérrez-Nieto, B., Serrano-Cinca, C., & Molinero, C. (2009). Social efficiency in microfinance institutions. Journal of the Operational Research Society, 60(1), 104–119.

    Article  Google Scholar 

  36. Hall, J., Collins, L., Israel, E., & Wenner, M. (2008). The missing bottom line: Microfinance and the environment. Philadelphia: GreenMicrofinance-LLC.

    Google Scholar 

  37. Hemingway, C., & Maclagan, P. (2004). Managers’ personal values as drivers of CSR. Journal of Business Ethics, 50, 33–44.

    Article  Google Scholar 

  38. Herrold-Menzies, M. (2006). Integrating conservation and development: What we can learn from Caohai, China. The Journal of Environment Development, 15(4), 382–406.

    Article  Google Scholar 

  39. Hudon, M. (2011). Ethics in microfinance. In B. Armendáriz & M. Labie (Eds.), The handbook of microfinance. London: World Scientific.

    Google Scholar 

  40. Husillos, J., & Álvarez-Gil, M. J. (2008). A stakeholder-theory approach to environmental disclosures by small and medium enterprises (SMEs). Revista de Contabilidad - Spanish Accounting Review, 11(1), 125–156.

    Google Scholar 

  41. Jeucken, M. (2001). Sustainable finance and banking: The financial sector and the future of the planet. London: Earthscan Publications Ltd.

    Google Scholar 

  42. Jones, M. (1991). Ethical decision making by individuals in organizations: An issue-contingent model. The Academy of Management Review, 16(2), 366–395.

    Google Scholar 

  43. Jones, M. (1999). The institutional determinants of social responsibilities. Journal of Business Ethics, 20, 163–179.

    Article  Google Scholar 

  44. Kaushal, K. K., & Kala, J. C. (2005). Nurturing joint forest management through microfinance. A case from India. Journal of Microfinance, 7(2), 1–12.

    Google Scholar 

  45. L’Etang, J. (1995). Ethical Corporate Social Responsibility: A framework for managers. Journal of Business Ethics, 14, 125–132.

    Article  Google Scholar 

  46. Labie, M. (2005). Comprendre et améliorer la gouvernance des organisations à but non lucrative : vers un apport des tableaux de bord ? [How to understand and improve the governance of non-profit organizations]. Gestion, 30(1), 78–86.

    Google Scholar 

  47. Logsdon, J., & Yuthas, K. (1997). Corporate Social Performance, stakeholder orientation, and organizational moral development. Journal of Business Ethics, 16, 1213–1226.

    Article  Google Scholar 

  48. López Rodriguez, S. (2009). Environmental engagement, organisational capability and firm performance. Corporate Governance, 9(4), 400–408.

    Article  Google Scholar 

  49. Maon, F., Lindgreen, A., & Swaen, V. (2009). Designing and implementing Corporate Social Responsibility: An integrative framework grounded in theory and practice. Journal of Business Ethics, 87, 71–89.

    Article  Google Scholar 

  50. Mbile, P., et al. (2005). Linking management and livelihood in environmental conservation: Case of the Korup National Park Cameroon. Journal of Environmental Management, 76, 1–13.

    Article  Google Scholar 

  51. Miles, M., & Huberman, M. (1984). Qualitative data analysis—A sourcebook of new methods. Newbury Park: Sage Publications.

    Google Scholar 

  52. Miles, M., & Huberman, M. (1994). An expanded sourcebook—Qualitative data analysis. Thousands Oaks: Sage Publications.

    Google Scholar 

  53. Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22(4), 853–886.

    Google Scholar 

  54. Mostovicz, I., Kakabadse, N., & Kakabadse, A. (2009). Corporate social responsibility: The role of leadership in driving ethical outcomes. Corporate Governance, 9(4), 448–460.

    Article  Google Scholar 

  55. Nidumolu, R., Prahalad, C., & Rangaswami, M. (2009, September). Why sustainability is now the key driver of innovation. Harvard Business Review, 3–10.

  56. Pallen, D. (1997). Environmental sourcebook for microfinance institutions. Ottawa: Canadian International Development Agency.

    Google Scholar 

  57. Peeters, H. (2003). Sustainable development and the role of the financial world. Environment, Development and Sustainability, 5, 197–230.

    Article  Google Scholar 

  58. Pikholz, L., et al. (2005). Institutional and product development risk analysis toolkit. Nairobi: MicroSave.

    Google Scholar 

  59. Pratt, M. (2009). For the lack of a boilerplate: Tips on writing up (and reviewing) qualitative research. Academy of Management Journal, 52(5), 856–862.

