Prudential Supervision: Sustainable Inclusive Finance

Climate change disproportionately affects low-income countries and vulnerable populations. Inclusive finance plays a critical role in enabling these groups to build resilience, recover from climate shocks, and participate in a just green transition. 

Climate risks threaten financial stability, and financial instability can, in turn, worsen financial exclusion, creating a vicious cycle, especially in emerging and developing economies. 

The interaction explores the impact of climate change on inclusive finance, sustainable finance, and the role of prudential supervision in climate-related regulation. 

Additional Reading 

The following resources are included in the interaction. They are repeated here for ease of reference. 

• Dias, D., Chalwe-Mulenga, M., Chamas, T.M.R., and Alonso, T., 2024, Exclusion Risks in Climate-Related Financial Regulation: An Analytical Framework, CGAP Publication, https://www.cgap.org/research/publication/exclusion-risks-in-climate-related-financial-regulation-analytical-framework
• International Finance Corporation, 2025, Leaving No One Behind: Unlocking Finance in Emerging Markets, IFC, https://www.sbfnetwork.org/sites/default/files/2025/Jul/SBFN_Leaving-No-One-Behind-Unlocking-Finance-in-Emerging-Markets_0.pdf
• Knaak, P. and Zetterli, P., 2023, Climate Risk and Financial Inclusion: A Regulatory Perspective, https://www.cgap.org/research/publication/climate-risk-and-financial-inclusion-regulatory-perspective
• Notta, S. and Zetterli, P., 2025, Is Climate Change Undermining Financial Inclusion: Early Evidence Says Yes, CGAP Blog, https://www.cgap.org/blog/is-climate-change-undermining-financial-inclusion-early-evidence-says-yes
• Zetterli, P., Mattern, M., and Swanborough, J., 2024, 8 Billion Reasons: Inclusive Finance as a Catalyst for Climate Action, CGAP Publication, https://www.cgap.org/research/publication/8-billion-reasons-inclusive-finance-catalyst-for-climate-action