A Green Future for All: How Financial Services Can Build More Inclusive Carbon Markets

Inclusive financial services can support efforts to build more inclusive carbon markets and maximize their contributions to the Sustainable Development Goals (SDGs). From Sub-Saharan Africa to South Asia and beyond, there are emerging examples of carbon projects that leverage credit, savings, and payment products to reach excluded communities and deliver concrete improvements to the lives and livelihoods of the people most vulnerable to the accelerating climate crisis, including women. Evidence on the role of financial services presents an opportunity for financial service providers (FSPs) to deepen their engagement in the climate space and for carbon project developers and other climate stakeholders to leverage the power of inclusive financial services to advance climate resilience, adaptation, and a just transition.

Fostering greater collaboration between FSPs and carbon project developers will be key to building more inclusive carbon markets. Carbon markets are complex, and CGAP’s research suggests that many FSPs will require capacity building and partnerships with project developers to meaningfully engage in this emerging space. At the same time, FSPs are well-positioned to support the success of inclusive carbon projects, pointing to an opportunity for project developers to leverage partnerships with FSPs to build higher value, more sustainable, and more impactful carbon projects.

This paper highlights both the challenges to and opportunities for developing inclusive carbon markets, emphasizing the opportunity for financial services to play a role in overcoming barriers to inclusion and driving impact at scale.