Climate Change and Financial Inclusion

As the effects of climate change intensify, it is critical to help the poor adapt to climate-induced challenges and empower them to reduce their impact on the environment. There are two ways in which financial services can be linked to climate change:

1. Financial services as a tool to build resilience in the face of shocks related to climate change.
2. Financial services as a mechanism to increase the accessibility, affordability, and usage of cleaner technology that reduces contributions to climate change.

This brief summarizes existing evidence from rigorous randomized control trials that suggest ways in which financial services can help the poor build their resilience and mitigate the risks associated with climate change, as well as reduce contributions to climate change. The brief also highlights several opportunities for innovative research to discover solutions to these formidable challenges.