Financial regulators of developing economies are leading the way in Inclusive Green Finance policies to build resilience and mitigate against the impact of climate change.
During the side event at the 2022 United Nations Climate Change Conference (COP27), the Alliance for Financial Inclusion (AFI) indicated that, the Inclusive Green Finance policies is to recognize the role of financial inclusion in building resilience to climate change impact and enable small-scale mitigation among the world’s most vulnerable people.
At the COP 27, AFI member institutions, central banks and financial regulators from developing countries shared their IGF policy solutions on how to use financial inclusion to enable vulnerable people to adapt and mitigate the challenges of climate change.
“We also want to consider how financial regulators can be involved at both national and international levels in formulating climate change policies and how financial services can be adapted to help individuals and small and medium enterprises (SMEs) to be more resilient against climate change impact.”
Kabinda Kawesha of the Bank of Zambia
Ghana and other countries like the Philippines or Rwanda have chosen to put the IGF policies through the means of Sustainable Finance/Banking Guidelines and Roadmaps. Moreover, countries like Sao Tome and Principe as well as Solomon Islands, have integrated IGF into their national financial inclusion strategies.
“We are here to create awareness of the role central banks play in mitigating risks associated with climate change. Bank of Ghana has established sustainable banking principles to assist banks in responding to emerging issues including environmental and climate change.”
Patience Nkansah of Bank of Ghana
Walid Ali from the Central Bank of Egypt, which is the one of the IGF trailblazers, explained that the IGF policy is a milestone in strengthening the role of the banking sector in advancing the transition towards a green economy and responding to current and emerging environmental and social risks.
A national cooperation agreement was signed between Ecuador’s Superintendencia de Economía Popular y Solidaria (SEPS) and the Ministry of Environment on green finance.
Environmental and Social Risk Management (ESRM) guidelines was as well launched to boost financial inclusion in its credit cooperative sector, especially in support of low-carbon projects and initiatives for build climate resilience among vulnerable communities.
SYSTEMATIC PLAN IN ACHIEVING THE GOAL OF IGF
Prof. Dr. Dirk Zetzsche, from the University of Luxembourg explained that, the IGF policy is one of the best comprehensible and holistic approach to integrating both financial inclusion and environmental factor in the regulation of finance.
“While mutual learning from other countries remains important, we found that financial inclusion and climate change concerns differ from country to country. No one size fits all. Solutions must be country-specific and tailored to the necessities of each AFI member.”
Professor Zetzsche
According to Professor Douglas Arner from Hong Kong University, he advised that, there would be a need for an active regulator of the policy. These regulators would also need more of their existing resources, entirely new types of resources, technology, hard science and data generation in the implementation of their roles.
Professor Ross Buckley from the University of South Wales in Sidney (UNSW Sydney), also shared some views on the need for a clear focus on national priorities as a crucial means for any successful IGF strategy. He also emphasized the need for constant updates and reassessment of the policies implemented.
