Climate events have surged in the past decade, and low-income people often feel the brunt of the impact. There are three primary reasons for this: their higher exposure to hazards, greater vulnerability to negative impacts from that exposure, and fewer resources to rebuild and recover losses quickly.

Unfortunately, people who are poor often face higher exposure to climate-related natural hazards because of who they are or where they live, which determines the quality of their homes and hugely impacts their overall health. They also tend to rely on agriculture as their primary source of income, creating a double hit of loss of assets and loss of labor productivity and income when a natural disaster strikes.

While we cannot prevent climate-related events from happening — and poverty itself increases vulnerability — financial inclusion is a tool that can help people experiencing poverty build resilience to climate shocks.

Comparing Global Findex 2021 data on financial inclusion with data on climate vulnerability reveals that over 1 billion unbanked adults, more than 80 percent of the world’s unbanked population, reside in the most climate-vulnerable economies.

Financial resilience, defined by the Global Findex 2021 as the ability to access additional funds of up to 5 percent of GDP per capita within 30 days during emergencies, is also an issue related to financial account access. In climate-vulnerable economies, 58 percent of adults lack financial resilience, compared to 25 percent in less climate-vulnerable countries.

Lack of financial resilience is an issue even when controlling for GDP per capita—wealthier yet climate-vulnerable economies have a higher-than-average share of adults who lack resilience. Adults in climate-vulnerable countries are less likely to depend on social networks for emergency money since many members of the same family or community might lose jobs or income simultaneously, making it difficult to help friends or relatives.

Two Pathways Toward Resilience

Research has found a positive correlation between financial inclusion and financial resilience, indicating that increasing access to financial services can benefit people affected by climate change.

There are two primary opportunities to leverage financial inclusion for greater financial resilience:

1. Increase account ownership among unbanked adults in climate-vulnerable economies.

According to Global Findex data, adults with bank accounts are likely to make and receive digital payments, save money, access formal credit, and store their money securely. These services can help individuals invest in preventative infrastructure (e.g., better housing), diversify their income sources, and access savings and remittances to recover from disaster-related losses. The COVID-19 pandemic offers many examples of how governments were able to quickly and safely provide relief payments to individuals with bank accounts.

2. Encourage savings among individuals who already have bank accounts.

The Global Findex 2021 data consistently shows that individuals who rely on savings to manage financial emergencies are more likely to be financially resilient than those who rely on any other sources, such as friends and family, jobs, or selling personal assets. This finding holds true across all regions.

For some individuals, having a bank account can provide a secure location to store their money and increase their savings. However, incorporating design features that incentivize savings can provide an additional benefit that helps to boost savings balances and create a personally financed emergency fund, even before disaster strikes. These funds can be used for investments such as disaster-resistant housing and stress-resistant seeds or to diversify income streams. Individuals with readily available funds may also be more willing to migrate to less risky environments.

Increased access to credit through formal accounts could also benefit adults in climate-vulnerable economies, though only about 15 percent of adults in low- and middle-income countries use formal credit, on average.

While access to financial services cannot prevent climate-related events nor fully eliminate the factors that make poor adults more vulnerable to the negative impacts of climate change, it can enable them to better anticipate and respond to natural hazards. By coupling access to finance with programs that promote financial resilience, low-income individuals can reduce their exposure to the financial burdens of natural disasters.

The Office of the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), under the leadership of H.M. Queen Máxima of the Netherlands, recently convened a working group on inclusive green finance consisting of members from the Alliance for Financial Inclusion, the Center for Financial Inclusion, and the Sustainable Banking and Finance Network. The group produced a policy and advocacy note on inclusive green finance, along with an accompanying two-page summary report, which are available in the publications section at and will be presented at the Responsible Finance Forum 2023 on July 5-7 in Bengaluru, India.


Leora Klapper

Lead Economist, Development Economics, World Bank

Leora Klapper is a Lead Economist in the Development Research Group at the World Bank. She is a founder of the Global Findex database, co-editor of the World Bank Economic Review, and was Director of the 2022 World Development Report Finance for an Equitable Recovery. She has published widely in refereed journals on corporate and household finance, fintech, banking, and entrepreneurship. Her current research studies the impact of digital financial services, especially for women. Previously, she worked at the Board of Governors of the Federal Reserve System and Salomon Smith Barney. She holds a Ph.D. in financial economics from New York University Stern School of Business.

Peter McConaghy

Policy Advisor, Office of the UNSGSA

Peter is a Policy Advisor to Queen Máxima of the Netherlands who is the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA). In this capacity Peter provides policy and regulatory advice to deepen financial inclusion in emerging markets, with a focus on Latin America (Argentina, Mexico), Francophone West Africa, and Nigeria. Peter also leads UNSGSA global engagement on inclusive green finance and women’s financial inclusion. Peter previously worked for nine years at the World Bank Group on financial sector programs in Latin America and the Middle East. He holds a master’s degree in international development and international economics from the Johns Hopkins University School of Advanced International Studies.

Peer Stein

Independent Advisor, Green and Digital Finance

Peer Stein, a German national, is an independent advisor for impact finance and investments with a focus on green and digital finance in emerging markets. He has had a long career in senior positions at the International Finance Corporation and the World Bank Group, where he has led investment, advisory, and policy work for clients across all regions in emerging markets as well as at the global level. In the aftermath of the financial crisis, he led the World Bank Group’s engagement with the G20 for financial inclusion and later on for green finance. Peer Stein has been a lecturer on financial sector reform and development at Johns Hopkins University/SAIS and has served as Chair for the World Economic Forum Global Agenda Council on the Future of Financing & Capital.

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