Social Business Charter

I. PREAMBLE

Develop business solutions to poverty and vulnerability

CHAMROEUN is driven by its social mission, which is at the heart of its business model and practices. 

CHAMROEUN’s mission is to contribute to reducing Cambodian people’s poverty and vulnerability through a market based approach, with particular attention given to women and economically active poor families.

In its business model, it intertwines economic and social pillars so as to set up a sustainable and scalable development model. Every stakeholder -shareholders, managers, employees, lenders, regulator and other relevant governmental entities and clients - takes part in the achievement of this social mission.

This Social Charter embodies CHAMROEUN’s social mission. It is structured along 7 generic principles for Social Businesses and completed by commonly agreed-upon, measurable commitments reflectingCHAMROEUN’s activities and characteristics. Indicators allowing for measuring and monitoring will be agreed upon by all the shareholders following a joint working session between CHAMROEU’s Top Management and the shareholders, whereby benchmarks should, to the largest possible extent, be taken from publically available standards, such as MIX[1] or IRIS[2], while ensuring consistency with national sector standards. By appending this Social Charter to the Shareholders’ Agreement, the shareholders and the top management of CHAMROEUN commit to the Principles and Commitments below.

II.    PRINCIPLES

                                                     

Principle 1- Business Definition

The Social Business aims at contributing to the overcoming of poverty and vulnerability through a business based approach

CHAMROEUN is a regulated social finance company based in Cambodia that provides sustainable and affordable financial and socio-economicservices to women and economically active poor families to contribute to poverty alleviation and economic development in Cambodia.

Commitment 1: CHAMROEUN has a clear focus on serving vulnerable clients in Cambodia.

Commitment 2: CHAMROEUN allocates a significant part of its resources to serve economically active poor clients by facilitating their access to finance and – through CHAMROEUN or other partner organizations - capacity building services.

Commitment 3: CHAMROEUNis committed to the promotion of Cambodian women’s empowerment through financial services designed to meet their needs.

Principle 2- Business Objective

The Social Business’ objective is to provide solutions to one or more problems that threaten people and society

CHAMROEUNtargets the enhanced financial inclusion for the most vulnerable people in Cambodia by providing a wide range of responsible microfinance and complementary socio-economic services.

Commitment 4: CHAMROEUNdesigns a variety of loans aimed at strengthening and improving the business of its clients.

Commitment 5: CHAMROEUN’s funding support to its partners is closely linked to the other socio-economic services it provides

Commitment 6: CHAMROEUN, as a microfinance institution, will actively commit to promotemicro insurance services and to engage with public and private stakeholders in order to improve their awareness of and effective access to these products.

Principle 3- Clients (Partners)

The Social Business protects its clients (partners)

CHAMROEUN adheres to the sector’s standards on client protection: it endorses the SMART Campaign’s Client Protection Principles (“CPPs”) and puts in place key procedures to ensure its compliance with them. CPPs will be an integral part of a set of social performance indicators that CHAMROEUN designs and defines, together with its shareholders, to monitor its social performance.

Commitment 7: CHAMROEUN progressively implements the CPP principles[1] and commits to conduct regular assessments of its practices,

Commitment 8: CHAMROEUN demonstrates best efforts to offer loans in the currencies used by its target clients in their day-to-day business activity or to support the clients in managing their currency risk, without exposing itself to significant unmanaged currency risk.

Commitment 9:CHAMROEUNcommits itself to offer loans that at first cycle have an average size among the lowest in the country, if not the lowest, ensuring a strong commitment to target vulnerable population. It commits also to offer loan conditions (interest rates, condition of access, etc.) that will be affordable for its partners.

Principle 4 - Returns

CHAMROEUNaims at being profitable, to ensure its social, economic and financial sustainability in the long run. As a Social Business, its objective is not profit maximization. The intention of shareholders is that, in accordance withCHAMROEUNdividend policy, profits shall bere-invested in order to maximize CHAMROEUN’s social impact.

CHAMROEUN’s financial and economic sustainability are key drivers, allowing CHAMROEUN to implement and maintain its social mission over time, therefore having a sustainable impact on the areas where it operates.

