There can be no financial inclusion without sustainability

By Margarita Hernández Naranjo, Superintendente de Economía Popular y Solidaria  

By aligning a commitment to social and environmental responsibility in the financial system, with the goal to financially include women, countries can make real progress on both fronts. 

The 410 savings and credit cooperatives which Superintendencia de Economía Popular y Solidaria (SEPS) oversees, 50% of them women-owned, play a crucial role in Ecuador’s economy. 

These small entrepreneurs live under the constant threat of environmental catastrophes. Ecuador is highly vulnerable to natural hazards, including floods, landslides, droughts, and earthquakes.  

As such, our supervision work confronts two major challenges: women’s historic lack of access to credit, and the risk of environmental disaster. While these two challenges appear distinct, SEPS’s work with AFI in the last few years has shown that financial inclusion can drive progress on both. 

As a financial regulator, our main lever is policy. By introducing new regulations, we have made it possible for women to have equal opportunities to access credit, without any discrimination. Additionally, for the first time, the population has access to gender-disaggregated information, enabling both financial institutions and regulators to make informed decisions to improve the living conditions of disadvantaged people. 

Simultaneously, we are championing sustainable finance. In 2022, we launched environmental and social risk management (ESRM) guidelines for the credit cooperative sector. Developed with support from AFI peers and an AFI grant, the guidelines encourage a commitment to social and environmental responsibility, and provide a safeguard against credit decisions that would have negative impacts. 

By maintaining these dual goals of increasing women’s access to financial products, and of achieving social and environmental sustainability, as policy and strategic imperatives, we have been able to advance on both. 

Over the past six years, the gender credit access gap has narrowed by 8 percentage points, decreasing from 20.8% in 2017 to 12.8% in August 2023. Women in Ecuador now have more access to credit, and our whole society is benefiting as a result.  

Ecuador’s experience, and our involvement in AFI’s Inclusive Green Finance and Gender Inclusive Finance workstreams, has brought home that there can be no financial inclusion without sustainability. Equally, there can be no sustainability if we do not focus on those who are excluded, mainly the most excluded, such as women.