Unlock climate adaptation through inclusive finance

This case study is part of the “Climate Resilience Awards for Business” an initiative by the World Business Council for Sustainable Development (WBCSD) in partnership with the Global Resilience Partnership (GRP), which celebrate businesses driving innovative and scalable solutions to strengthen climate resilience across operations, supply chains, and communities. Learn more here

Al-Amal Microfinance Bank (AMB) operates in Yemen, where extreme weather, water scarcity, and reliance on fossil fuels threaten agriculture, energy, and household livelihoods. Farmers and small businesses face declining productivity, rising fuel costs, and limited access to clean energy, creating both climate vulnerability and carbon emissions challenges. To address these risks, AMB developed the Green Finance Initiative, providing solar-powered irrigation, renewable energy technologies, and climate-smart agricultural inputs. These solutions reduce dependence on diesel-based systems, lower emissions, improve water and energy access, and strengthen resilience in fragile communities.

The Al-Amal Green Finance Initiative empowers communities in Yemen to strengthen climate adaptation while reducing reliance on fossil fuels. The initiative combines tailored green financial products, supplier partnerships, capacity building, and digital outreach to deliver solar energy, water-efficient irrigation, and climate-smart agricultural inputs. Flexible Islamic financing models, including Qard Hasan and Murabaha, make these solutions affordable for small-scale farmers, agribusinesses, and households.

The program integrates technical assistance and vetted suppliers to ensure proper installation, maintenance, and effective use of renewable energy and sustainable agriculture technologies. By 2025, the initiative had supported 2,145 people, providing renewable energy financing, climate-smart agriculture financing, water resource management financing, and sustainable livestock financing, and created over 2,600 jobs. This approach directly reduces exposure to water scarcity, rising fuel costs, and environmental degradation, while improving energy and water access and strengthening community resilience.

Through a combination of finance, technical support, and local engagement—including mobile banking and digital channels to reach remote areas—the initiative ensures long-term adoption, sustainability, and impact, demonstrating how microfinance can be a catalyst for climate adaptation, livelihood protection, and decarbonization in fragile contexts.

Figure 1: Success story of the AGFI

Sustainability Impact

Climate

The initiative enables greenhouse gas reductions by replacing diesel-based irrigation and energy systems with solar-powered technologies and renewable energy solutions. These interventions reduce reliance on fossil fuels, improve water and energy efficiency, and strengthen climate resilience in communities across Yemen.

Nature

By promoting efficient water use, solar energy, and climate-smart agricultural practices, the initiative protects natural resources, reduces environmental degradation, and supports sustainable land and water management in fragile ecosystems.

Social

The program has strengthened community resilience by supporting over 2,145 people, improving energy and water access, and creating over 2,600 jobs. It enhances livelihoods through income generation, agricultural productivity, and access to affordable finance, while ensuring inclusive adoption through flexible Islamic financing models and technical assistance.

Business Impact

Benefits

The initiative strengthens AMB’s portfolio resilience by reducing defaults linked to climate shocks, expanding outreach in rural areas, and positioning the bank as a trusted partner for donors, investors, and government agencies. By enabling clients to adopt renewable energy and climate-smart agriculture, the program enhances client satisfaction, loyalty, and long-term engagement, while demonstrating how microfinance can be a driver for climate adaptation and sustainable development.

Costs

To date, AMB has mobilized over USD 32.8 million, invested in solar systems, solar water pumps, greenhouses, modern irrigation networks, and technical assistance, with additional funding supported by international donors (UNOPS, EU, EAA’s program Silatech, AGFUND, SDC, ... etc.). Costs are managed through blended finance, leveraging grants and concessional loans to make interventions affordable for low-income clients. Investments also include staff capacity building, supplier partnerships, and digital outreach to expand rural access.

Indicative abatement cost

The initiative reduces reliance on diesel fuel and fossil-based energy, enabling measurable indirect GHG reductions while supporting resilience and economic sustainability.

