European Microfinance Platform 190d ago

Climate change is fundamentally reshaping the inclusive finance landscape. Extreme weather events—floods, droughts, cyclones— threaten to reverse decades of progress in financial inclusion. Low-income clients, particularly women and smallholder farmers, are on the frontlines of these shocks. Yet, financial service providers (FSPs), especially microfinance institutions (MFIs), often find themselves caught between safeguarding institutional stability and supporting client resilience. CGAP research illustrates how this tension plays out in practice. In Pakistan, for example, over 40% of MFIs reduced lending to climate-affected regions, cutting off liquidity precisely when clients needed it most. This risk-averse approach, while understandable, can deepen client vulnerability and undermine long-term portfolio growth and customer trust. Meanwhile, global humanitarian aid is declining, with global aid for post-disaster recovery projected to drop 30% by 2025 compared to 2022 levels—highlighting the urgency of scalable, market-based financial responses (UN 2025). This session will spotlight emerging strategies for climate-resilient service delivery, focusing on recovery lending, contingent line of credit, and inclusive insurance.