CSAF members, as socially responsible lenders, have translated our commitment to building a thriving and sustainable financial sector into a set of guiding principles. These Responsible Lending Principles, written in 2015 and updated in 2020, are the following:
1. Promotion of Inclusive Finance.
We actively promote and contribute to the further development of the market for smallholder agricultural finance. We embrace the concept of additionality in our lending, meaning that we seek to expand the addressable market to serve an ever-greater number of underserved agricultural businesses and a wider range of their financing needs.
CSAF members practice additionality: of the 650 agricultural businesses accessing financing from CSAF members, 75%+ receive a loan from just one CSAF member.
2. Responsible Credit Decisions.
We act in the best long-term interests of a sustainable financial sector that serves our agricultural business clients, their affiliated smallholder farmers and workers, and our investors.
3. Emphasis on ESG & Impact.
We actively seek out prospective clients that create positive impact on marginalized groups and on the environment, and we work together to harmonize policies and reporting for environmental, social and corporate governance (ESG) standards consistent with CSAF’s ESG Principles.
In 2015, CSAF members also created a set of ESG Principles enumerating both negative screens and positive social and environmental criteria. Members have been reporting in these annual publications and the CSAF Open Data Portal on a set of common impact metrics (aligned with the IRIS metrics for agriculture) and created a working group to harmonize around borrower impact reporting similar to the loan reporting tool referenced below under Principle 5.
We maintain a high degree of transparency regarding loan terms, conditions, and processes by communicating clear, sufficient, and timely information in a manner and language our clients can understand.
5. Harmonization of Standards.
We collaborate to set more harmonized lending and performance standards to reduce the burden for borrowers and contribute to further comparability in the industry.
CSAF members have created a standard loan reporting tool so that borrowers accessing finance from more than one lender can report monthly cash flow performance to all lenders in a common format.
6. Prevention of Overindebtedness.
We take adequate care in all phases of the credit process to determine that clients have the capacity to repay our loans without becoming over-indebted.
7. Trusted Information Sharing & Collaboration.
To promote the development of a healthy agricultural lending sector, we share information pertaining to due diligence and risk management with co-lenders while respecting the confidentiality of our borrowers’ business and financial information.
8. Fair Treatment.
We commit to ethical behavior in all credit decisions, including loan approvals, servicing and collections, and due processes for resolving disputes with the aim of engaging clients in good faith to support their business as a going concern.
In response to COVID-related disruptions in agricultural markets and clients’ cash flows, CSAF members have been rescheduling loan repayments and exercising flexibility with late fees and other loan terms. In 2021, CSAF members signed an MOU to guide alignment and collaboration during loan restructuring for shared CSAF borrowers.
9. Working Together.
As lenders we commit to coordinating our actions with each other, with other lenders, and with other stakeholders, including buyers, technical assistance providers, and certifiers to support the success of our clients and the growth, impact, and sustainability of the agricultural finance market.