Tackling climate change and financial inclusion will require cross-cutting solutions

Charlotte Fauquembergue, Deputy Manager, Financial Systems Division, Agence Française de Développement

Agence Française de Développement (AFD) and the Alliance for Financial inclusion (AFI) have been working together to advance financial inclusion since 2019. Initially, AFD provided two grants of two million euros each as part of a multi-donor implementation policy with Luxembourg and Germany. The project aimed to generate 25 policy reforms, but ultimately delivered over 200, including Central Bank of Egypt’s Sustainable Finance Regulations, Central Bank of Sudan’s Guiding Principles for Green Finance, and Bank of Tanzania’s ‘Generation Equality Programme’ which seeks to expand women’s access to and control over productive resources.

Last year, we launched a new project with AFI around Inclusive Green Finance. The aim is to build financial sector actors’ understanding of the risks and opportunities associated with climate change, and to promote green and sustainable development around the world.

Partnering with AFI allows us to work with central banks to build awareness, devise solutions, and then evaluate their impact. AFI’s In-Country Implementation program, in particular, lets us support members to develop and implement effective policies. We also try to ensure that actions will have impact not just within a particular country but internationally, through promoting knowledge exchange and peer reviews.

In addition to our contribution through AFI, the AFD directly supports financial regulators. For instance, earlier this year, AFD pledged a Euro 6 million grant towards Greening the Pacific Financial Systems, a project, which involves six central banks from the region.  The aim is to enable central banks to share knowledge and experience in order to implement effective policies, for example to develop climate finance or integrate climate risk into the sector.

For AFD, insurance is a particularly important area, as it encompasses not just financial inclusion, but also climate change, biodiversity, and disaster risk. We see exciting opportunities for the financial sector to innovate by developing insurance schemes that address these multiple aspects. Equally, digitalization holds a lot of promise, as long as consumers are protected and their essential needs considered. 

Ultimately, if we are to tackle the challenges of climate change, financial inclusion, and consumer protection, rather than treating them in isolation, we have to take a cross-cutting view and approach them together.

You can learn more about how AFD works with financial institutions and regulators to build responsible and sustainable economic, social and environmental trajectories on their website.