UNIVERSAL STANDARDS FOR SOCIAL PERFORMANCE MANAGEMENT Governance and Employee Commitment to Social Goals Talk about the purpose of the working group - At the SPTF Annual meeting this year work was done on SPTF Universal Standards for Social Performance Management. The idea is that these standards will establish clear expectations for both social performance and social performance reporting. The standards are also being designed to represent the foundation for an institution's social performance expectations, not the pinnacle. Our working group has been working to finalize the standards. Over the past few months, we've met through webinar once a month and continued discussions via email. We have systematically reviewed each proposed standard and asked whether it should be a standard, how should it be worded, does it reflect the concepts we want it to reflect, does it belong to this section and so on. At this point our work on standards has been forwarded to the taskforce who will come back with their recommendations. After that we will be focussing on guidelines for implementation for each standard.

2.a. Members of the Board of Directors are committed to the institution’s social goals Proposed Revision: Members of the Board of Directors are committed to the institution's social mission The group was mostly in agreement with standard 2a, but changed the word “goals” to “mission”. There was a suggestion that shareholders should be aligned with the social mission of the MFI

2.b. Members of the Board monitor the institution’s social performance through a formal mechanism Proposed Revision: Members of the Board monitor the institution’s social performance and take action in accordance with the mission Some group members thought that this standard was more of a benchmark/guideline for Standard 2.a. However others in the group wanted to include the concept that the Board is accountable for progress towards the institutions’ social goals and hence must monitor social performance.

2.c. Remuneration at the top management level balances retention and fair compensation with the social performance objectives of the institution REMOVE STANDARD Some group members felt that this was more of a benchmark/guideline The group felt that this would be a better fit under the Section 7 - Responsible Financial Performance section of the standards It also overlaps with Section 5 - Social Responsibility to Employees Our recommendation is to remove this from Section 2 and shit to Section 5 or 7 and adjust wording to encompass idea of appropriate salaries for staff, not just senior management remuneration.

2.d. Social performance information is integrated into regular management reports and strategic planning Proposed Revision: Social performance information is integrated into decision making processes by management within the institution. This standard is similar to 2.b. which is for the Board. Some members would like to roll the two standards into one and other would like to keep them separate. For the time being we have kept them separately – would like feedback on this

2.e. Each employee understands his/her specific role in achieving the institution’s social objectives NO REVISION There was some discussion on using social objectives vs. social goals. We are leaving it up to the taskforce to streamline this language across all the standards.

2.f. Employees are evaluated on their job duties related to social performance Proposed Revision: Employees are evaluated and rewarded on their job duties related to social performance Is this more of a benchmark/guideline for the previous standard (2.e)? Argument for keeping 2.e. and 2.f. separate - Standards need to cover the concept of commitment and understanding, which is covered under 2.e and 2.f covers the concept of accountability. It was suggested to add the idea of incentives for employees, so that they were not only evaluated but also incentivized based on their social performance.

Suggested Standard: Institution applies a Code of Ethics Code of Ethics is broader and delves into many issues not covered by Client Protection principles. Most organizations’ codes of ethics do not currently apply to the board, but group would support having it apply to the board too. Some participants were not convinced that this needs to be a standard as it is a wider issue of business integrity and is not really best covered under SPM standards Standard needs wordsmithing at least. We will need to detail out what the codes are and how they are to be applied, perhaps under guidelines. Invite opinion on this.

Over-Arching Issues Good Governance vs. Universal Standards for Social Performance Management Gender There was a tendency for the group to include concepts that come under “good governance.” We decided that we needed to be conscious about this and only focus on governance from the social performance lens. Gender will be discussed in the benchmarks/guidelines. Gender wording has not been included in the Standards to keep their “universal” nature and not to give preference to one target group over another.

Moving Forward Discussing Guidelines for Implementation/Benchmarks in January-February, 2012 Email Rashmi Ekka @ rekka@azmj.org if you would like to be part of this discussion