Research & Analysis
Publication

Climate Risk and Financial Inclusion: A Regulatory Perspective

Climate change poses risks to the real economy. This may drive a retrenchment of the financial sector away from serving the least profitable and most climate-exposed clients, namely low-income, rural households, and micro, small, and medium enterprises. Moreover, new reporting and disclosure requirements for increased environmental due diligence, along with other necessary regulatory actions, can unintentionally exacerbate financial exclusion if they are not implemented with a risk-based approach.

This working paper outlines how inclusive green finance policies can enhance financial stability by creating a more resilient real economy and reducing the risks facing the financial sector. It offers suggestions for governments on their regulatory and policy responses, including for financial instruments that mitigate climate risk without exacerbating financial exclusion; reduce transaction costs linked to climate risk management and green financing; and scale up affordable green finance.

Related Resources

Publication

Bolstering Women’s Climate Resilience and Adaptation through Financial Services

Financial services help people to reduce the impact of and to adapt to climate-related risks. Yet women have less access to such tools. This working paper illustrates how women are differently impacted by climate change and how financial services can play a better role in strengthening their autonomous adaptive capacities to climate change.
Blog

Climate Resilience Through Financial Services: Farzana’s Story

Women, especially those in low-income countries, are faced with higher risk, greater vulnerability, and fewer tools to cope with the impacts of climate change. Financial services can empower women to manage climate risks and build resilience.
Blog

Financial Inclusion: An Entry Point to Climate Adaptation for Funders

Development funders are thirsty for guidance and good practices on funding for climate adaptation, not just mitigation. Here, we discuss how funding to support inclusive financial systems may be a great place for them to start.
Blog

State of the Climate-Responsive Financial Product Landscape

EMDEs are hit hardest by climate-related disasters and environmental impacts and will need a variety of financial services to adapt and grow more resilient to climate change. Are they getting them? Our product scan provides preliminary insights.
Topic: Digital Innovation, Enabling and Responsible Financial Policy, Climate Change
Sub-topics: Regulation, Role of Financial Inclusion

Related Research

Publication

Supply-Side Gender Disaggregated Data for Advancing Financial Inclusion: Insights and Areas for Further Research

Gender data is key for unlocking the potential of financial inclusion. This report explores the ways supply-side gender-disaggregated data (S-GDD) is being used to inform financial policies and strategies that seek to intentionally apply a gender lens.
Reading Deck

Social Media Monitoring to Assess Consumer Risks in Digital Credit Apps: Guidance for Supervisors from an India Pilot

To better understand the digital consumer credit and the risks they pose for customers, this reading deck contains supervisory guidance on the use of a branch of AI, Natural Language Processing (NLP), for social media monitoring. It is based on insights and lessons from an India pilot and provides examples of social media analyses carried out as part of that pilot.
Publication

Emerging Trends in National Financial Inclusion Strategies that Support Women’s Entrepreneurship

Women entrepreneurs continue to face persistent gender-based barriers that impede their success – such as unequal access to financial accounts, constrained credit, and normative roles that keep women in the role of primary caregivers. Improved financial inclusion can help reduce some of these barriers. This WBL-CGAP Brief presents data collected by the World Bank’s Women, Business and the Law (WBL) project on how National Financial Inclusion Strategies can spur policy and regulatory reforms in support of women’s entrepreneurship.