Why do microfinance institutions go green?

Marion Allet

No 12-015, Working Papers CEB from ULB -- Universite Libre de Bruxelles

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 & 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.

Keywords: Microfinance; Ecological responsiveness; Environmental motivation; Organizational decision making; Corporate Social Responsibility (search for similar items in EconPapers)
JEL-codes: G21 Q01 Q56 (search for similar items in EconPapers)
Pages: 24 p.
Date: 2012-04
New Economics Papers: this item is included in nep-env, nep-mfd and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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