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Why do microfinance institutions go green?


  • Marion Allet


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 & Roth (2000), we discover that MFIs that are the most proactive in environmental management are primarily motivated by social responsibility, additionally by competitiveness, and to a lesser extent by legitimation (stakeholder pressure). MFIs for which legitimation 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.

Suggested Citation

  • Marion Allet, 2012. "Why do microfinance institutions go green?," Working Papers CEB 12-015, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/115102

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    References listed on IDEAS

    1. Manuel Branco & Lúcia Rodrigues, 2006. "Corporate Social Responsibility and Resource-Based Perspectives," Journal of Business Ethics, Springer, vol. 69(2), pages 111-132, December.
    2. François Maon & Adam Lindgreen & Valérie Swaen, 2009. "Designing and Implementing Corporate Social Responsibility: An Integrative Framework Grounded in Theory and Practice," Journal of Business Ethics, Springer, vol. 87(1), pages 71-89, April.
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    Cited by:

    1. Davide Forcella & Marek Hudon, 2016. "Green Microfinance in Europe," Journal of Business Ethics, Springer, vol. 135(3), pages 445-459, May.
    2. Marion Allet & Marek Hudon, 2015. "Green Microfinance: Characteristics of Microfinance Institutions Involved in Environmental Management," Journal of Business Ethics, Springer, vol. 126(3), pages 395-414, February.
    3. repec:eco:journ2:2017-03-09 is not listed on IDEAS
    4. repec:gam:jsusta:v:9:y:2017:i:11:p:1957-:d:116623 is not listed on IDEAS
    5. Rafael Moser & Davide Forcella & Lauro Emilio Gonzales Farias, 2016. "Microfinance and climate change: threats and opportunities, the case of Brazil’s largest rural MFIs, Agroamigo and Cresol," Working Papers CEB 16-010, ULB -- Universite Libre de Bruxelles.
    6. Davide Forcella & Guja Lucheschi, 2016. "Microfinance and ecosystems conservation How green microfinance interacts with Socio- Ecological systems Lessons from Proyecto CAMBio in Nicaragua and Guatemala," Working Papers CEB 16-008, ULB -- Universite Libre de Bruxelles.

    More about this item


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

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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