The integration between financial inclusion and green finance is not only a powerful move, but is urgently needed, given how the impacts of climate change will be much more severe than the ongoing health pandemic, according to Former Governor of the State Bank of Pakistan, Shamshad Akhtar at an inclusive green finance (IGF) webinar co-hosted by the Centre for Sustainable Finance (CSF) at SOAS University of London and AFI, held as part of the London Climate Action Week yesterday.

“We thought the pandemic is terrible. Climate change will be lethal and deeply unjust. Therefore, inclusive green finance policies hold real potential to make tangible improvements to the lives of those at the base of the economic pyramid,” said Akhtar, stressing that central banks today have more tools at hand including technological solutions, digital corridors and payment systems and FinTech solutions.

Inclusive and green finance have been critical innovations in the world of finance, given their strong implications for humanity and planet, noted Akhtar, who is also currently serving as the Chairperson of the Pakistan Stock Exchange and Chairperson of the Board of Karandaaz – a collaborative platform that promotes financial inclusion for SMEs in Pakistan.

Policy initiatives shared at the London Climate Week event include reshaping disaster response policies by Bangladesh Bank, expansion of the use of digital financial services by Bank of Ghana and capacity building workshops by Bank Al-Maghrib. All three central banks are also working closely with public and private stakeholders on bringing financial inclusion and green finance together.

Increasingly AFI member institutions are turning to IGF solutions to enable a more sustainable and resilient post-COVID-19 economic recovery, observed Laura Ramos, AFI’s IGF Policy Manager. Ramos   also pointed out that there is  an increase in national level inter-agency coordination in this area.

“While not the silver bullet, IGF can play an important role in supporting vulnerable groups in adapting to global environmental change, strengthening their resilience and enabling mitigation to climate change and environmental degradation,” said Professor Dr. Ulrich Volz, Director of the Centre for Sustainable Finance (CSF) and Reader in Economics at SOAS University of London. Dr. Volz also pointed out that the financial sector is needed to enable investments in new opportunities for those affected by climate change.

Last year, SOAS CSF and AFI published a Reflection Paper on bringing IGF Concept to Practice. The study provides a conceptual framework of how financial inclusion can enable and support climate change adaptation and mitigation in principle.

AFI’s Inclusive Green Finance (IGF) workstream is part of the International Climate Initiative (IKI)  supported by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), based on a decision of the German Bundestag.