    Article  Google Scholar 

  60. Redmond, J., Walken, E., & Wang, C. (2008). Issues for small business with waste management. Journal of Environmental Management, 88, 275–285.

    Article  Google Scholar 

  61. Rippey, P. (2009). Microfinance and climate change: Threats and opportunities. CGAP Focus Note 53. Washington DC: CGAP.

  62. Rok, B. (2009). Ethical context of the participative leadership model: Taking people into account. Corporate Governance, 9(4), 461–472.

    Article  Google Scholar 

  63. Schicks, J. (2010). Microfinance over-indebtedness: Understanding its drivers and challenging the common myths. CEB Working Paper No. 10/048, Université Libre de Bruxelles.

  64. Schuite, G. J., & Pater, A. (2008). The triple bottom line for microfinance. Bunnik: Triodos Facet.

    Google Scholar 

  65. SEEP Network Social Performance Working Group. (2008). ‘Microfinance and the Environment’, in ‘Social Performance Map’. Washington, DC: The SEEP Network.

    Google Scholar 

  66. Servet, J. M. (2006). Banquiers aux pieds nus. Paris: Odile Jacob.

    Google Scholar 

  67. Servet, J. M. (2011). La crise du microcrédit au Andhra Pradesh (Inde). Revue Tiers Monde, 207(3), 43–60.

    Article  Google Scholar 

  68. Sohn, H. (1982). Prevailing rationales in the Corporate Social Responsibility debate. Journal of Business Ethics, 1, 139–144.

    Article  Google Scholar 

  69. Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20, 571–610.

    Google Scholar 

  70. Symbiotics Research & Advisory. (2011). Symbiotics 2011 MIV survey report. Geneva: Symbiotics Research & Advisory SA.

    Google Scholar 

  71. Triodos Facet. (2009). Risk management and sustainability management. A handbook for microfinance practitioners. Bunnik: Triodos Facet.

  72. UNEP-FI. (2006). Sustainability management and reporting. Benefits for developing countries and emerging economies. Geneva: United Nations Environment Programme Finance Initiative.

  73. Van Elteren, A. (2007). Environmental and social risk management and added value at MFIs and MFI funds—The FMO approach. The Hague: Netherlands Development Finance Company (FMO).

    Google Scholar 

  74. Wenner, M. (2002). Microenterprise growth and environmental protection. Microenterprise Development Review, 4(2), 1–8.

    Google Scholar 

  75. Wenner, M., Wright, N., & Lal, A. (2004). Environmental protection and microenterprise development in the developing world. A model based on Latin American experience. Journal of Microfinance, 6(1), 95–122.

    Google Scholar 

  76. Williamson, D., Lynch-Wood, G., & Ramsay, J. (2006). Drivers of environmental behaviour in manufacturing SMEs and the implications for CSR. Journal of Business Ethics, 67(3), 317–330.

    Article  Google Scholar 

  77. Yunus, M. (2008). Creating a world without poverty: Social business and the future of capitalism. New York: Public Affairs.

    Google Scholar 

  78. Zutshi, A., & Sohal, A. (2004). A study of the environmental management system (EMS) adoption process within Australasian organisations. Role of stakeholders. Technovation, 24, 371–386.

    Article  Google Scholar 

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Marion Allet.

Annex: Details on the Qualitative Study Methodology

Annex: Details on the Qualitative Study Methodology

Selection of MFIs

In order to make sure that our analysis and model could be generalized to the microfinance sector, we opted for a theoretical sampling of interviewed MFIs. The objective was to have a very diverse sample of MFIs, in terms of size, location, age, social mission, financial performance, environmental engagement, etc., so that our analysis and model could be applicable across all types of MFIs (Eisenhardt 1989). In particular, it was important for our study to have some extreme cases: on the one hand, leaders that are strongly engaged in environmental management, and on the other hand, MFIs with a minimalist approach that totally refused to consider environmental issues. Thanks to this diversity of positions and profiles, we were able to identify the rationales and factors behind MFIs’ decision to go green (or not).

Researcher’s Position and Introduction to MFIs

When the MFIs’ representatives were contacted, I introduced myself as a researcher only, and never as a practitioner. This strategy was chosen to avoid bias in MFIs’ answers, since they could have changed their discourse, had they perceived me as a potential donor or technical assistance provider.

