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KNOWLEDGE MANAGEMENT
SPOTLIGHT Climate Resilience Strategy March 2023
THE CHALLENGE: CLIMATE CHANGE LEAVES CLIENTS AND PARTNERS VULNERABLE SUMMARY Challenge: Climate change is pushing millions of people into extreme poverty and undermines the effectiveness of our programs. An Opportunity Solution: Climate Resilience Strategy for Microfinance, Agricultural Finance, and Education Finance.
Climate change threatens to exacerbate poverty and inequality globally. Over 100 million people will be pushed into extreme poverty by climate change by 2030, with developing countries expected to bear 75-80% of the costs.1 The global surface temperature has reached 1.1 ˚C (~2 ˚F) above 1850-1900 in 20112020.2 Climate change is having an adverse effect on Opportunity clients and partners. The majority of our 18 million clients across 30 countries are among those most vulnerable to climate change. They are failing to recover from frequent, adverse weather events, including unseasonal temperatures, droughts, flash floods, and other climatic changes occurring with greater frequency and intensity. Opportunity microfinance partners and programs have seen typhoons, flooding, and drought severely impact their portfolios and program delivery models. Partners face common problems such as limited staff capacities, incomplete climate policies, lack of flexibility in program or financial product structures, liquidity constraints, and operating in high interest rate environments. Climate change is projected to continue increasing the severity and frequency of these adverse impacts on Opportunity clients and partners.
OPPORTUNITY’S SOLUTION: CLIMATE RESILIENCE STRATEGY In 2023, Opportunity launched a Climate Resilience Strategy that articulates how Opportunity intends to work with our partners and clients around the world to help build climate resilience in vulnerable communities. It is guided by four foundational principles: u u u u
Client-focused climate adaptation (ahead of mitigation) Locally-led development Partnerships Climate as cross-cutting, with all corners of Opportunity playing a part in response to climate change
Opportunity’s climate strategy covers key program pillars of Microfinance, Agricultural Finance (AgFinance), and Education Finance (EduFinance). The strategy also touches on our Health Program and Climate Change, and also the interplay with our cross-cutting issues of digital technology and gender equity.
MICROFINANCE AND CLIMATE Financial inclusion builds resilience in those exposed to shocks. Well-designed financial products and services help vulnerable households prepare for shocks, reduce risk, increase investment in the face of risk, and respond when a shock occurs. In particular, access to credit can enable low-income households to build and diversify their asset base, thereby expanding the range of coping strategies available to them. However, due to climate change, the development gains that the financial inclusion sector has achieved face a severe threat. Opportunity’s climate strategy work in the KNOWLEDGE MANAGEMENT SPOTLIGHT highlights Opportunity International innovations and industry trends.