As a global policy leadership alliance representing 100 members from emerging and developing economies, AFI has a responsibility not only to be part of the solution, but also provide a significant contribution when addressing climate change, one of the major global challenges, AFI Executive Director Dr. Alfred Hannig said in his address on the occasion of the launch of AFI’s latest knowledge product, Inclusive Green Finance: A Survey of the Policy Landscape (Second Edition).

“The second edition of the IGF Survey of Policy Landscape, published today, is a great milestone for AFI as the network continues to formulate feasible solutions, new policies, strategies and approaches which can help others learn and innovate,” Dr. Hannig said.

AFI Executive Director explained that AFI has moved into unchartered territory three years ago when its members recognized the role that the financial inclusion, climate change and green finance play in bringing quality financial services that help mitigate the effects of climate change on those outside of the financial system.

“Today, with the second edition of the Policy Survey, our Alliance offers practical answers to this global challenge. Through knowledge sharing and implementation of pragmatic solutions, AFI members are now catalysts of a message that greening our economies is not only possible, but also crucial for financial stability and growth,” Dr. Hannig underscored.

He expressed appreciation to the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety (BMU) for their role in recognizing the significance of inclusive green finance as a policy area and assisting AFI in becoming the leader in the field.

Inclusive green finance (IGF) refers to policies and regulations that aim at enabling mitigation and building resilience to the negative impacts of climate change through financial inclusion.

“Green solutions should be seriously considered in long-term economic recovery response to the current COVID-19 crisis. This is an opportunity both to mitigate and to build resilience for future crises such as climate change,” said Walid Ali, Chair of AFI’s Inclusive Green Finance Working Group (IGFWG) from the Central Bank of Egypt.

“This report, which features 28 AFI member institutions and their IGF policies and initiatives, will serve as a basis for knowledge exchange and further development of IGF policies,” continued Ali.

Following in the footsteps of the previous report, the second edition report categorizes initiatives and policies according the AFI’s 4Ps framework for IGF: Promotion, provision, protection and prevention. The purpose of the framework is to provide financial regulators with and intuitive way to consider the full range of policy actions that can be taken under IGF. The framework also evolves with policy implementation at the national level and caters to countries at different stages of IGF adoption.

According to Audrey Hove, Co-chair of IGFWG from the Reserve Bank of Zimbabwe, “the report has captured growing trends and considerations in the green finance space among member countries”.

One of the key findings of the survey is a growing trend in the AFI network that links financial inclusion to climate change at the national level, either through a National Financial Inclusion Strategy (NFIS) or other financial sector strategies. The survey also found that many AFI members have already enacted a broad range of policies to turn these strategic objectives into reality.

These policies include individuals and micro- small and medium enterprises (MSMEs) in climate mitigation and resilience efforts and were found to have three things in common: they catalyse financial services for climate action from the private sector; they use financial infrastructure to deploy them; and/or they strengthen the resilience of financial institutions that are providing financial inclusion solutions in the face of climate change impacts.

Hove pointed out that while there is still a lot to learn from IGF policies around the world, the report showed that there is no need to ‘reinvent the wheel’.

“The report shows that in many cases, existing policy tools and techniques for low-income populations and MSMEs can be refined and repurposed with a green focus,” said Hove, adding that this allows for policymakers to act swiftly while also taking time to prepare the groundwork for more innovative policies.

Ali stressed that there was still much work to do in this area but inclusive green finance is not a trend: “It is a necessary approach that should be incorporated in the financial regulatory framework to accelerate achieving a sustainable financial sector.”

AFI’s IGF workstream is part of the International Climate Initiative (IKI), which is supported by the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety (BMU) based on a decision of the German Bundestag.