Impact beyond sustainability and business

Co-benefits

The initiative delivers multiple social and economic co-benefits beyond climate adaptation. By providing access to renewable energy, modern irrigation, and climate-smart agriculture, it strengthens livelihoods, food security, and income generation for households and small businesses. Over 2,600 jobs have been created, and over 2,145 people have benefited from improved energy and water access. In addition to around 65,000 solar panel systems disbursed, funded, and implemented in partnerships with UNOPS and the World Bank. The program also builds financial inclusion and technical capacity, supporting communities in fragile and resource-constrained contexts.

Potential side-effects

While AMB’s initiatives promote green finance and economic empowerment, potential negative side effects include unequal access for the most remote or marginalized communities, over-dependence on donor funding, and possible environmental risks from improperly installed solar or irrigation systems. To mitigate these, AMB ensures inclusive outreach through local agents, provides training and technical support for safe technology use, and continuously monitors projects to avoid maladaptation and ensure equitable, sustainable outcomes.

Typical business profile

The initiative is most relevant for small-scale farmers, agribusinesses, and low-income households in fragile and climate-vulnerable regions such as Yemen. It is particularly applicable to the agriculture and energy sectors, where water scarcity, fossil fuel dependence, and environmental degradation threaten livelihoods. The model also provides guidance for financial institutions and development partners seeking to integrate green banking in conflict-affected or resource-scarce contexts. The initiative aligns with organizations at early-to-intermediate stages of climate adaptation, requiring affordable access to renewable energy, modern irrigation, and sustainable agricultural inputs.

Approach

Implementation combines finance, partnerships, and technical support. The core steps are:

1. Tailored Green Financial Products: Offering Islamic financing tools (Qard Hasan, Murabaha) to make renewable energy and sustainable agriculture affordable.

2. Supplier Partnerships: Engaging vetted suppliers to provide solar systems, irrigation technologies, and agricultural inputs with after-sales support.

3. Capacity Building: Providing training, advisory services, and awareness campaigns to ensure proper adoption and maintenance of green technologies.

4. Digital Outreach: Using mobile banking and agent networks to expand access in rural and underserved areas.

This approach is flexible and can be adapted across sectors such as agriculture, energy, and waste management, with financial products and supplier ecosystems tailored to local contexts.

Stakeholders involved

• Project Leads: Al-Amal Microfinance Bank (AMB)

• Company Functions: Finance, Risk, HR, and Green Transformation units within AMB

• Main Providers: Technical suppliers of solar systems, irrigation equipment, and digital services

• Other: REYADAH Foundation (training and entrepreneurship), international donors (UNOPS, EU, EAA’s program Silatech, AGFUND, SDC, ... etc.), Central Bank of Yemen, local agents, community beneficiaries

All stakeholders collaborated through integrated service delivery, technical support, capacity building, and monitoring to ensure sustainability and impact.

Key parameters to consider

• Initiative Maturity: Well-established with several successful projects scaling in multiple governorates

• Average Lifetime: Financial services are ongoing; technical infrastructure (solar systems, pumps) lasts 5–10 years

• Technical Constraints: Limited renewable energy infrastructure, intermittent electricity, logistical challenges in conflict-affected or remote areas

• Regional Specificities: Yemen’s security situation, fragmented markets, and local regulations require adaptive approaches

• Availability of Subsidies: Donor funding and grants reduce financial barriers for beneficiaries

• Scalability & Replicability: Models can be adapted to other governorates and vulnerable groups with adjustments for local socio-economic conditions

Implementation and operations tips

Challenges include limited infrastructure, conflict disruptions, and low awareness of green solutions. Success is achieved by leveraging local agents, combining financial and technical support, partnering with donors, and building staff capacity. Long-term sustainability relies on integrated service delivery, strong monitoring, and sustained engagement with communities and stakeholders.

Environment policy manual

Green finance initiative (video)