In conjunction with World Environment Day 2022, we caught up with the leadership of the IGFWG to get their take on important trends in inclusive green finance and insights on the direction AFI members are taking in this work area.
Interviews conducted with: Najwa Mouhaouri (Bank Al-Maghrib), Chair; Sonam Rinzin (Royal Monetary Authority of Bhutan), Co-chair 1; Alba Rodziguez (Comision Nacional Bancaria y de Valores Mexico), Co-chair 2; and Patience Yeboah-Nkansah (Bank of Ghana), Gender Focal Point
1. What are the greatest achievements of the IGFWG in the last few years?
Najwa: Since its inception in 2019 in Kigali, Rwanda, the IGFWG has been pushing awareness on the significance of climate-related disasters for firms and populations. We have also been providing guidance on how to build a global inclusive green finance framework and the role that central banks need to play in this space. I think that many guidelines and reports were already produced for central banks and policymakers on how to understand the interlink between climate change and financial inclusion issues across their activities. From where we stand today, I think that we are moving into more implementation and progress.
Sonam: The top three significant achievements of IGFWG are the launch of knowledge products which are very insightful and resourceful towards understanding IGF concepts, building a vibrant partnership of peer networks who all aspire to work collectively in advancing inclusive green finance, and creating an inclusive green finance environment towards motivating continuous learning from members
2. What are some of the topics and emerging trends that the working group has identified for this year?
Najwa: Many new topics and emerging trends have come up during discussions with members. They have been put out as critical to advance the inclusive green finance agenda like exploring biodiversity and natural interdependency. This year, we have also been looking at inclusive green finance roadmaps and also some inspiring leader initiatives in developing environmental and social risk management guidelines that could inform future development of AFI members in this space.
Patience: We recently looked at biodiversity we also looked at the intersection between IGF and gender inclusive finance and financial stability issues. We also looked at leveraging digital financial services issues with IGF. We also looked at engaging national leaders in the implementation of IGF.
3. What are some of the mid-term plans for the working group?
Najwa: During the 6th IGFWG meeting in Ecuador, the members engaged in strategic reflections on what could be done on top of what we already do and what could be improved in that respect. One of the key priorities identified is to leverage the capacity that we already have to develop common approaches that would really simplify and help members move in the same direction. I think that the next step forward is to foster peer-learning and technical support in advancing inclusive green finance initiatives across AFI members.
4. How do you foresee the evolution of IGF initiatives?
Najwa: Working together since 2019, we have seen the value of partnerships and networks to push the inclusive green finance agenda for emerging and developing countries. Lots of work has been happening in terms of awareness-raising and in-country implementation of inclusive green finance framework. What I am seeing is that the international community is also increasingly recognizing the sizable opportunity for accelerating green investments and financing for climate resilience. In this changing environment, work for both financial inclusion and green finance will be intensifying in the coming years.
Sonam: I foresee the evolution of IGF initiatives happening with respect to two stages. The first phase is to do with the ever-changing global landscape of green finance where the world is slowly and steadily shifting its focus on green finance. In this regard, the IGF initiatives will take a paramount role in the governance and policy level of each country. The second phase is to do with how countries encompass the IGF initiatives into their own country mandates and bring synergy with other policies and developmental efforts.
5. Why is the “inclusive” important in “inclusive green finance”?
Najwa: Climate change and financial inclusion are closely interlinked in the broader context of sustainable development. In order to deliver on our commitment to mitigate and adapt to climate change, we need to shift a new model without leaving anyone behind. So regardless of if economies are advanced or not, it is essential that we green the economy and the financial sector, and make sure that it is done in a way that is fair and inclusive to everyone concerned.
Alba: Now more than ever, issues related to climate change and other environmental and social matters have gained enormous relevance in the real economy and in the global financial system. It is of vital importance that, in addition to inhibiting the funding of activities with a high environmental impact whilst promoting the financing of greener activities, financial strategies could be designed so that the most vulnerable populations can face the ravages of climate change.
6. How can AFI members benefit from this WG or what is the relevance of this WG?
Sonam: The AFI members can really benefit from this WG in many positive ways because IGF is a topic that cannot be neglected for any country moving forward in this generation with the issues and concerns of existential threats from the effects of climate change. In particular, having such a platform to discuss IGF, itself is a big step towards building solidarity, hope and brotherhood for developing and small countries that are members of AFI in our individual fight against our sovereign survival from the looming threats of climate change.
AFI’s inclusive green finance workstream, is part of the International Climate Initiative (IKI), which is supported by the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety (BMU), based on a decision of the German Bundestag.