Microfinance refers to the provision of financial services to low-income clients, including consumers and the self-employed. By definition it is banking to the unbankables, bringing credit, savings and other essential financial services within the reach of millions of people who are too poor to be served by regular banks, in most cases because they are unable to offer sufficient collateral. In general, banks are for people with money, not for people without. While the industry has taken more interest in recent years, it is still a very niche market. Challenges are more widespread in comparison with other forms of investment, but incentives for the overall process (the investor, the loan recipient, & governments alike) have proved to be a win-win process. In fact as Recent as 2006, the Nobel Peace Prize was awarded to microfinance pioneer Muhammad Yunus and the Grameen Bank for their work dating back to 1976 in dealing with widespread famine plaguing Bangladesh.
Unlike most investments funds which invest into companies, shares, or even fixed assets, Microfinance provides a cushion for poor households against the extreme vulnerability that is a feature of their everyday existence and can push a family into destitution. In essence microfinance gives people more options, empowering them to make their own choices and build their own way out of poverty.
With this growth, opportunities for us as individuals to get into green investing and SRI abound. There are the usual suspects like stocks and bonds, mutual funds and venture capital. For example, hundreds of various funds exist for investors looking to put their money where their mouth is, and support companies who share their values.
Source: Oikocredit, Gert va Maanen, Microcredit: Sound Business or Development Instrument, 2004), (CGAP, World Bank Consultative Group to Assist the Poor, CGAP Annual Report, 2004)