Can’t buy me love?
Love, to most of us, is one of those things that just has no easy measure, similar to art or to happiness. Nevertheless, we insist on sizing and benchmarking it and we spend our lives trying to measure what we all really feel for one another. We might even use material things or actions – like diamonds and presents - to measure how much we love or are loved by some individual or group of people.
Well when I first met with the Planet Rating team last week, my impression was that they were trying to achieve something as difficult as measuring love: Planet Rating was assessing Financiera El Comercio’s Social Performance.
Allow me to take a step back: Planet Rating is a French Social Impact rating agency, specialized in assessing Micro Finance Institutions (MFIs) and currently evaluating Financiera El Comercio. MFI rating agencies work similarly to ordinary rating agencies (the notorious Standard&Poors, Moodys, etc) and typically come up with a final grade based upon both quantitative (financial statements) and qualitative analysis (position in industry, management expertise, etc). No need to get into technicalities and scare away profane readers, precious and loyal so far!
Notwithstanding the above, the Planet Rating folks were here in Asunción just to evaluate El Comercio’s Social Performance. And this is where it gets tricky, because Planet Rating is trying to measure “the systems and procedures implemented by MFIs to reach their social objectives” (in other words: are they contributing towards a better world?), using questions such as “is El Comercio reaching the poor or excluded?”, “is it protecting its clients?”, “is it treating its employees fairly and equally?”, and finally “is El Comercio contributing towards social change?”. Some of these questions remind me of the “who do you love more, your daddy or your mummy?” questions that my parents would use to tease my brother and me with when we were kids. They are hard to answer, and they are even harder to measure and compare!
In any case, I am aware of the need to standardize and regulate the ever-growing industry of microfinance, and now that I have met the analysts and seen their rigorous and methodical work, I buy the idea. The positive side effects of such ratings are clear:
a) MFIs would be able to tap into investors that do not have time nor resources to evaluate social impact themselves as the MFI landscape gets more crowded and complex and,
b) Improvement of the industry by sharing best practices.
I think it is worth mentioning that Financiera El Comercio came out very well in 2011 with a solid 4- rating, which positions it among the top rated MFIs and proves its commitment to social goals - hooray!
This post is just an introduction for the discussion that follows. Readers, please share your thoughts and comment below: Can we measure love and/or social impact? What is the right way to do it?