For the first interviews conducted, I had told MFIs’ representatives that I was doing research on microfinance and environmental issues. Then, I decided to be a bit less specific in the following interviews, and introduced myself as a researcher interested in sustainable development or in microfinance impact. The intention was to avoid as much as possible greenwashing discourses, by not mentioned beforehand the specific focus of the research.

Interview Protocol

Semi-structured interviews were conducted following the list of topics hereunder. The order in which the questions were asked and the types and number of questions were flexible. They were adapted as the interview was going on in order to fit the dynamics of the interview.

TOPICS Potential questions Objective
Background information on the MFI What is the mission/vision of your MFI?
When was it created?
Where do you operate? (country, regions, rural/urban areas)
What is the legal status of your MFI?
How many clients do you have?
What type of financial services do you offer? (credits, savings, others; group or individual loans, etc.)
Do you provide non-financial services? Which ones? To whom? How? Why?
Where do you get your funding from?
Break the ice
Get an overview of the MFI when it was not previously known by the interviewer
Identify whether environmental protection is part of the MFI’s mission
Identify whether the MFI has a minimalist or integrated approach
Identify whether the MFI is dependent on donors’ and investors’ funding
Microfinance clients and environmental issues In your opinion, do microfinance clients have an impact on the environment (in terms of pollution, degradation of natural resources, etc.)?
To what extend? How? Why?
Is it only the case for some specific activities? Which ones?
Do you have activities that can have an impact of the environment in your portfolio? Which ones? What proportion of your portfolio do they represent?
In your opinion, are microfinance clients vulnerable to/affected by environmental risks?
In your opinion, are microfinance clients aware of environmental issues? Are they concerned by such issues?
Perceptions on the importance of environmental issues for microfinance clients
MFIs role and responsibility regarding environmental issues Do you think that microfinance can increase or decrease environmental risks?
Have you heard about the triple bottom line approach in MF? What do you think about it?
Do you think that MFIs have a role to play in environmental protection? In your opinion, should MFIs be involved in environmental management?
How? What could they do? With whom?
Should environmental issues be handled by MFIs or by other actors?
Opinion on the role of MFIs in tackling an environmental bottom line
MFIs’ capacity to manage environmental issues In your opinion, do MFIs have the capacity to manage environmental issues?
Can they help mitigate environmental risks?
Can they change clients’ environmental behaviours?
Do MFIs have the internal skills for that?
Opinion on the capacity of MFIs to implement environmental management programs
Existing environmental programs/practices within the MFI Do you tackle some environmental issues within your MFI?
Are you implementing environmental management programs?
What do you do? Which type of program?
When did you start?
How? Through partnerships?
Is it included in the MFIs’ procedures?
How did you train the MFI’s staff?
What results have you achieved? Do you measure them?
What constraints do you face?
Identify actual practices
Motives for going green Why did your MFI decide to engage in environmental management?
How did you come up with the idea of this environmental program?
What triggered the decision to go green? Why at that time?
Did the decision come from within your institution?
What benefits are there for an MFI to go green?
In your opinion, can environmental risks threaten your portfolio quality?
Do you think that green microfinance can provide your MFI with a competitive advantage?
Is there an economic interest in going green or is it too costly?
Understand what drove the MFI decision to go green, or what could drive it (in case of future projects)?
Identify whether the MFI sees strategic benefits in going green (competitiveness motive)
Role of investors and donors In your experience, are your donors and investors interested in these environmental issues? To what extend?
Has any of your donors/investors put a requirement related to environmental management?
Did you decide to go green to answer donors/investors’ expectations?
Identify potential pressures from stakeholders (legitimation motive)
Influence of peer MFIs Have you already heard of other MFIs (within your country or elsewhere) that are engaged in environmental management?
Which ones? What do they do?
Did it give you ideas to engage in environmental management?
 
Future projects Are you planning to develop environmental management programs?
Which type of program? How? When?
Why?
 

Data Analysis

To analyze the data, I applied best practices in qualitative research as they are promoted by Miles and Huberman (1984, 1994) or by Eisenhardt (1989). In this perspective, I went through the following steps:

  1. (1)

    Transcription of the interviews: All interviews had been recorded after previous approval of the interviewees. In the days following each interview, I worked on transcribing them. It allowed me to have a good immersion in the data and to add some extra comments on the behaviour and intonation of the interviewee. Full recording and transcription of interviews is a guarantee that the data considered for analysis will be faithful to the original interview.

  2. (2)

    Triangulation of information: In addition to interviews, I reviewed MFIs’ websites, annual reports, ratings, and any other relevant document, in order to check the validity of the information provided by the interviewee. This triangulation of information allowed me in particular to identify “greenwashing” discourses and strengthen my analysis.

