Developing resilient and inclusive financial systems through responsible and sustainable finance and investment

Context

Sustainable economic growth and a just transition require resilient, well-functioning and inclusive financial systems to redirect financial flows towards sustainable investments that benefit all. A better inclusion of women and men as well as of micro-, small and medium-sized enterprises (MSMEs) into the financial system is crucial to ensure that the benefits of growth are widely shared. Integrating sustainability aspects into financing decisions and risk management processes in the financial sector promotes a sustainable economic transformation in line with the Sustainable Development Goals (SDGs) and the climate agenda.

Developing and emerging countries often lack formal means for individuals and households and MSMEs to conduct financial operations, as access to finance is often limited, making it difficult for MSME operations to function successfully and, consequently, boost the economy and the labour market. Digitalising the financial sector offers both opportunities and risks for consumers and the financial system. Moreover, there is a large financing gap to the desired extent to achieve the SDGs or climate targets. Increasing risks and economic crises (through pandemics, climate change, disasters) threaten the resilience and stability of the financial system and the reconstruction of national economies in many developing and emerging countries.

Developing efficient and responsible financial systems is central to countering these challenges.

Objective

Efficient and responsible financial systems for sustainable growth, economic transformation and poverty reduction in developing countries and emerging economies have been promoted.

Approach

The sector programme provides technical and conceptual advice to the German Federal Ministry for Economic Cooperation and Development (BMZ) in national and international processes. It currently focuses on the following key areas:

• Promoting Financial inclusion and inclusive insurance, with particular attention to women, especially women entrepreneurs and vulnerable populations in order to support their economic participation.
• Promoting secure and responsible digital financial services in order to contribute to a digital transformation of the financial sector that leave no one behind.
• Promoting sustainable finance by systematically integrating environmental, social and governance (ESG) criteria in financial decision-making in order to align capital flows with the SDGs.  

Last update: May 2023