Climate Smart Financial Services
This series will feature development approaches that combine environmental goals with financial inclusion. Over the next month, watch this space for a new post every week on this topic. We welcome your thoughts on how best to combine these goals through comments.
Exposure to smoke from traditional cookstoves and open fires – the primary means of cooking and heating for nearly 3 billion people in the developing world – causes 2 million premature deaths annually, with women and children the most affected.
As Michael Porter and other insightful business thinkers have emphasized, excessive focus on short-term financial performance while ignoring customer and community well-being distorts decision making, inhibits innovation and ultimately limits financial success.
Offering financial products that enable poor clients to purchase clean, low-carbon alternatives to kerosene, firewood and other conventional fuels is perhaps the most direct way in which microfinance can be mobilized to combat climate change and preserve ecological resources.
Energy poverty, climate change, financial inclusion and women empowerment are all closely related. Of the 1.6 billion people globally without access to electricity, 70% are women and girls.
Excluded from formal markets and unable to access agricultural inputs, market information and credit, many rural poor adopt survival techniques such as illegal logging and slash-and-burn agriculture that degrade the environment and contribute to global warming.