The FINANCIAL — CSR policy is one of the most important fields for microfinance organization Crystal. According to Malkhaz Dzadzua, CEO of Crystal, the company implemented several important CSR activities last year and has spent more than GEL 100 000 on this direction.
The projects “Borrow Wisely”, “Young Entrepreneur’s School” and “Social Entrepreneurship” were all successfully implemented by the company last year.
JSC MFO Crystal is a dynamically growing local microfinance organization supporting development of the micro and small business sectors in Georgia.
Crystal offers a wide range of financial services, including: micro, SME and agro loans for start-ups and operating businesses; housing, education and consumption loans; currency exchange services; money transfers and utility payment service. Crystal is mainly focused on micro entrepreneurs and smallholder farmers living and working in the regions and remote areas. For 2016 about 60% of the company’s loans were concentrated in rural areas.
Holding a market share of 10%, Crystal is the 2nd largest MFI in Georgia out of 80 registered institutions.
Q. Who are your stakeholders?
A. Crystal is a local non-bank microfinance organization supporting the micro and small business sectors in Georgia. Our key stakeholders are: customers, employees, shareholders, investors, suppliers, government, local communities and industry-related associations.
Q. What is their impact on your business?
A. The impact is huge and the company’s success is mainly derived from its ability to properly balance and effectively manage the various self-interests and priorities of the different stakeholders. We divide them into 2 groups: internal and external. In the case of internal stakeholders (employees, founders, shareholders, equity investors), their interest comes through a direct relationship with Crystal. In the case of external stakeholders (customers, debt investors, suppliers, peer companies, environment), they do not work directly in Crystal, but are anyway affected in some way by our business activities.
Q. What do they (the stakeholders) expect from you?
A. Different stakeholders have different expectations and priorities, but all of them should be interested in the long-term success and sustainable development of Crystal. For this purpose, companies should demonstrate not only high profits and attractive financials, but also prove how responsibly they make profit and how ethically they treat internal or external stakeholders. We believe that high customer loyalty as well as employee satisfaction is a key component for reaching long term profitability and competitiveness in the market.
Q. What is the impact of your business on the local community and environment? How do you measure your impact?
A. We support micro and small entrepreneurs as well as smallholder farmers in realizing their business potential, reaching financial sustainability and elevating living standards. By providing micro loans and other financial services, we seek to establish long-term partnership with our customers and offer them transparent, affordable and innovative financial solutions tailored to their specific needs. Our ultimate goal is to see a growing number of successful enterprises, new businesses, more employment and happy customers. We strongly believe that sound social performance encompasses all aspects of sustainable development and it is all about the impact of our business activities on the local community and environment. That’s the reason why we strive to be distinguished in the market not only by the quality of our financial service, but for our social focus as well.
Q. Can you name the CSR activities implemented by your company last year?
A. Last year Crystal was traditionally active in the CSR direction. In 2016 we implemented several CSR activities in the areas of client protection, transparency, financial literacy, environment and charity. We allocated more than GEL 100 thousand for 2016’s CSR projects and will continue to support this process in the future as well. Among the most important CSR activities we can distinguish the following:
• “Borrow Wisely” International Financial Education Campaign, led by the MFC-Poland in 15 countries of Europe and Central Asia. The Campaign promotes global client protection standards and financial education. More than 8,000 borrowers have been reached and consulted by Crystal about how to borrow wisely and be protected from over-indebtedness; several educational video lectures on financial literacy have been prepared and spread through social media and network.
• The “Young Entrepreneur’s School” project, implemented in 21 cities of Georgia. More than 200 start-ups have been trained in business planning and entrepreneurship skills; 10 start-up business ideas have been financed by Crystal.
• The “Social Entrepreneurship” project, implemented with the Center for Strategic Research and Development. The project is aimed at the capacity building of social enterprises and to facilitate the economic empowerment of vulnerable groups in Georgia.
• Charity programmes: donations for 16 local and 3 international charity projects.
Q. How many micro businesses were financially supported by Crystal last year?
A. By the end of 2016 Crystal had served around 60 thousand borrowers, the majority of which are engaged in various micro business activities, including agriculture, service, trade, manufacturing, etc. It should be pointed out that more than 60% of our loans are disbursed in rural areas and 75% of them – in the local currency.
Q. You are among the few companies in Georgia supporting CSR. Can you suggest how large companies may be encouraged to follow responsible business rules?
A. There is a widespread, common “myth” saying that only large companies can and must follow CSR. We think that responsible business rules and commitment to the basic principles of CSR are essential for any size of company. They should be adopted and agreed in the early stages, at the high managerial level (founders, owners and key employees) as the core values of the company, and integrated in daily activities while communicating with internal or external stakeholders. These values do not automatically come later after growth. They should be there in the beginning. When companies are relatively small, they have more flexibility and chances to encourage these principles. If it is done properly, CSR is not a cost or a burden; it is a wise strategic investment in the future which results in the loyalty and positive attitude of customers, employees and other key stakeholders.
Q. How do you measure customer or employee satisfaction?
A. We use several methods to measure customer and employee satisfaction. For our customers, we have a “hotline” through which they can communicate all of their complaints and claims. Besides, in all branches we have anonymous complaint boxes. Customers can also easily communicate via the company’s webpage and social media. We also conduct a market survey and mystery shopping every year to have a neutral (external) point of view. As for the employees, besides standard feedback mechanisms, we conduct annual employee satisfaction surveys by external sources. From last year we also started a 360-degree performance appraisal process.
Q. Do you use social or environmental criteria for partner selection?
A. Yes. This is one of the main criteria while selecting key external stakeholders (debt and equity investors). That’s why our funders are reputable and socially-oriented international investors, who do not push us to profit maximization, but also expect a relevant social impact.
Q. Do you have a business system which ensures professional development of your employees (career-development plans)?
A. Yes. We have a business system (part of our HR policy) which regulates career development plans for all level employees. There is a salary grade system and internal promotion rules. Basic training programmes are available for all staff and advanced training courses for specific category or successful employees.
Q. Do you have a system for managing health and safety?
A. Health and safety rules are regulated by our HR and Administrative policies, which set general standards and requirements. Besides, we provide all employees with private health insurance service.
Q. Do you have an environmental management system?
A. We have a special environmental policy, which sets minimal standards and requirements on how to manage environmental risks in the company. We do not lend to the enterprises with high eco-risk profile. We also work with some of our international partners and intend to upgrade and strengthen this system by studying and integrating good international standards.
Q. Do you have a programme to control/overview the consumption of energy and water?
A. Since we are a financial service provider agency, our business is not directly related to the consumption of water/energy. Thus we do not have a special programme to control it.
Q. Do you have a waste management policy?
Yes, we have a special policy and procedures on how to manage and utilize waste paper. Recently we joined “Makuliteratura” project, where we exchange part of our wastepaper for new books and donate these books to socially vulnerable students.
Q. Do you have a policy to reduce fuel consumption?
A. When we purchase a new vehicle, or rent external transport means, fuel economy is one of the key criteria for decision-making.
Q. Can you tell us which national and international standards (ISO, EMAS) your company complies with?
A. We comply with the global SMART client protection principles and MIX social performance reporting standards, which are the most important international standards in microfinance industry.