How can digital finance build climate resilience among the world’s most vulnerable?
Millions of people around the world are already experiencing the negative effects of climate change. Lasting droughts, soaring temperatures, wildfires and other extreme weather events are threatening the lives, livelihoods, and assets of people globally. However, the effects of these impacts are concentrated among those who are dependent on natural resources, the poor and vulnerable, and those in particular geographies, like urban settlements and coastal regions. Unfortunately, many of these exposed populations lack access to solutions and resources, like financial services, that can help mitigate their greater exposure to the negative impacts of climate change and enable them to participate in the climate transition.
While this imbalance is troubling, technological advances and increased reach of digital services offer an opportunity for climate resilience solutions to help vulnerable people anticipate, adapt, and build resilience to the physical impacts of climate change. Even as access to resilience solutions lags, digital finance innovations have been able to reach many climate vulnerable populations.
To understand the opportunity for digital finance and fintech to power greater climate resilience, BFA Global convened a Task Force of climate and financial service experts, including World Resources Institute, CGAP, PayPal, and the team of the UN Race to Resilience campaign. BFA Global is a partner under the UN Race to Resilience campaign, led by the High Level Champions. The campaign aims to build the resilience of 4 billion people from vulnerable groups and communities against climate risks. Together, the Task Force developed the framework presented in this infographic to provide an actionable way for stakeholders to understand the DF4CR opportunity and the concrete solutions that can grow climate resilience among vulnerable people in emerging markets. This framework draws on valuable climate action and risk management frameworks and taxonomies developed by the European Commission, The Lightsmith Group’s Adaptation SME Accelerator, World Bank, and others, as well as CGAP’s narrative on climate transition financial services.
At a high level, this infographic illustrates three groups of solutions: 1) solutions that help vulnerable people anticipate and recover from disasters caused by climate change, 2) solutions that enable households to adapt their livelihoods and assets given chronic changes to the climate, and 3) solutions that help build long-term resilience for communities and markets.
We’re sourcing the next cohort of inclusive fintech startups working at the intersection of digital finance and climate resilience. If your company falls within this space, express interest in becoming a Catalyst Fund company.
All companies will be evaluated by our Investor Advisory Committee for our upcoming cohort.