Boosting Women’s Climate Resilience: 3 Areas to Support FSPs

As stated by Women’s World Banking, financial services play a critical role in helping women adapt to, mitigate, and endure the effects of climate change. A previous blog in this series discussed how financial service providers (FSPs) are responding to increasing climate risks for women through the support of partners. How can solutions such as “Swachh Akash” (Clean Skies) campaign by SEWA be scaled and replicated by other FSPs? In June 2024, CGAP partnered with FinEquity to learn how the FinEquity community is supporting FSPs and what FSPs need to provide climate-responsive financial services to women. We received 63 responses, with approximately 20% being FSP representatives. In addition, CGAP conducted interviews with 55 FSPs between 2023 and 2024.
See these FinEquity Case Studies: Building Women’s Climate Resilience: A Case Study Series - MEDA Nicaragua Technolinks+ | Building Women’s Climate Resilience: A Case Study Series - Village Enterprise | How SEWA is Building Collective Agency and Mitigating Risk for 3 Million Women in India.)
Overall, we found that 88% of FinEquity respondents are actively exploring ways to strengthen low-income women’s climate adaptation and resilience through inclusive finance. One way is to support FSPs in three key areas: (1) data analysis and evidence, (2) capacity building, and (3) adequate funding.
Data analysis and evidence
“There are limited tailored services, products, and channels available in the markets we operate in (fragile countries) and little evidence on the services that work to advance women's climate resilience. The link between opening an account, access to/use of financial services, and increased resilience is missing." - Finequity survey respondent
FSPs identify lack of data and evidence as a top constraint and want more training on collecting, analyzing and using climate risk data. An insurance provider mentioned receiving financing to capture sex-disaggregated data and assess how women had utilized the payouts from their flood insurance. Though there were interesting results, no specific design integrations materialized. Similarly, a commercial bank was gathering climate risk exposure data through a georeferencing tool but didn’t know how to apply it to business operations. These examples show that while in some cases data is being collected, translating data to implementation remains a challenge. Support for gathering empirical evidence and data analysis can in turn be translated into actionable support for women, such as the extreme heatwave insurance product or the ration kits created by SEWA.
Capacity building
Capacity building and training is one of the most common types of support that funders offer and FSPs receive. Yet, FSPs stated that content is not sufficiently tailored to help them understand their own exposure to climate risks, how to manage climate risks and how to understand their customers’ climate risk and viable investments for climate resilience and adaptation.
FSPs need training on how to design products that take gender considerations into account. Their biggest knowledge gap is understanding how financial and non-financial products and services can be bundled to enable low-income women to build resilience and adapt to climate change. In 2022-2023, CGAP interviews with FSPs found 29% of MFI respondents acknowledging that the impact on climate change differs for women versus men, yet only 36% of MFIs with a climate strategy took action. Many of the gendered differences cited by MFIs were anecdotal and not based on a sex-disaggregated data analysis. Some MFIs’ field officers find women using credit products for entrepreneurship ventures and household expenses and usually have lower average ticket sizes than men. Being able to design products that meet women’s needs and preferences would allow for greater usage and impact of climate-responsive financial products. Therefore, more specific and actionable capacity building is needed.
Adequate funding
Access to long term financing and the lack of funding was identified as a top constraint by FSP respondents in the FinEquity survey. As stated by a survey respondent, “serving women [refugees] is costly and risky but requires guarantees and interest rate subsidization.”
Adequate funding includes (i) longer term financing; (ii) funding for product innovation that extends beyond a pilot and allows for multiple rounds and iterations; and (iii) subsidies that help make the short-term business case work for end-customers. FSPs would like to receive more funding for supporting female customers’ climate resilience and adaptation throughout the product development cycle. Adaptation investments take much longer to realize benefits or returns, meaning lending terms need to be for three or more years. Private investors’ lending horizons tend to be shorter than that. While there are several pilots, few have reached scale. An insurtech from Kenya, for example, received a grant to develop and pilot a financial solution to build women farmers’ resilience to climatic and economic shocks. While successful, the product was no longer offered after the pilot due to lack of funding. Why does capital not flow after a pilot has demonstrated potential?
Next Steps
Our research indicates that FSPs are not yet receiving the support they need to offer financial services that support women’s climate adaptation and resilience. When they receive support, it often does not meet their needs: from not being tailored to the constraints they experience, to not being sufficiently practical, and finally, to not being designed to reduce the FSP’s risk of serving climate-vulnerable women.
Funders and development partners need to provide a comprehensive support package that includes long-term, risk tolerant financing, training, and information that enables and motivates investments in women’s climate adaptation and resilience. Our next blog will share how funders can become more effective in promoting climate-responsive finance for women.