Skip to main content

Entrepreneurial value creation through green microfinance: Evidence from Asian microfinance lending criteria


Microfinance has proliferated as both a poverty alleviation tool and catalyst for entrepreneurs running small-scale businesses with support from microloans. This article examines four rationales for incorporating concern for the natural environment into the practice of microfinance and suggests a typology to categorize microfinance sustainability initiatives as preserving, evolving, sustaining or restoring. Using a binomial descriptive content analysis of publicly available lending criteria, we investigate the incidence of ‘green microfinance’ in a sample of 40 Asian microfinance institutions (MFIs) – all members of the Banking with the Poor Network in Bangladesh, India, Indonesia, Laos, Nepal, Pakistan, Philippines, Sri Lanka, Thailand and Vietnam. We conclude that despite the existence of viable and strategic rationales to support the proliferation of ‘green’ microfinance, very few MFIs actually embed such a commitment into the structure of their financial products. This disconnect reveals that current microfinance practice in Asia, to the extent that it may ignore the natural environment, may correspondingly endanger the health and livelihoods of the very people it is designed to help. We consider this study as investigative and in need of replication in other regions; however, it reveals key contradictions while also suggesting strategic redirections for the microfinance field in Asia and elsewhere.

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

Figure 1
Figure 2


  1. 1.

    The focus of this investigation is specifically on environmental impacts of microfinance, and we purposefully limit ourselves to defining and discussing this subset of impacts. Certainly, microfinance has been linked with many positive social impacts (empowerment, food security, consumption smoothing, improved health and education for clients and children) as well as many negative social impacts (violence against women, general over-indebtedness and related suicides, particularly in India). We mention these here to encourage further investigation, but they are outside the scope of this article.


  1. Acs, Z.J. and Dana, L.P. (2001) Contrasting two models of wealth distribution. Small Business Economics 16: 63–74.

    Article  Google Scholar 

  2. Asian Development Bank. (1999) Finance for the poor: Microfinance development strategy,, accessed 22 April 2011.

  3. Baxter, W. (1995) People or Penguins. In: C. Pierce and D. VanDeVeer (eds.) People, Penguins and Plastic Trees. Belmont, CA: Wadsworth.

    Google Scholar 

  4. Boiling Point. (2005) Scaling up and commercialization of household energy initiatives. 50,, accessed 17 April 2011.

  5. Brook, P. and Smith, W. (2001) Improving access to infrastructure services by the poor: Institutional and policy responses,, accessed 19 April 2011.

  6. BYU Broadcasting. (2005) Microcredit and the future of poverty. (DVD), program originally aired 17 October.

  7. Callaghan, I. (2007) Microfinance – On the road to capital markets. Journal of Applied Corporate Finance 19 (1): 115–125.

    Article  Google Scholar 

  8. Chan, S.W. (2005) An exploratory study of using micro-credit to encourage the setting up of small businesses in the rural sector of Malaysia. Asian Business and Management 4: 455–479.

    Article  Google Scholar 

  9. Clancy, J., Oparaocha, S. and Roehr, U. (2004) Gender equity and renewable energies: Thematic background. Paper presented at ‘Renewables’, Internationale Konferenz für Erneuerbare Engergien; 1–4 June, Bonn, Germany,

  10. Cohen, B. and Winn, M.I. (2007) Market imperfections, opportunity and sustainable entrepreneurship. Journal of Business Venturing 22 (1): 29–49.

    Article  Google Scholar 

  11. Coloma, J. and Harris, E. (2009) From construction workers to architects: Developing scientific research capacity in low-income countries. PLoS Biol 7 (7): 1–4, Also,

    Article  Google Scholar 

  12. Dean, T.J. and McMullen, J.S. (2007) Toward a theory of sustainable entrepreneurship: Reducing environmental degradation through entrepreneurial action. Journal of Business Venturing 22 (1): 50–76.

    Article  Google Scholar 

  13. Dunford, C. (2000) The holy grail of microfinance: ‘Helping the poor’ and ‘sustainable?’ Small Enterprise Development 11 (1): 40–44.

    Article  Google Scholar 

  14. Engardio, P. (2007) Beyond the green corporation. Business Week 29 January: 50.

  15. (2011) A microfinance cooperative linking socially conscious lenders with microfinance entrepreneurs in the developing world,, accessed 7 May 2011.