Driven by a business-based approach and operating in a competitive framework,CHAMROEUN ensures its viability and development through regular review and improvements of its products and services. CHAMROEUN’s strategy to achieve these social and financial returns is aligned with its social mission.

Commitment 10: In accordance with CHAMROEUN’s dividend policy as stated by its Articles of Association, shareholders commit themselves to re-invest net profits in the company in order to ensure its development and sustainability in the long run and foster its social mission. An exception to this policy may be authorized upon decision of the Board in favor of CHAMROEUN Staff Association (CSA) and Chamroeun Foundation Association. 

Commitment 11: Shareholders commit also toreinvest the amount of any capital gain they may receive at exit from CHAMROEUN into other social added-value services or social business projects with the purpose of maximizing their social impact.An exception to this principle may be granted, upon decision of the Board, in favor of such minority shareholder, holding a less than 20% stake in the company, who demonstrates its strong commitment to the social mission of CHAMROEUN and needs to use such capital gains to ensure its own long term self-sustainability. 

Commitment 13: any bonus and any profit-sharing scheme for the executive directors and managers of CHAMROEUN will be granted based on an equal basis between financial and social performances. 

Principle 5 - Responsibility toward Community and Environment

The Social Business contributes to a better community and environment.

CHAMROEUN is committed to contributing in efforts that help ensure stronger community and a healthy environment for current and future generations.

Commitment 14: CHAMROEUN commits to open its socio-economic services to all members of the communities in which they operate in order to strengthen their financial inclusion, prevent over-indebtedness and participate in their economic development.CHAMROEUN will be a positive agent of change in the communities and work in good collaboration with all the stakeholders involved in the improvement of the well-being of its target groups.

Commitment 15: CHAMROEUN commits to develop environmentallyfriendly products and services and to ensure that they do not have a strong and irreversibly adverse impact on the environment.

Commitment 16: CHAMROEUN recognizes and respects the environmental principles and policies of its shareholders and lenders (as set out in the Shareholders’ Agreement and other respective contractual agreements).

Principle 6 – Human Resources/ Employee Satisfaction

The Social Business works for employee empowerment, pays market wages and offers above standard working conditions

CHAMROEUN’s human resources policy reflects fair and non-discriminatory treatment of employees, with a particular focus on training, personnel and career development.

Commitment 17: CHAMROEUNsecures a steady job and a market-based salary for its staff.

Commitment 18:CHAMROEUN ensuresa safe working environment and conditions. Its HR policies are neutral as regards to the ethnic, religious, sexual orientation or political affiliation of its staff. It promotes diversity of people in recruitment, promotion and compensation of employees (including women employment and gender equality at management level) and improvement of skills.

Principle 7 - Measurement

The Social Business sets up relevant indicators to monitor these commitments and the social impact on stakeholders.

CHAMROEUNcontributes to the development of tools and indicators used for monitoringthe achievement of its social commitments.

Commitment 19: The Board of Directors of CHAMROEUN determines relevant indicators for each of the above commitments. To do so, CHAMROEUN, operating as a microfinance institution, will regularly use different tools to measure its social performance, like the Universal Standards of Social Performance. CHAMROEUNmay be supported by external specialists and development actors in the field of social performance assessment in

microfinance.

Commitment 20: CHAMROEUN’s social impact will be assessed, at the latest, three years after the agreement on this Charter. This assessment shall be undertaken on a transparent and independent basis by a dedicated research professional or organization. Among the tools used byCHAMROEUN to monitor its social commitments, there should be a poverty measurement score card, such as the Progress out of Poverty Index (PPI) tool, in order to measure the poverty level of its clients.

Commitment 21: CHAMROEUN commits to report relevant social performance indicators to the MIX market on an annual basis and to all other relevant stakeholders and specialized entities (like the Social Performance Task Force, TrueLift, MicroFinance Transparency to mention a few) if and when requested.

III.     INDICATORS FOR MONITORING

Together with CHAMROEUN and its shareholders, indicators for monitoring will be negotiated and agreed upon.

           IV. They will be aligned, to the greatest possible extent, to industry recognized standards such as the USSPM[4] and MIX reporting standards.