Today’s opening plenary of European Microfinance Week included a celebration of the accomplishments of the European Microfinance Platform’s (e-MFP’s) Green Inclusive & Climate Smart Finance Action Group. The group has grown to 150 people and still is accepting new members.
One of the main outputs of the group is the Green Index, which helps financial services providers (FSPs) evaluate their performance in terms of green inclusive finance. The Action Group introduced the index in 2014 and most recently updated it in 2022. One of the group’s most recent outputs is the Green Map, which offers a range of examples of financial services that further environmental goals.
Davide Castellani of the University of Bergamo argued that people with low incomes bear the brunt of climate change, but that green finance can reduce inequality and create new economic opportunities for this lower income group. Also, when an FSP is active in green finance, it can help the FSP boost social performance and attract impact investors. However, Dr Castellani warned, regulations around green finance can be problematic. Sometimes they demand evaluations that are too costly to perform given the small loan sizes involved. In other cases, they can cause unnecessary obstacles by requiring FSPs to adopt policies that are not relevant to their markets.
Michael Steidl of the European Investment Bank (EIB) noted his institution’s increasing focus on green lending: “When we give a credit line to an FSP, we ask for a larger and larger portion of the funds to be used for green projects – often 30 percent.” And EIB plans to increase this portion over time, which Mr Steidl concedes, may make it more difficult for smaller firms to acquire “vanilla” finance.
MiCredito of Nicaragua has had success in providing green finance by listening to client needs. For example, the FSP has partnered with local sellers of solar panels, plumbing fixtures, pumps and small water towers to finance 18,000 installations of such equipment.
This report is part of a sponsored series on European Microfinance Week 2023, which began today in Luxembourg and is also accessible online. MicroCapital has been engaged to promote and report on the event each year since 2012. Stay tuned over the coming days for more news from the conference! Learn more about European Microfinance Week at https://www.emw2023.eu/.
Additional Resources
Green Map webpage
https://e-mfp-green-map.hedera.online/
Action Groups webpage
https://www.e-mfp.eu/action-groups
European Microfinance Week 2023 homepage
https://www.emw2023.eu/
MicroCapital coverage of European Microfinance Week since 2012, including the European Microfinance Award
https://www.microcapital.org/category/european-microfinance-week/
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