Female rural workers in a field Photo by Wim Opmeer, 2016 CGAP Photo Contest

Climate Change

 

We cannot tackle climate change effectively without inclusive financial services

diagramPoor and vulnerable people in developing countries, especially women, suffer disproportionate effects of climate change on their health and livelihoods. Although financial services are only part of the solution, they are vital for empowering vulnerable populations to build resilience to climate change and to benefit from a just green transition. Savings, insurance, credit, remittances, and social protection payments all have major roles to play in helping people prepare for and adapt to climate change.

CGAP has issued a call to action for stakeholders working to address climate change and those working to improve inclusive finance to work together and leverage inclusive finance to scale grassroots climate action.

CGAP research shows that most financial service providers don’t yet see climate adaptation as a top priority. Their efforts tend to focus on understanding their own climate risk, reducing their carbon footprint, or lending for renewable energy. These efforts are vital, but cannot substitute for bolstering the adaptation and resilience of climate-exposed clients. Similarly, few climate practitioners realize that inclusive financial services can be a powerful tool for increasing grass roots climate action.

Climate change is also increasingly threatening progress on financial inclusion, by making poor clients riskier and more expensive to serve. As the consequences of climate change grow rapidly, the financial inclusion community must learn to help both clients and providers better manage their climate risk to keep financial systems inclusive.

Considering compounding inequities and their major role in household resilience, women’s needs must take center stage. CGAP’s first dedicated publication on gender and climate, Bolstering Women’s Climate Resilience and Adaptation through Financial Services, provides illustrative examples of gendered impact when women face climate shocks and stresses that affect health, agricultural livelihoods, and women-owned businesses.

CGAP sees an increasingly urgent agenda for research and action at the crossroads of climate change and financial inclusion, and is working to find and test solutions that can help poor people manage and adapt to the changing world.

 

CGAP VII Green Development

 

Featured Publications

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Latest Research

Publication

Resilience for All: Why Inclusive Finance Can't Wait

The world faces urgent challenges as risks intensify and interconnect, amplifying vulnerabilities, especially for low-income populations and small and medium enterprises (MSEs). If left unaddressed, these vulnerabilities can create ripple effects with national, regional, and global consequences. This paper highlights the importance of inclusive finance as an indispensable component of resilience responses, and calls on everyone working on increasing resilience to leverage inclusive finance to enhance the reach, speed, and impact of their work.
Publication

Strengthening Financial Systems for Climate Adaptation

As climate-related shocks become more frequent, communities need access to finance that helps them cope with and recover from damage and loss, yet current efforts to strengthen financial systems’ resilience often overlook the importance of inclusion. This paper outlines how governments and funders can foster inclusive financial systems that enhance climate adaptation and resilience.
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Building Climate Resilience at Scale in the Sahel

Already reaching over half the world’s population, social protection systems present an untapped opportunity to channel climate funds to help vulnerable communities adapt to climate change, enhancing the reach, efficiency, and impact of climate finance.

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