FinEquity Blog

Why Financial Inclusion Is the Cornerstone of Climate Resilience

Woman squatting on a patch of parched earth.

Did you know that women are 14 times more likely to die because of a climate disaster than men? At WWB, we know that climate change is hitting hard, and women are bearing the brunt of it, facing increased economic hardship, health crises, and displacement. Financial systems continue to fail these women and disregard their specific needs, leaving them vulnerable and ill-prepared to protect their livelihood. For women, climate change is fundamentally a financial inclusion problem. Without focusing financial resources on this challenge, women face greater economic instability, health challenges, and social problems.

Women play a critical role, but often lack even basic financial services

Despite their vital role in supporting families and communities, Women’s World Banking has calculated that 753 million women in the most climate-vulnerable regions lack even the basic financial services needed to withstand these challenges.

Worse still, a staggering 880 million women don’t have any way of receiving emergency relief payments in case of a climate crisis because they lack access to personal technology, digital financial capability, or connectivity to access simple digital payment services.  

However, women are not passive victims of climate change. They are at the forefront of preparing for and responding to climate crises, addressing the early recovery needs of their families, and strengthening community building. Evidence shows that women’s representation in decision-making bodies and governments results in better climate governance and more stringent climate change policies.

Financial access is essential for fostering women’s and girls’ resilience and prosperity

As the world stands today, financial systems fail to address women’s specific needs, leaving them vulnerable and unprepared to protect their livelihoods.

Photo courtesy of Women's World Banking.

Against the backdrop of climate change, financial access has never been more essential for fostering the resilience and prosperity of women and girls. Strengthening women’s financial resilience means they can save safely, receive insurance for climate events, access credit for business investments, and utilize secure digital payments for government aid.  

With 45 years of experience and having reached over 82 million women in the past six years, we view financial access as essential for fostering women’s and girls’ resilience and prosperity. Women’s World Banking is deepening collaboration with stakeholders across public and private sectors to accelerate women’s access and usage of scalable and commercially viable financial solutions such as: 

  1. A formal savings account that offers women a secure place to store funds, shielding them from the destruction of physical cash during extreme weather events. Women with formal savings accounts experience 22% less financial loss annually compared to those holding cash. In India, Women's World Banking worked with Bank of Baroda to increase women's savings frequency. After the devastating rains in one state in 2023 that led to widespread damage to the homes and businesses of women and their families, it was the women who saved in a financial institution that had emergency funds to fall back on.
  2. Access to credit enables women to invest in their livelihoods, recover from economic shocks, and adapt to climate impacts. Credit provides the capital needed for women to access energy-efficient technology and adapt to changing environmental patterns, resulting in positive climate impacts and improved household conditions. Annapurna Finance, a member of the Women’s World Banking Global Network, employs a hazard mapping approach to predict and prepare for cyclone and severe weather impacts on individual customers, allowing the company to offer flexible loan terms and first responder help to clients predicted to be affected. This proactive risk assessment helps prevent potential portfolio impacts while ensuring climate resilience for its customers.
  3. Digital payments are crucial for women in climate-vulnerable regions, especially in the aftermath of natural disasters when traditional financial systems may be inaccessible. Providing this access offers a vital financial lifeline, enabling women to maintain financial stability during crises by quickly accessing funds from government sources or friends and family.  In 2020 and 2021, Women's World Banking partnered with Indonesia's largest cash transfer program, Program Keluarga Harapan, to ensure relief payments meet the needs of women. When designed well, government-to-person payments are both a financial lifeline and an on-ramp to financial inclusion.

Beyond financial products

For gender-responsive financial approaches to be most effective, they must be supplemented by non-financial interventions like early warning systems, community-based training, financial literacy, and access to adaptive technologies.

Climate change is predicted to push 158 million more women and girls into poverty by 2050, erasing development progress worldwide.

But it doesn't have to. By taking collective action now and prioritizing financial inclusion, we can ensure that women are not only able to survive climate disasters but can thrive as leaders in creating a sustainable world.

Women’s World Banking will continue to release new research, insights and data on the intersection of climate change and women's financial inclusion. Follow us to stay informed!

Comments

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Lawrence Lwanji , NGO, Tanzania
25 January 2025

Real helping, most people perceive differently about women adaptive capacity, and resilient to shocks and risks. I promise to share this article with many people as possible for clarity and adaption.

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