Through private debt and equity investments we channel financing towards growth of the MSME sector, employment creation and improved living conditions for private households. EFSE’s activities contribute to a range of SGDs and have been mapped at an SDG target level, based on which 7 have been selected as core SDGs.

We build on the following international standards and applicable regulations, among others: 

• Operating Principles for Impact Management  
• Client Protection Principles
• 2X Challenge
• IFC Performance Standards  
• Fundamental conventions of the International Labour Organization  
• International Bill of Human Rights
• Disclosure in line with requirements stipulated by Article 9 of the Sustainable Finance Disclosure Regulation (SFDR). 

Finance in Motion, EFSE’s Portfolio Manager, has been recognized as a 'Practice Leader' by leading impact verifier BlueMark since 2022. In 2023, its impact management system was rated 'advanced'—the highest possible—across all eight dimensions of the Impact Principles.

Measuring positive impact helps us monitor progress towards our impact objective and informs the strategy. We monitor our impact based on key indicators, in line with EFSE Theory of Change which reflects: 

• Direct impact on the investee and the sector overall, for example, by improving the financial institutions’ capacity to serve MSMEs
• Indirect impacts on or through the investees’ clients, for example, sustaining and creating job opportunities in the local MSME sector.  

Systematic impact measurement and management is integrated in EFSE’s investment lifecycle. We assess potential impact of each investment with the Impact Scoring Tool at the due diligence stage, regularly monitor it during the investment period and assess the final impact at exit. Our data management system enables end-to-end tracking of financing to the final client, capturing key indicators such as use of proceeds, gender, and economic sector. This data informs the Fund’s impact measurement, portfolio management and strategy.  

EFSE places a priority on effectively managing – i.e., avoiding, minimizing, and mitigating –  potential environmental and social (E&S) risks and negative impacts associated with its investments. To this end, the fund maintains and continuously improves its environmental and social management system (ESMS).  

E&S risks are considered throughout the investment process. E&S screening and thorough E&S due diligence processes are a key tool for identifying potentially significant E&S risks and for assessing the capacity and commitment of EFSE’s investees to address and mitigate against these. E&S undertakings are also included in the financing documents with the investees, as well as EFSE’s E&S exclusion list. Once capital is deployed, EFSE monitors the E&S performance and compliance of its investees at least on an annual basis.  EFSE also engages with them to strengthen their E&S capacity where required.