AFI’s 4P framework provides financial regulators with an intuitive was to consider the full range of policy actions they can take for inclusive green finance. All policies under the 4Ps either catalyze financial services for the private sector or use financial infrastructure to deploy finance for climate action.

Promotion

Promotion policies and initiatives prepare the private sector to offer financial services for green projects or related climate action activities to qualifies beneficiaries, for example, through awareness raising, information sharing, capacity building and data collection.

• Bangladesh – Quarterly Report on Green Banking Activities of Banks & Financial Institutions and Green Refinance Activities
• Bangladesh – Sustainability Ratings for Banks and Financial Institutions
• Bangladesh – Target and Achievement of Sustainable Finance and Green Finance
• Bhutan – National Stakeholder Capacity Building and Coordination Workshop for the upcoming Inclusive Green Finance Roadmap
• Cambodia – Encouraged commercial banks to repackage loans for populations affected by disasters
• Egypt – Conducted capacity building on sustainable finance
• Fiji – Fiji Financial Services Demand Side Survey 2020
• Morocco – Sensitization and awareness raising on green finance and climate risks in the financial sector
• Morocco – Finalizing regulatory directive on climate change-related risks
• Philippines – Knowledge sharing and awareness raising on sustainable finance
• Philippines – Conducts Banking Sector Outlook Survey (BOS) regularly
• Philippines – Research and data gathering on the impact of disasters to banking operations
• Thailand – Capacity building on ESG risks
• Thailand – Established a regulatory working group on sustainable finance comprised of the Ministry of Finance, the Securities and Exchange Commission, the Office of Insurance Commission and the Stock Exchange of Thailand

Provision

Provision policies help to ensure financial resources for green projects or related climate action activities are provided for qualified beneficiaries, whether through lending policies, refinancing or other financing schemes.

• Argentina – Relaxed conditions for loans packaged with climate insurance
• Armenia – Offered longer term financing to financial institutions to on-lend to MSMEs for products such as renewable energy
• Bangladesh – Introduced an annual green finance regulatory target equivalent to 5% of loans disbursed
• Bangladesh – Use of refinancing facilities to promote low carbon technologies
• Egypt – Required banks to allocate 20% of their portfolio to finance MSMEs including renewable energy and climate-resilient irrigation
• Egypt – The Central Bank of Egypt issued circular that provides a discounted rate for local bakeries to convert into the use of natural gas
• Egypt – The Central Bank of Egypt launched a EGY15million fund to support transition to the use of natural gas in the transport sector
• Eswatini – Offers financial services for climate-smart technologies to build resilience into agricultural supply chains
• Fiji – Issued a renewable energy loan ratio requirement equivalent to 2% of deposits and similar liabilities
• Jordan – Medium-Term Advances to Licensed Banks Program provides subsidized loans for critical development sectors including renewable energy and agriculture
• Morocco – Creation of Innov Investment Fund to support start-ups including renewable energy and cleantech
• Nepal – Directed all banks to dedicate 10% of their portfolio to green projects
• Nepal – Refinancing facilities for banks to offer subsidized loans for green technologies
• Nepal – Refinancing facilities for subsidized loans to rebuild from floods and fires, modelled on a program that supported post-earthquake recovery and reconstruction
• Pakistan – Financing scheme for Renewable Energy Projects from 2017 to mid-2019
• Peru – Rescheduling of retail loan payments in the event of a disaster mechanisms in place
• Philippines – Developed Agricultural Value Chain Financing Framework which allows banks to include disaster contingency mechanisms in place
• Philippines – Provision of temporary regulatory relief measures to banks affected by disasters
• Seychelles – Lower interest loans to MSMEs and to households through the Seychelles Energy Efficiency and Renewable Energy Program (SEEREP) SME loan scheme
• Sri Lanka – Moratoriums on loan repayments for affected borrowers by disasters
• Vanuatu – Assists businesses affected by Tropical Cyclone Pam through concessional lending to commercial banks at interest rates of one percent via the Vanuatu Disaster Reconstruction Credit Facility (2018)
• Vanuatu – Lowered the reserve requirement for commercial banks by two percentage points (from seven percent to five percent) to incentivize banks to lend to affected low-income households

Protection

Protection policies reduce financial risk by “socializing” potential losses through insurance, credit guarantees, socializing payments or other related risk-sharing mechanisms.

• Armenia – Establishment and supervision of the Agricultural Insurers’ National Agency (AINA), a public-private partnership for agriculture insurance market development
• Fiji – Use of mobile payments to disburse funds from its “Help for Homes Initiative” to people affected by Tropical Cyclone Winston
• Fiji – Allowed people to withdraw 20 percent from their retirement accounts to rebuild their homes
• Fiji – Fiji National Provident Fund provided relief assistance to members through its retirement fund
• Fiji – Established Fiji’s Natural Disaster Rehabilitation Facility, a climate resilience and adaptation program to replace damaged inventory; cover the loss of sales, including working capital; repair or replace damaged plants, equipment and machinery; restore damaged buildings, including resorts and hotels; and replace business vehicles for affected businesses and homeowners
• Ghana – Supported the development and initial implementation of the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL) to increase the total amount of credit available to the agriculture and agribusiness sectors
• Morocco – Introduced climate multi-risk insurance products to protect investments in major cereal crops from climate-related damages, including drought, excess moisture, hail, frost, wind and sandstorms
• Nigeria – Established the Anchor Borrower’s Program to link smallholder farmers with large-scale processors to alleviate the impact of climate change including revenue index insurance
• Nigeria – Provides subsidies to incentivize bank lending to smallholder farmers facing climate risks
• Nigeria – Guaranteed 50 percent of the loss if a smallholder farmer cannot repay a loan through Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) through bundling climate risk insurance with subsidized lending and credit guarantees
• Philippines – Launched the Countryside Financial Institutions-Calamity Assistance Program in 2007 to help fund early recovery and reconstruction activities in areas affected by typhoons, disasters and other natural calamities
• Peru – Approved an innovative contingency insurance product for business interruption specifically designed for MSMEs and MFIs

Prevention

Prevention policies aim to avoid undesirable outcomes by lowering financial, social and environmental risks.

• Bangladesh – Introduced Environmental Risk Management (ERM) Guideline and Environmental Due Diligence Checklists (2011) to regulated financial institutions
• Brazil – Issued detailed guidelines to support the adoption of a Social-Environmental Responsibility Policy (Política de Responsabilidade Socioambiental, or PRSA) and made the application of these guidelines a condition for commercial banks to operate
• Ecuador – Issued Environmental Risk Management (ERM) Guidelines for Cooperative sector
• Nepal – Adopted Guidelines on Environmental and Social Risk Management for Banks and Financial Institutions (2018), which apply to bank lending for SME finance, commercial leasing, term finance and project finance
• Pakistan – Issued Green Banking Guidelines with a sizable section on ERM (2017) that offers guidance to banks on developing their own green financing products and services
• Paraguay – Flexible Guide for the Management of Environmental and Social Risks (2018) that encourages including non-financial risk in credit decisions
• Philippines – Environmental and Social Risk Management Framework (2021)