Emmanuel de Lutzel, head of international microfinance at the French bank BNP Paribas, spoke of the power of microfinance to lift people out of poverty and create a lasting social impact when he addressed a Greencoat Forum in the London Centre of the Initiatives of Change on 8 May. His evening talk was co-hosted by Caux Initiatives for Business.
De Lutzel, who was speaking in a personal capacity rather than as a spokesman for the bank, told how microfinance began in the 1970s when the economist Muhammad Yunus lent $25 to a group of women in Bangladesh. When he was repaid, Yunus decided to expand the initiative. De Lutzel explained that, 30 years later, the microfinance sector lends to an estimated 150 million borrowers which in turn directly impacts the lives of one billion people.
De Lutzel has worked in the banking sector for 25 years but alongside this he has been involved in business ethics on a national level. He is a member of the board of Transparency International France, the anti-corruption organization, and is also a member of the board of Initiatives of Change in France. Despite being socially active, he thought that he should be doing something more and in 2005 his calling came while reading The Economist magazine. 2005 was the Year of Microfinance and while BNP Paribas were involved in funding microfinance initiatives in France, as part of their Corporate Social Responsibility (CSR) policy, they were funding only two small microfinance pilot projects abroad, in Guinea and Morocco. These have now be replicated in 10 other countries.
De Lutzel was inspired by what he had read and heard about microfinance’s potential to make a social impact. He started as a field volunteer for Adie, a French microfinance organization, and proposed colleagues from the bank to join. The response was overwhelming. ‘I was really surprised at the number of people who turned up,’ De Lutzel said. He then transformed his ‘hobby’ into a job, to work full time for microfinance, starting with a proposition to the bank’s Executive Committee to launch a global initiative to invest in microfinance at an international level.
As his previous banking experience had been in cash management and not microfinance, he faced a challenge to demonstrate the expertise behind his conviction that microfinance could be a tool to reduce poverty and make a social impact while not losing the bank any money. The executive committee agreed and the project was given the green light. ‘Big banks are not just bureaucratic monsters; they are made up of people and I knew I just had to reach the people individually,’ de Lutzel commented.
In January 2007, he became the head of microfinance in BNP Paribas and is now in charge of a €70 million allocation of bank resources, working with 22 microfinance institutions in 12 countries. This was impacting the lives of some 400,000 borrowers and their families, he said.
As banks have traditionally been profit-focused, the microfinance initiatives taken up by commercial banks represent an innovative economic model where both financial and social returns are taken into consideration. De Lutzel highlighted, ‘When considering applications for microfinance loans, we always look at the potential social impact and if this is perceived to be negative, we won’t invest in the venture even if it seems to be financially viable.’ He underlined that it was also an innovation in risk analysis, as banks are used to working with big banks as counterparts, but not so much with tiny financial institutions which often have an NGO background.
De Lutzel also spoke of his role in coordinating a network of volunteers who were either working in the banking sector or had recently retired. ‘It was very important for us to have the help of people with financial expertise.’ He saw the current economic crisis as a moral crisis which was ‘an opportunity for a new paradigm in ethical banking’. He noted that the word credit comes from the Latin credo which means to trust, believe and commit.
De Lutzel spoke of the people who had inspired him along the way such as Muhammad Yunus, the founder of the Grameen Bank and Nobel Peace Prize winner; the late Bill Porter, founder of the International Communications Forum, a media ethics campaign; Bill Drayton, the founder of the Ashoka social enterprise network and Peter Eigen, the founder of Transparency International.
Cheryl Gallagher
English