Crédito Real Women-Led SME Financing Partnership
The proposed loan for Crédito Real S.A.B. de C.V., SOFOM E.R. ("Crédito Real") is for up to the Mexican peso (“MEX$”) equivalent of US$50 million, or MEX$1 billion, whichever is less, to support the growth of small and medium-sized enterprises ("SMEs") in Mexico. The Project seeks to promote access to financing for SMEs led by women in Mexico through financial products such as leasing, which provide a comprehensive approach to serving the female market. The term of the IDB Invest Loan is expected to be up to five years, and the Loan will be complemented by IDB Invest technical assistance to support the efforts of Crédito Real to become a role model for leasing operations with a gender focus.
1. Environmental and Social Categorization and Rationale: This operation is classified as an FI-3 under the IIC’s Sustainability Policy. Based upon the nature of this transaction, sub-projects in the financial intermediary’s current or future portfolio are likely to produce very limited or no adverse environmental or social or health and safety (“ESHS”) and labor impacts and risks. Crédito Real’s portfolio is concentrated short-term payroll credit lines (67.7%), used cars (8.9%), SME lending (7.5%), group lending (1.8%), and Instacredit (14.1%).
2. Environmental and Social Risks and Impacts: The main sectors that Crédito Real finances are the following: Commerce (30%), Services (17%), Hotels (10%), Mattress Industry (7%), Food (7%), and Other (29%). The average sub-loan size is US$130,000. Environmental and social risks may be related but not limited to: (i) health and safety: occupational health and safety; (ii) environmental: supply chains and waste disposal; and (iii) social: potential discrimination and barriers for an equitable process providing payroll credit. Since 2013, Crédito Real has in place an Environmental Policy which was updated in 2015. This Policy applies to staff, collaborators and suppliers of Crédito Real.
With respect to occupational health and labor, Crédito Real has a multitude of procedures for employees and collaborators, including for benefits and entitlements, personal loans, health and life insurance, library services, support with language courses and higher education. It applies a Code of Ethics and Conduct and carries out several online and presence training and induction activities for its employees which are described in a series of specific procedures. In addition, Crédito Real has in effect a manual for emergencies. Crédito Real includes environmental and social considerations in its Annual Report and carries out self-evaluation about its sustainability maturity in the framework of the Mexican Stock Exchange’s self-evaluation framework.
3. Mitigation Measures / E&S Action Plan: Crédito Real will be required to apply the IDB Invest’s Exclusion List, and comply with applicable national environmental, health and safety (“EHS”) laws and labor requirements. As per loan contract, sub-loan size will be limited to a maximum of US$250,000. Crédito Real will be required to report annually and participate in the IDB Invest’s environmental and social training course for financial intermediaries or another similar course approved by IDB Invest.