At today’s meeting of the Green Inclusive & Climate Smart Finance Action Group at European Microfinance Week 2024, several organizations working to expand financial inclusion in lower income countries offered examples of their work to harness finance to improve the health of families and reduce climate change.

Partner, a financial services provider (FSP) in Bosnia and Herzegovina, is addressing the fact that families in the country use more than triple the energy to heat their homes than the European average. This is due to poor insulation in many homes, as well as the prevalence of a preference for keeping interior temperatures high. The resulting potential for energy efficiency savings is estimated at EUR 2.5 billion. To date, Partner has disbursed energy efficiency loans - largely for insulation as well as replacing windows and doors - to 31,000 clients. These loans, which comprise about one third of the institution’s portfolio, average about EUR 3,000 each, with a grant of 10% to 20% offered as an incentive to the client to participate. Clients considering applying for a green loan from Partner may access its dedicated green-lending website to learn about efficient technologies, browse equipment providers and calculate potential energy savings.

Attadamoune, an FSP in Morocco, has identified a recurring issue whereby family farmers store fertilizers too close to their homes, resulting in harmful exposure of family members, particularly children. This is part of the motivation to offer farmers funding to convert to using organic inputs. However, before Attadamoune issues a loan, it educates potential clients about why and how to make the transition to green techniques. During a recent pilot phase, the institution disbursed 156 green loans totaling MAD 4 million (USD 400,000). At this time, it has a limit of 10% on the portion of its portfolio dedicated to green finance.

The Microfinance Council of the Philippines is addressing climate change - which is causing an increasing number of deadly typhoons in the country - with a pilot involving three of its member FSPs. The effort has engaged 1,400 clients in training, and the partner lenders have rolled out products funding 22 farmers to adopt green agricultural practices and 1,000 urban borrowers to implement energy efficiency measures and green housing design elements such as generating solar energy. Because the situation of every FSP is different, it is critical to: (1) begin with a baseline study to design an appropriate product; (2) partner with regulators, investors and other stakeholders; and (3) support borrowers with training and education. This training, for example, may include how scientific research ties to practical considerations, such as why climate change necessitates changing practices that farmers may have been using throughout their lifetimes.

More examples such as these are available on The Green Map. This map and other tools are available from the website of the Green Inclusive & Climate Smart Finance Action Group, one of the five Action Groups of the European Microfinance Platform. The e-MFP has about 120 members, each of which supports the provision of financial services in lower income countries. Today’s meeting of the Action Group took place on the first day of European Microfinance Week 2024.