  16. Fisher, M. (2006) Income is development: Kickstart's pumps help Kenyan farmers transition to a cash economy. Innovations 1 (1): 9–30.

    Article  Google Scholar 

  17. FIS Microcredito Social Investment Fund. (2006) Solar FIS Project Prospectus. Santiago del Estero, Argentina: El Ceibal Asociacion Civil.

  18. Freeman, R.E., Pierce, J. and Dodd, R.H. (2000) Environmentalism and the New Logic of Business. New York: Oxford University Press.

    Google Scholar 

  19. Fthenakis, V. (2000) End-of-life management and recycling of PV modules. Energy Policy 28: 1051–1058.

    Article  Google Scholar 

  20. Gallo, P. and Jones-Christensen, L. (2011) Firm size does matter: An empirical investigation of organizational size and ownership on sustainability-related behaviors. Business and Society,, accessed 17 March 2011.

  21. Grameen Foundation. (2008) Who we are,, accessed 31 December 2008.

  22. Grameen Foundation. (2009) Our heritage, village_phone/heritage/, accessed 9 April 2009.

  23. Grameen Technology Center. (2008) Grameen Technology Center employee statements at BYU's 2008 Economic Self-reliance conference on 7 November 2008.

  24. (2004) Guiding principles for microenterprise and the environment. Paper presented at Microenterprise and the Environment Conference; 30 July, Valley Forge, PA, USA.

  25. (2011) Green microfinance center,, accessed 19 April 2011.

  26. Hall, J. (2007) Microenterprise, microfinance and the environment,,com_docman/Itemid,36/dir,ASC/gid,166/limit,5/limitstart,0/order,name/task,cat_view/, accessed 31 December 2008.

  27. Hardin, G. (1968) The tragedy of the commons. Science 162 (3859): 1243–1248.

    Article  Google Scholar 

  28. Hawken, P., Lovins, A. and Lovins, H. (1999) Natural Capitalism. New York: Hachette.

    Google Scholar 

  29. Ho Lem, C. and Samson, R. (2003) The Mayon turbo stove: Fueling the fight against poverty. REAP-Canada Newsletter 1 (Winter): 6–8.

    Google Scholar 

  30. Holvoet, N. (2004) Impact of microfinance programs on children's education: Do the gender of the borrower and the delivery model matter? Journal of Microfinance 6 (2): 27–49.

    Google Scholar 

  31. Huitt, W. (2004) Maslow's hierarchy of needs. Educational Psychology Interactive,, accessed 1 April 2009.

  32. ILO. (1999) ILO Reports Significant Job Growth in Commerce Worldwide during 1990s,, accessed 10 June 2009.

  33. Japanese Institute for Irrigation and Drainage (JIID). (2001) Smallholder irrigation market initiative,, accessed 19 April 2011.

  34. Karnani, A. (2010) Failure of the libertarian approach to reducing poverty. Asian Business and Management 9 (1): 5–21.

    Article  Google Scholar 

  35. Kelman, S. (1995) Cost-benefit analysis: An ethical critique. In: C. Pierce and D. VanDeVeer (eds.) People, Penguins and Plastic Trees. Belmont, CA: Wadsworth.

    Google Scholar 

  36. Knapp, K. and Jester, T. (2001) Empirical investigation of the energy payback time for photovoltaic modules. Solar Energy 71 (3): 165–172.

    Article  Google Scholar 

  37. Lal, A. and Israel, E. (2006) An overview of microfinance and the environmental sustainability of smallholder agriculture. International Journal of Agricultural Resources, Governance and Ecology 4 (5): 356–376.

    Article  Google Scholar 

  38. Littlefield, E., Morduch, J. and Hashemi, S. (2003) Is microfinance an effective strategy to reach the millennium development goals? Focus Note of the Institute for Financial Management and Research,, accessed 19 April 2011.

  39. Maslow, A.H. (1943) A theory of human motivation. Psychological Review 50 (4): 370–396.

    Article  Google Scholar 

  40. McDonough, W. and Braungart, M. (2003) Cradle to Cradle: Remaking the Way We Make Things. New York: North Point.

    Google Scholar 

  41. Microcreditsummit. (2011) Record 128 million of world's poorest received a micro-loan in 2009,, accessed 19 April 2011.

