Advancing Green Economy through Microfinance in Europe

The paper offers a glimpse into the emerging green microfinance activities within the microfinance sector in the EU. While there are some encouraging examples of introducing sustainable green economy products into the scope of microfinance loans, green microfinance is in its early stages of development rarely reaching any significant percentage of the loan portfolios and clients.

Part One presents the European framework for financing sustainable economic and social activities and offers a high-level segmentation of green finance activities as they relate to microfinance. It also presents the key stakeholders involved in the green microfinance activities in Europe.

Part Two presents the market conditions in which green microfinance is operating in Europe.  First, it discusses the demand for green sustainable products and the associated green microfinance loans. Next, it reviews the current supply of green financial products and services offered by microfinance institutions in Europe. Further, the paper discusses marketing and promotional efforts, support for clients in the use of sustainable products and collaboration with suppliers of green products and services. Finally, the paper examines the availability of financing for green microfinance in Europe.

 Part Three summarizes the challenges and opportunities for green microfinance in Europe and offers several recommendations for all the stakeholders involved in this area: MFIs, investors, governments, policy makers and regulators, industry associations.