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Library » Microfinance and Climate Change: Threats and Opportunities

Microfinance and Climate Change: Threats and Opportunities
Mar 2009, Rippey, P.

Combating climate change at the household, microbusiness, MFI, and systemic levels

This paper proposes ideas to combat climate change. It suggests that each MFI should find its own way of addressing the issue, weighing the risks of inaction against the cost and risks involved in institutional change.

Responses to climate change fall into two categories, namely, mitigation and adaptation. Mitigation focuses on reducing the severity of climate change. Adaptation focuses on taking measures that help people adjust to changed conditions. MFIs can support climate change mitigation efforts by:

Promoting clean energy products at the household level by lending to households that purchase energy saving devices, and by financing microentrepreneurs who supply these devices;
Encouraging community-level mitigation efforts;
Financing environment-friendly lighting, cooking, reforestation and afforestation, bio-fuels, low-carbon agriculture and adaptive agriculture.

At the institutional level, climate change should be part of strategic planning. These plans should include both mitigation and adaptation. At the systemic level, MFIs can reinforce institutions' actions to combat climate change. Finally, MFIs can help raise awareness and ensure that the interests of their clients are considered through advocacy and contribution to policy debate.

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Journal Volume/Pages:
20

Publisher(s):
CGAP