Inclusive Green Finance – a piece of the SDG puzzle
AFI members are supporting efforts to achieve the Sustainable Development Goals (SGDs) by exploring and implementing policies under Inclusive Green Finance that advance financial inclusion among the most vulnerable to build resilience and enable mitigation to climate change.
World leaders are in New York this week to discuss if we are on track to meet the 17 SDGs. Under the theme “Empowering people and ensuring inclusiveness and equality”, the High-Level Political Forum is highlighting the following global goals:
- Goal 4. Quality Education
- Goal 8. Decent Work and Economic Growth
- Goal 10. Reduced Inequalities
- Goal 13. Climate Action
- Goal 16. Peace, Justice and Strong Institutions
- Goal 17. Partnerships for the Goals
Financial inclusion can advance the achievement of a range of SDGs and is also recognized in the indicators of several goals.
Among them is Goal 13, which advocates urgent action to combat climate change and its impacts. While climate change deepens poverty, ample research shows that financial inclusion can build the resilience of individuals, whether to a sudden and extreme climate event or the gradual effects of varying rainfall patterns, sea level rise or saltwater intrusion.
Savings, credit, insurance, money transfers and new digital delivery channels can all provide vital support for those managing new environmental realities.
In its milestone report, the International Panel on Climate Change (IPCC), concluded last year that radical cuts need to be made to greenhouse gas emission before 2030 in order to limit a rise in global heating to 1.5 degrees Celsius above pre-industrial levels. Action is needed now and AFI members are stepping up to this challenge.
To share some examples, Bangladesh Bank introduced a regulatory target on the annual disbursement of green finance, while Nepal Rastra Bank has directed commercial banks to dedicate at least 10 percent of their portfolios to green energy.
Meanwhile, the Central Bank of Nigeria has alleviated the impact of climate change on farmers by introducing revenue index insurance that provides automatic pay-outs to farmers based on predicted crop yields using satellite data on precipitation.
Finally, the Government of Fiji used mobile money payments to disburse funds to those affected by Tropical Cyclone Winston through its “Help for Homes” initiative.
These are just some of the examples from the AFI network. More is available in AFI’s recent report, ‘Inclusive Green Finance: A Survey of the Policy Landscape’.
While Inclusive Green Finance is a tool to achieve the SDGs, it is also a much-needed instrument for the realization of the Paris Agreement. Specifically, it works towards making finance flows consistent with pathways toward low greenhouse gas emissions and climate-resilient development, as outlined in Article 2.1c. It also helps attain Articles 7 and 8, which outline agreed efforts to enhance adaptive capacity, strengthen resilience and reduce vulnerability to climate change as well as avert, minimize and address loss and damage associated with its adverse effects.
There is big potential to break the silos between sectors and other actors by working together to combat the current climate emergency that is of a magnitude never seen before. Regulators in the AFI network are a part of providing global solutions in the mission to empower people and ensure inclusiveness and equality.