Thoughtful policy responses can help to create a virtuous cycle of growing inclusion, falling climate risk, and greater financial stability (see illustration below). But more financial inclusion won’t automatically bolster climate resilience. Business cases may be harder to build for adaptation finance than traditional lending, and financial services carry risks which could become part of the problem.
We cannot tackle climate change effectively without inclusive financial services. CGAP outlines five areas for collaborative action between stakeholders working on climate change and those working on inclusive finance in order to leverage inclusive finance to scale grassroots climate action.
In this episode, we travel to Bangladesh to speak with two farmers who are fighting to protect their homes and livelihoods from storms, flooding, and rising sea levels. We also hear from MicroSave Consulting and CGAP about the potential role financial tools can play in bringing hope, resilience, and lasting change to climate-vulnerable communities.
CGAP is currently working to:
- Distil best practices for financial service providers on how to better prepare for and respond to extreme climate events;
- Define the features and combinations of financial products that best support the climate resilience needs of vulnerable clients;
- Drive innovation of financial solutions to better meet the climate needs of underserved clients;
- Provide advice to policymakers, including on mobilizing the private sector to extend their commercial climate risk management and adaptation solutions to more vulnerable populations;
- Demonstrate how financial services can help social protection systems build better long-term resilience to climate shocks and stresses.
Featured Videos
8 Billion Reasons to Put Inclusive Finance at the Heart of Climate Action
8 Billion Reasons to Put Inclusive Finance at the Heart of Climate Action
Climate Resilience: Urmilaben's Story
Climate Resilience: Urmilaben's Story
Climate Risk and Financial Inclusion: A Regulatory Perspective
Climate Risk and Financial Inclusion: A Regulatory Perspective
3 Ways Financial Services Bolster Women's Climate Resilience
3 Ways Financial Services Bolster Women's Climate Resilience
Climate Resilience: Dharmishtaben's Story
Climate Resilience: Dharmishtaben's Story
Climate Adaptation and Financial Inclusion: A New Agenda
Climate Adaptation and Financial Inclusion: A New Agenda
Regulation in a Warming World: The Link Between Climate Risk, Financial Inclusion & Stability
Regulation in a Warming World: The Link Between Climate Risk, Financial Inclusion & Stability
Why Adaptive Social Protection is Key to Climate Resilience and Food Security
Why Adaptive Social Protection is Key to Climate Resilience and Food Security
Climate Resilience: Nilamben’s Story
Climate Resilience: Nilamben’s Story
How can Financial Inclusion Support a Just Climate Transition?
How can Financial Inclusion Support a Just Climate Transition?
Featured Publications
This working paper presents an analytical framework to identify the potential exclusionary effect of climate-related financial sector regulation on the incentives and ability of financial service providers to lend to vulnerable segments in emerging markets and developing economies.
In this Focus Note, CGAP calls for financial inclusion to be a cornerstone of action on climate adaptation, and proposes a new agenda for collaboration between financial inclusion and climate adaptation practitioners.
Climate change risks may drive the financial sector away from serving the least profitable and most climate-exposed clients. This working paper outlines how inclusive green finance policies can help reduce these risks, creating a more stable and resilient real economy.
Rural women are critical to ensuring global food security but disproportionately vulnerable to climate change. In this working paper, CGAP and Mercy Corps AgriFin provide an overview of 10 opportunities for service providers, investors, and donors to improve rural women’s climate resilience and share examples of innovative business solutions.
This deck explores three personas of rural women and their distinct customer journeys through product and service engagement. It aims to provide a deeper understanding of the challenges and opportunities rural women face—including in the context of climate change.
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.
Featured Blogs
As financial authorities across the world develop plans to respond to the changing climate, they have opportunities to create a positive feedback loop of expanded financial inclusion and reduced climate risk.
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.
Financial inclusion is a critical part of climate resilience, and organizations must work together to continue expanding it in the face of a challenging risk environment.
Social protection programs hold immense potential for climate adaptation. Financial inclusion can further these climate goals, but while promising examples exist, they are still emerging—representing a promise waiting to be realized.
Climate change disproportionately affects people experiencing poverty, yet they often lack the financial tools needed to adapt. Focus must shift to ensuring that climate funding reaches the individuals and communities most impacted.
Talks around climate finance dominated COP29, but sourcing funding is only one part of the puzzle. Now the NCQG – the newly agreed global funding target – has been agreed, it's time to focus squarely on how the money will be disbursed and to whom.
The third in our three-part blog series with Decodis and MSC discusses our finding that different climate events, and different phases of those events, drive different needs for financial services.
The second blog in our series with Decodis and MSC explores our research finding that many poor households are just muddling through climate events rather than strategically adapting to long-term climate change in ways that enhance their resilience.
Based on interviews with hundreds of farmers in Nigeria, we unpack how households use financial services in responding to climate events.
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.
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.
This year’s World Environment Day theme “Only One Earth” reminds us that this planet is humanity’s only home, with finite resources that we must safeguard. Here, we look not only at who pollutes, but who suffers the impact of climate change most.
In her first blog post as CGAP CEO, Sophie Sirtaine proposes a global agenda for financial inclusion that leads to an inclusive, greener and more resilient world.
Amid the talk of national climate plans, net zero timelines, and the Paris rulebook, we should not forget about the need for practical tools — including financial services — that enable low-income populations to participate in the climate transition.
Early evidence suggests that the financial sector could play a key role in helping low-income people prepare for and participate in climate transition. However, greater coordination among funders and other sector stakeholders is needed.