Raising awareness among stakeholders, building internal capacities, and encouraging financial literacy among customers are just some of the efforts needed at a national level in inclusive green finance (IGF), participants said at the Third Global IGF Conference. With digital financial services (DFS) paving the way to offer targeted financial inclusion solutions to different groups, the conference also highlighted that detailed vulnerability assessments and gender considerations are needed in order to shape policies and tailor interventions.

Co-hosted by Banco de Moçambique (BdM) and AFI, policy makers from AFI network had a unique opportunity to take stock of the IGF achievements made so far and map out the next steps to ensure IGF policy development and drive in-country implementation. The conference also saw the launch of a new reflection paper and framework developed in collaboration with SOAS University of London.

Reflecting on how IGF can be rolled out in different member jurisdictions, Governor Rogério Zandamela from Banco de Moçambique (BdM) in his opening remarks said that the implementation of a prudential policy, including review of financial regulation, as well as adoption of financial education on Inclusive Green Finance are critical policies solutions.

The Governor added that central banks and regulators are called to incorporate sustainability and resilience into their policy frameworks which should also address environmental, climate and social factors. As a global phenomenon climate change requires collective policy response and move towards a low-carbon economy that leaves no one behind, Governor Zandamela concluded.

Underscoring ongoing discussions around rebuilding economies impacted by the COVID-19, AFI Executive Director Dr. Alfred Hannig explained that the pandemic can be transformative for social and financial inclusion, and that a green recovery can result in the creation of a more sustainable economy.

Dr. Hannig noted that since the network endorsed the Sharm El Sheikh Accord on financial inclusion, climate change and green finance, which is in alignment with the Sustainable Development Goals (Goal 1: no poverty and Goal 13: climate action) – this policy area has been taking shape with leadership coming from AFI members across the world.

“With the Sharm El Sheikh Accord – we launched the 4Ps of inclusive green finance, established the IGF Working Group (IGFWG) and saw the first in-country implementation projects take off,” Dr. Hannig said

Dr. Hannig calls upon the network to use the opportunity of the global pandemic to leverage on our valuable and solid learnings to drive forward the financial inclusion agenda in a practical and feasible way. Ultimately, said Dr. Hannig, this will lead us to a better normal.

In presenting the reflection paper and framework, Professor Dr. Ulrich Volz, Director of the SOAS Centre for Sustainable Finance, explained that IGF can play a crucial role in supporting vulnerable groups to adapt to global environmental change and strengthen their resilience.

According to Dr. Volz, green finance and financial inclusion has traditionally been treated in the academic and policy literatures as two distinct and largely unrelated concepts. However, the paper found meaningful overlaps between these two areas and calls for a holistic approach that combines green finance and financial inclusion policies in an integrated IGF approach.

“Key target groups for financial inclusion tend to be disproportionately exposed to the risks and impacts of local and global environmental change,” said Dr. Volz, adding that these vulnerable groups play an important role in mitigating climate change.

Echoing this was Christophe Edmond, First Deputy Governor from the Central Bank of Seychelles who highlighted the importance of building the capacity of all stakeholders to encourage and raise awareness to different areas of the financial sector.

“Global solidarity and collaboration are especially important to ensure that the most vulnerable nations are not left behind and that they are heard,” said DG Edmond.

Underscoring digital financial services as a breakthrough in advancing IGF, DG Edmond said the DFS introduces new ideas and innovations that can be considered by policymakers and gave the example of blockchain technology which has opened the door the new advancements in the renewable energy sector.

The conference wrapped up with a celebration of AFI members who have made IGF Maya Declaration Commitments, and called for more members to align their policy initiatives with the Maya Declaration and the Sharm El Sheikh Accord.

Gathering 85 participants from all AFI regions, as well as representatives from AFI’s funding partners including representatives from the German Federal Ministry of Economic Cooperation and Development, the European Commission, Luxembourg Ministry of Finance, the event comes at a time when it is more urgent than ever to ensure that those at the base of the economic pyramid are not further excluded and that they are empowered to build their own resilience to the impacts of climate change through financial inclusion.

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