  42. Montiel, I. (2008) Corporate social responsibility and corporate sustainability: Separate pasts, common futures. Organization & Environment 21 (3): 245–269.

    Article  Google Scholar 

  43. Morduch, J. (1999) The microfinance promise. The Journal of Economic Literature 37 (4): 1569–1614.

    Article  Google Scholar 

  44. Nattrass, B. and Nattrass, M.A. (2002) Dancing with the TIGER: Learning Sustainability Step by Natural Step. Gabriola Island: New Society.

    Google Scholar 

  45. Neuendorf, K.A. (2002) The Content Analysis Guidebook. Thousand Oaks, CA: Sage.

    Google Scholar 

  46. Panjwani, A. and Cecelski, E. (2003) Major Activities and Actors in Energy, Poverty and Gender. Washington DC: World Bank.

    Google Scholar 

  47. Paudyal, D.P. (2007) An overview of rural development in Asia. Asia-Pacific Journal of Rural Development 37 (1): 1–16.

    Google Scholar 

  48. Poyo, J., Parker, J. and Golden-Vasquez, A. (1996) Trends in Microenterprise Development in Latin America and the Caribbean. Report prepared for Microenterprise Unit, Inter-American Development Bank. Bethesda, MD: Development Alternatives Incorporated.

  49. Rolston III, H. (1988) Environmental Ethics: Duties to and Values in the Natural World. Philadelphia, PA: Temple University Press.

    Google Scholar 

  50. Simon, D. and Sear, J. (2005) Indigenous microcredit and enterprise establishment: A Sri Lankan case study. In: Executive Reference Book: The Sri Lankan Economy. Hyderabad: ICFAI.

    Google Scholar 

  51. Taborga, M. and Wenner, M. (1997) An evaluation of the Inter-American Development Bank loan for micro and small enterprise development in Costa Rica. Microenterprise Unit, Sustainable Development Department, Washington DC: Inter-American Development Bank.

  52. Taylor, P. (1986) Respect for Nature: A Theory of Environmental Ethics. Princeton, NJ: Princeton University Press.

    Google Scholar 

  53. Tictin, T., Nantel, P., Ramirez, F. and Johns, T. (2002) Effects of variation on harvest limits for non-timber forest species in Mexico. Conservation Biology 16 (3): 691–705.

    Article  Google Scholar 

  54. Unitus. (2011) Microfinance Institutions,, accessed 22 April 2011.

  55. Wenner, M. (2004) Microenterprise growth and environmental protection. Microenterprise Development Review 4 (2), 1, 5–7.

  56. Wilson, M. and Green, J.M. (2000) The feasibility of introducing solar ovens to rural women in Maphephethe. Journal of Family Ecology and Consumer Sciences 28: 54–61.

    Google Scholar 

  57. Werhane, P.H. (2002) Moral imagination and systems thinking. Journal of Business Ethics 38: 33–42.

    Article  Google Scholar 

  58. Women's World Banking. (2009) Mission and Vision,, accessed 1 March 2009.

  59. World Bank. (2007) Microfinance in South Asia: Toward financial inclusion of the poor,,,contentMDK:21404284~pagePK:146736~piPK:146830~theSitePK:223547,00.html, accessed 22 April 2011.

  60. Yunus, M. (2003) Banker to the Poor. New York: PublicAffairs.

    Google Scholar 

  61. Zucchetti, A. and Alegre, M. (1999) Microempresa y Ambiente. Paper presented at 2nd Inter-American Forum on Microenterprise; 24–26 June, Buenos Aires, Argentina.

Download references


The authors would like to thank Gordon Rands, the editors and anonymous reviewers for helpful comments on earlier versions of this article.

Author information



Corresponding author

Correspondence to Geoffrey R Archer.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Archer, G., Jones-Christensen, L. Entrepreneurial value creation through green microfinance: Evidence from Asian microfinance lending criteria. Asian Bus Manage 10, 331–356 (2011).

Download citation


  • microfinance
  • microcredit
  • green
  • poverty
  • environment
  • sustainability