Supported by BMU, AFI launches Financial Inclusion & Climate Change program as part of the International Climate Initiative

Policymakers are recognizing the urgency in advancing green financial inclusion to help vulnerable communities build resilience and mitigate the impacts of climate change. The Financial Inclusion and Climate Change (FICC) program by the Alliance for Financial Inclusion (AFI) is part of the International Climate Initiative (IKI), supported by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU).

The launch of the FICC program is an important milestone following the Sharm El Sheikh Accord on Financial Inclusion, Climate Change and Green Finance that the AFI network adopted during the 2017 Global Policy Forum (GPF) in Egypt. In response to heightened interest from the AFI network, member institutions committed to work together and collaborate with partners in identifying, understanding and implementing green financial inclusion policy solutions while focusing on communities most vulnerable to climate change.

AFI Executive Director, Dr. Alfred Hannig emphasized that “policymakers and regulators in the AFI network have acknowledged the dual threats of financial exclusion and climate change as key barriers to financial stability. BMU’s support is an important milestone for AFI which will facilitate new knowledge generation and innovative policy development.”

“Many countries in the AFI network are affected by the devastating impacts of climate change — and the most vulnerable communities bear the brunt of it. Through peer learning and knowledge sharing, the FICC is providing AFI member institutions with a platform to share and exchange their experiences and knowledge on how to develop and implement green financial inclusion polices. They understand the pivotal role of financial inclusion in building people’s resilience in the face of tragedy and devastation,” Dr. Hannig explained.

During the 2018 AFI Global Policy Forum in Sochi, Russia, AFI will officially present the FICC to delegates attending the Annual General Meeting, and as a cross-cutting topic to the AFI Working Groups. During the first phase of the FICC program, from June 2018 to January 2021, AFI will conduct research, publish knowledge products, and facilitate peer learning and knowledge exchange based on the experience of members who are pioneers in the field.

Several AFI members across continents are already at the forefront of enacting policies on green financial inclusion and are keen to share their experience with the rest of the network. Bangladesh Bank has issued guidelines on environmental and social risk management for banks and financial institutions and established a green re-financing mechanism to make lending for green projects more attractive. In addition, the Central Bank of Brazil has issued a mandatory resolution on social and environmental responsibility for financial institutions.

Meanwhile, the Central Bank of Jordan is closely cooperating with the Jordan Renewable Energy and Energy Efficiency Fund to enable households and small and medium-size enterprises (SMEs) to finance the installation of solar water heaters and renewable energy products. Across the African continent, AFI members have enabled mobile payment technology that allows the financing of pay-as-you-go, off-grid, clean energy for people who previously relied on kerosene or biomass.

Financial services are a crucial tool for the poor and vulnerable to build resilience when faced with climate change shocks or slow onset disasters. Specifically designed financial services, like affordable disaster risk- and weather index insurance or conditional loans for sustainable land use practices, allow vulnerable groups to prepare for and recover from climate change impacts as well as treducecarbon emissions. As a result, these services increase the accessibility, affordability, and usage of cleaner technology and improve the ability of communities to cope with the harmful effects of climate change.

About the International Climate Initiative (IKI)

Since 2008, the International Climate Initiative (IKI) of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) have been financing climate and biodiversity projects in developing and newly industrialising countries, as well as in countries in transition. The IKI is a key element of Germany’s climate financing and the funding commitments in the framework of the Convention on Biological Diversity. The Initiative places a clear emphasis on climate change mitigation, adaption to the impacts of climate change, conservation of natural carbon sinks with a focus on reducing emissions from deforestation and forest degradation (REDD+) and the protection of biological diversity. These efforts provide various co-benefits, particularly the improvement of living conditions in partner countries.