FinEquity Blog

Breaking Silos for Women's Climate Resilience through financial services: What’s the FinEquity Community of Practice up to?

Two women in a mountain field in Northern India.

Women and girls are disproportionately impacted by climate shocks and stresses, and to support their adaptation and foster their prosperity, relevant and responsive financial services are needed. Yet much needs to be done to help financial systems respond in such a way, and development has a hand to play in that response. FinEquity members’ strategies are responding to the cross-sectoral implications of climate risks, especially when it comes to looking at the way financial services can enable the adaption and resilience-building efforts of women and girls. This work reveals several insights on relevant shifts in donor and NGO priorities that prioritize cross-sectoral strategic approaches.

Sectoral lanes are not helping us respond to the compounding nature of climate risks

Traditional approaches to development that focus on specific sectoral approaches, such as inclusive finance, do well to understand a specific sector in depth. Yet there are limitations to a sectorally-bound approach, especially when we are trying to respond to development challenges (such as climate risks) that don’t stay within sectoral lines. In these cases, our delineated approaches may not respond adequately to the challenges presented. 

The risks presented are compounding in both their presentation and consequences  

For example, drought is both a slow-onset stress that can wipe out livestock, and it is also a catalyst for health care risks. It can mean children are removed from school to save costs and also that a family has less food to eat. This type of climate event doesn’t need one solution, especially one financial solution, but rather, it requires an understanding of the wide-reaching implications of risk exposure and how financial services can enable cross-cutting solutions that last beyond the event itself. 

There are more considerations to be made when looking at how these events impact women and girls, as discussed in the previous blogs.  However, many development solutions are trying to approach these complex challenges in bifurcated ways that, by their very nature, run the risk of being sectorally siloed and fail to understand the compounding nature of the risk that women exposed to climate risk face. The development sector is changing, however, as seen by a shift in NGO and donor trends that are moving to prioritize more cross-sectoral focal areas.    

“Climate change disproportionately impacts women, and without the financial tools to cope, they face a future fraught with poverty and insecurity. There are 753 million women living in climate-vulnerable countries who are excluded from formal financial systems, leaving them ill-prepared to protect their livelihoods or recover from climate shocks.” -

Women’s World Banking

 

Understanding strategic priorities of the member base regarding women’s climate adaptation

FinEquity undertook a review of the strategic priorities of over 200 of FinEquity’s Community of Practice participants to better understand what they are doing as it relates to supporting women’s climate adaptation, especially through the role of informal and formal financial services. The stakeholders reviewed were comprised of multilateral organizations, bilateral organizations, private sector actors, NGOs, think tanks, and academic actors – all of whom had demonstrative reach at scale to be considered for the review.

We also undertook a scan of over 600 private foundations, corporate foundations, donor collaboratives, donor-advised funds, NGOs, research institutions, and multilateral and bilateral organizations at a global level to better understand where their strategic priorities are heading, and to consider what this might mean as development actors work to respond to the threat of climate risks that vulnerable populations face. 

More organizations may be moving to cross-sectoral approaches, but there is work to be done  

Of the FinEquity community of practice members, we found a little more than half had strategies that focused on the intersection of gender, climate, and financial inclusion, including those seen in CARE’s recent “Women’s Economic Justice: Impact Report 2024 – Her Money, Her Future”. For other organizations within this group, this does not mean that their strategies were cross-cutting per se. There was evidence from some that they approached these topics as standalone issues with minimal intersection across the respective thematic strategies. The same could be said for those organizations that had a focus just on gender and climate (16%), gender and financial inclusion (4.7%), and climate and financial inclusion (9.3%)  

 

The scan of donor and development trends provided further insights. Funding trends are often indicators for strategic development approaches that the development sector might pursue.  We saw donors increasingly focusing on outcome areas that again require a cross-sectoral approach to respond. For example, while a focus on livelihoods is not new, more donors are focusing on whether these are prioritizing market linkages and considering climate-adaptive approaches.

It’s worth noting that for Community of Practice members, we saw similar trends, including those who have a prominent focus on livelihoods, food security, health, and child wellbeing.  

What are the implications of these findings?

While donor and NGO trends are beginning to move toward more of an outcome focus for complex topics, the development sector needs to be sure it is considering the comprehensive nature of these outcome areas. A focus on livelihoods cannot be just about job creation alone, for example, but must also consider an understanding of the enabling environment that can support the growth and sustainability of those livelihoods over time. In turn, a focus on community development can’t necessarily be devoid of considering livelihoods, relevant and adequate market linkages, and infrastructure. As stated by a World Bank report, “Adaptation interventions alone cannot make people and households resilient; they also need to have access to basic infrastructure services (such as energy and improved water), financial instruments (such as saving accounts and borrowing), and critical services (such as health care).” 

This may be easier said than done. For stakeholders to prioritize an intersectional approach on gender, climate, and financial inclusion will require recognition that a cross-cutting approach needs cross-sectoral collaboration, patient capital, and sufficient organizational capacity building and resourcing over time to engage in an intersectional approach to solutions.   

Where do we go from here?  

In the next blog, Sabaa Notta will highlight the ways financial institutions can play a critical role via collaborations with key stakeholders in responding to the compounding risks women face due to climate change. 

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