SPECIAL REPORT: Private, Public Funders on Green Microfinance, Climate Adaptation, Biodiversity

Today, at the first plenary of European Microfinance Week 2021, climate adaptation was the hot topic – in contrast to climate mitigation, which is more of a preventative measure. The panelists argued that the scale of funding for climate adaptation is much too small and that many of those most in need still lack access to funding. These groups include smallholder farmers, women, youth and members of indigenous groups. Meanwhile, financial services providers (FSPs) are reporting that climate change already is having negative impacts on their portfolios.

Another trend, which was widely discussed at COP26, is a much higher level of concern for biodiversity. Avril Benchimol Dominguez of the Global Environment Facility (GEF) argued, “There is no economic system without nature.” Sebastien Soleille of BNP Paribas noted that, although his bank has tracked climate-related metrics for over a decade, it has only tracked biodiversity indicators for approximately two years. When BNP Paribas was looking into which of its clients had the most negative impact, one was a major agro-industrial firm. A challenge in acting on this information was that the deforestation involved in creating the firm’s products was not carried out by the company itself, but by its suppliers. This brings the focus back to reaching communities in rural areas to educate them on alternative practices and crops. To do this, Mr Soleille argued, “It is clear that high-income countries need to finance adaptation and mitigation in low-income countries.”

In order to develop the market for investors to support climate adaptation and biodiversity, BNP Paribas, the Grameen Credit Agricole Foundation and Yapu are collaborating to build a special-purpose institute. One of the goals of this entity is to pilot technical assistance products that FSPs can use to help them address climate change, habitat loss and related challenges.

The panelists agreed that – although some financing products have been tested sufficiently and are ready for scaling up – many still need public financing to de-risk them while they are tested. On an optimistic note, Ms Benchimol pointed out that investing in energy efficiency and renewables was esoteric 20 years ago, but now is quite mainstream.

This feature is part of a sponsored series on European Microfinance Week 2021, which is taking place online through November 19. The event is held annually by the European Microfinance Platform (e-MFP). MicroCapital has been engaged to promote and report on the conference each year since 2012.

Additional Resources

The e-MFP Green Inclusive & Climate Smart Finance Action Group
https://www.e-mfp.eu/gicsf-ag

European Microfinance Week 2021 agenda
https://registration.european-microfinance-week.eu/website/27793/agenda/

MicroCapital coverage of European Microfinance Week, including the European Microfinance Award
https://www.microcapital.org/category/european-microfinance-week/