The Importance of Financial Inclusion as a Fundamental Element of Climate Resilience

 

Did you know that women are 14 times more likely to perish due to a climate disaster compared to men? At WWB, we recognize that climate change is having a severe impact, with women disproportionately affected, encountering heightened economic difficulties, health emergencies, and displacement. Financial systems persist in failing these women and neglecting their unique requirements, rendering them vulnerable and inadequately equipped to safeguard their livelihoods. For women, climate change is essentially a matter of financial inclusion. If financial resources are not directed towards addressing this issue, women will experience increased economic instability, health issues, and social challenges.

Women hold a vital position, yet frequently do not have access to even fundamental financial services.

Currently, financial systems do not adequately meet the specific needs of women, rendering them vulnerable and ill-equipped to safeguard their livelihoods.

Photo courtesy of Women's World Banking.

In light of climate change, access to financial resources has become increasingly vital for enhancing the resilience and prosperity of women and girls. By bolstering women’s financial resilience, they can securely save, obtain insurance for climate-related events, access credit for business ventures, and utilize safe digital payment methods for government assistance.

With 45 years of experience and having reached over 82 million women in the last six years, we consider financial access crucial for promoting the resilience and prosperity of women and girls. Women’s World Banking is intensifying collaboration with stakeholders from both public and private sectors to expedite women’s access to and utilization of scalable and commercially viable financial solutions, including:

A formal savings account that provides women with a secure location to store their funds, protecting them from the loss of physical cash during extreme weather conditions. Women who maintain formal savings accounts experience 22% less financial loss annually compared to those who rely on cash. In India, Women's World Banking partnered with Bank of Baroda to enhance the frequency of women’s savings. Following the catastrophic rains in one state in 2023, which caused extensive damage to the homes and businesses of women and their families, it was the women who had saved in a financial institution that possessed emergency funds to rely on.

Access to credit allows women to invest in their livelihoods, recover from economic disruptions, and adapt to the effects of climate change. Credit supplies the necessary capital for women to acquire energy-efficient technologies and adjust to evolving environmental conditions, leading to beneficial climate outcomes and improved household circumstances. Annapurna Finance, a member of the Women’s World Banking Global Network, utilizes a hazard mapping strategy to anticipate and prepare for cyclones and severe weather.

Beyond financial products

To maximize the effectiveness of gender-responsive financial strategies, it is essential to complement them with non-financial measures such as early warning systems, community-based training, financial literacy initiatives, and access to adaptive technologies.

Climate change is anticipated to drive an additional 158 million women and girls into poverty by the year 2050, thereby undermining global development achievements.

However, this outcome is not inevitable. By engaging in collective action at this moment and emphasizing financial inclusion, we can guarantee that women not only endure climate-related disasters but also excel as leaders in fostering a sustainable future.

Women’s World Banking will persist in publishing new research, insights, and data regarding the relationship between climate change and women's financial inclusion. Stay connected with us to remain updated!