> Posted by Jeffrey Riecke, Communications Associate, CFI

In addition to its other benefits, microfinance can be a vehicle for promoting environmentally sustainable development. Small-scale finance, when bundled with other services, can improve access to clean energy for people at the base of the pyramid, and can assist them to protect ecosystems, conserve biodiversity, and adapt to climate change. And for the poor, climate change mitigation and adaptation is critical. Although poor people have contributed the least to climate change, according to the United Nations, they will suffer its effects in the biggest way. Though still a burgeoning area, a number of microfinance institutions are effectively pairing microfinance and environmental action, including Kompanion Financial Group in Kyrgyzstan, ESAF Microfinance in India, and XacBank in Mongolia. A few weeks ago at European Microfinance Week (EMW) these three institutions were acknowledged for their work in this area, with Kompanion winning the 5th European Microfinance and Environment Award, and ESAF and XacBank placing as runner-ups.

The Microfinance and Environment Award, launched in 2005, recognizes institutions committed to serving the poor while contributing to environmental sustainability. It’s jointly organized by the Development Cooperation Directorate, the European Microfinance Platform (e-MFP), and the Inclusive Finance Network Luxembourg in collaboration with the European Investment Bank. Below is a snapshot of the environmental efforts of the three institutions, featuring the videos that were shown at EMW.

Kompanion Financial Group (Kyrgyzstan)

In Kyrgyzstan, environmental degradation is rampant due to decades of poor agricultural practices and land management. Kompanion’s Training on Pasture Land Management initiative offers “credits for conservation” to farmers, which are loans linked to a training program that includes sustainable land management practices and helps restore damaged land.

ESAF Microfinance (India)

The majority of ESAF’s clients in rural areas lack access to clean energy or clean water, and most suffer from homes that are severely polluted from inefficient cooking appliances. The MFI’s Clean Energy for the Poor initiative provides financing to help individuals acquire solar energy equipment, energy efficient stoves, and water filters.

XacBank (Mongolia)

XacBank’s Eco Program has facilitated the purchasing of over 150,000 energy efficient heating units and insulation products in the country’s capital, Ulaanbaatar. The products bring great benefits, as winters in the capital last nine months. With many households using inefficient, dilapidated heating systems, families spend an average of 40 percent of their income on heating.

Video credit: Inclusive Finance Network Luxembourg

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