100 Banks Initiative

100 Banks in 5 years

Aligned with the V20 Finance Ministers’ 2024 Call to Action, the V20-SIF intends to provide direct technical assistance to one hundred banks in five years across all V20 regions. Through the 100-Banks Initiative, the V20-SIF will work with micro, small, and medium-sized enterprises (MSME) and banks to deploy a rapid, low-cost template approach to climate risk assessments for MSME credit portfolios, designed to scale through blended finance. This approach draws on decades of grant-funded technical expertise to deliver greater impact, more efficiently, and more affordably.

The V20-SIF team will conduct portfolio-level climate risk assessments, applying its specialised insight gathered through its 2025 Landscape Study to quantify exposure and identify the most appropriate financial instruments for response. These may include adaptation-focused lending products, parametric insurance solutions, or other blended finance mechanisms tailored to the specific risk profiles of each portfolio.

The goal is to tackle the systemic threat of climate risk while unlocking targeted, actionable strategies to build MSME resilience, reinforcing the economic stability of the most climate-vulnerable economies.

Who is involved?

The V20-SIF recognises that it is vital to facilitate mutually beneficial climate-resilience financial mechanisms which address the needs of communities, business owners, financial organisations, and governments. The 100 Banks Initiative is specifically designed to integrate climate-resilience for MSMEs into the investment strategies of banks, micro finance institutions, credit unions, mutual funds, and any other financial organisations which provide credit to MSMEs.

The MSMEs

Micro, small, and medium-sized enterprises (MSMEs) represent more than 70% of livelihoods and 30-40% of total GDP in V20 markets. Most of these are family businesses that face the market alone, taking out loans from banks and other financial institutions to invest in producing income. However, in countries increasingly affected by severe and frequent climate-related disasters, business owners face a growing risk of prolonged business interruption, impacting not only their incomes, but also their ability to meet loan repayments.

A range of financial products and solutions already exist to help MSMEs recover from business interruptions, enabling them to resume operations and meet their financial obligations. However, in V20 nations, individual MSMEs often represent relatively small financial values, frequently falling below the eligibility threshold for these instruments. Even when such products are accessible, their cost is often prohibitive for businesses operating on narrow profit margins. As a result, a critical barrier remains to building climate resilience in the very regions where it is most urgently needed.

At the individual level, this poses a serious challenge for small business owners. At the macro level, however, it represents a systemic risk to entire MSME markets in V20 nations, and a potential disaster for their broader economies.

The Banks

Banks and other financial institutions often hold loan agreements with hundreds or even thousands of MSMEs within a single credit portfolio. As a result, the risks associated with individual businesses become aggregated at the portfolio level. This can translate into millions of dollars in exposure, posing a substantial risk of financial loss for the institutions themselves.

As climate risks continue to intensify, there is growing concern that banks may respond by reducing their exposure, scaling back on lending to MSMEs in V20 nations. Such a shift would severely constrain business continuity for MSMEs, potentially shrinking the broader market and placing further strain on the economies of these already vulnerable countries.

The V20-SIF has identified a system through which banks and financial institutions in V20 nations can leverage their market position to invest in MSME resilience while simultaneously protecting and strengthening their own credit portfolios. By assessing climate risk at the portfolio level as an aggregated risk, these financial institutions can generate meaningful metrics on their overall exposure. However, this aggregated approach also helps overcome the challenge of scale by consolidating smaller, individual MSMEs into a viable collective for financial intervention.

Therefore, positioning banks and other financial institutions as “Demand Aggregators” provides access to previously unavailable options for financial solutions to V20 economic risks.