  3. (3)

    Coding of the interviews: In order to process my data, I followed Miles and Huberman (1994)’s technique of manual content analysis. I started with coding the interview transcriptions. Codes were not assigned to specific words but rather to units of meanings, which could be phrases, sentences, or even paragraphs. It was essential to look at units of meanings and not at words, for several reasons: words can have several meanings, interviews were conducted in three different languages (English, French and Spanish), most interviewees were not speaking in their mother tongue (which was Arabic, Tagalog, Bahasa, Chinese, etc.), and looking only at words could have been misleading because it would not allow identifying greenwashing discourses. Therefore, using a more “automatic” approach (and application) working on key words would have been misleading and would have resulted in overseeing some key elements in our interviews. We thus started by manually coding the transcriptions, using descriptive codes such as “APPROACH” (for minimalist or integrated positioning), “PRACTICE” (for environmental programs implemented by the MFI), “DONORS” (for perceptions regarding donors’ influence), or “MOTIVES” (for the motives expressed for going green). The coding was realized at several points in time, starting early in the study process, and codes were refined to become more analytical as we were collecting more data and progressing in our analysis.

  4. (4)

    Tabulation: Still following Miles and Huberman (1994)’s technique, we used tabular display to facilitate the analysis of our qualitative data. We built a matrix using our codes to cluster information around topics. For each topic, we had a first column that would synthesize the main information with a key word (for instance, for “PRACTICES”, we would have YES or NO) and a second column providing more detailed information and/or selected quotes. Such a display was useful to get a rapid overview of our data, while still keeping meaningful information thanks to the selected quotes. An extract of the matrix that we built (Excel spreadsheet) is presented below.

  5. (5)

    Cross-cases comparison and identification of patterns: The matrix enabled us to identify patterns and make contrasts and comparisons between MFIs. In particular, it helped us identify groups of MFIs sharing similar positions, rationales and characteristics.

  6. (6)

    Iterative process between literature, coding, tabulation, comparison: This data analysis process was not linear but went through numerous iterations, as it is recommended in the literature on qualitative research (Eisenhardt 1989; Miles and Huberman 1994). After a first round of coding, clustering and comparing, we confronted our results to the literature, which made us refine some of our analysis and assumptions, and go back to the transcriptions for a second round of coding, clustering and analyzing. As interviews were conducted between 2009 and 2011, we had time to multiply such iterative cycles where theory and data were constantly compared. This technique allowed us to start our analysis in an inductive approach, without pre-conceived theoretical expectations, and to progressively refine our data analysis in light of new theoretical insights. It also allowed us to identify a theoretical framework that was the most suitable to our study.

  7. (7)

    Closing of the study and analysis: We reached theoretical saturation at around 16 interviews. To make sure that we were not missing any key element, we still conducted additional interviews. As additional interviews were only bringing minimal incremental learning (we were observing patterns that we had already seen before), we decided to close our data collection and analysis after 23 interviews. According to Eisenhardt (1989), who recommends analyzing between four and ten cases, this would already represent quite a good sample for qualitative analysis. Key findings were presented to the 23 interviewees for their feedbacks and reactions. As none of them questioned our analysis and conclusions, we then considered that we had achieved maturity in our analysis.

Extract of the Data Analysis Matrix

  Approach (minimalist/integrated) Does MF have a role to play in environmental management? Role of investors and donors Other topics…
Position Quotes Perception Quotes
MFI 1 Minimalist No “We are not interfering in what he is going to buy. We are giving them liquidity.” Pressure “It was the demand of the ILO”
MFI 2 Integrated Yes “Nosotros podriamos hacer mucho. […] Tenemos que hacer alianzas para poderlo concretar.” Support “Nos falta orientación.”
MFI 3 Minimalist No “The minimalist, is just giving the financing, that’s it. […] [MFI 3] is just a minimalist” No role Not dependent on investors
MFI 4 Integrated Yes “If microfinance helps them diversify away from dependence on nature, […] definitely microfinance can help them reduce or mitigate the effect on the environment. Or if microfinance can help them to finance solar energy.” NA  
Other MFIs…  

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Allet, M. Why Do Microfinance Institutions Go Green? An Exploratory Study. J Bus Ethics 122, 405–424 (2014). https://doi.org/10.1007/s10551-013-1767-2

Download citation

Keywords

  • Corporate Social Responsibility
  • Ecological responsiveness
  • Environmental motivation
  • Microfinance
  • Organizational decision making