Across low-income communities and small enterprises in sub-Saharan Africa and Asia, climate shocks are arriving in ways they didn’t before, in places with no history of them, and to people with almost nothing set aside to absorb the hit. According to the Center for Financial Inclusion (CFI)’s survey of 20,000 micro and small businesses across five major cities — Addis Ababa, Delhi, Jakarta, Lagos, and São Paulo — one in three micro and small enterprises reported being hit by drought, floods, or another environmental shock. That number rises to roughly two in three in Delhi. Only about one in five of those affected could raise emergency funds within a week, and fewer than two percent used insurance to cope. A smallholder farmer, a gig worker, and an informal merchant each depend on income that a single flood, heatwave, or failed rain can interrupt, with no savings buffer or insurance policy standing behind them.
From our work scaling inclusive climate finance in India and sub-Saharan Africa, we’ve seen that financial access alone does not shield customers from climate-related losses in income and livelihoods. CFI’s five-city research points the same way: access to credit showed no measurable effect on a firm’s ability to raise emergency funds after a shock, while insurance did. The lesson: climate risk protection solutions must be built and embedded into current financial pathways. Credit and protection are not separate problems to be solved by separate institutions.
The ClimaFii Resilience Innovation Lab (CRIL), a joint initiative of Accion and K.M. Dastur & Co. (KMD) under the ClimaFii Alliance, aims to close this gap. The ClimaFii Alliance is a program supported by Shell Foundation through its partnership with the Transforming Energy Access platform funded by the UK government’s Foreign, Commonwealth & Development Office through its Global Research and Technology Development portfolio. Launched from ClimaFii’s year one learnings, CRIL is designed on the premise that the pieces needed to bring climate solutions to underserved customers already exist in some form — satellite and weather data, automatic payout triggers, and the banking and mobile-money channels that reach these customers. What’s missing isn’t technology; it’s proof that these tools actually work for segments no one has designed for before. CRIL brings together four groups that rarely sit at the same table: climate-exposed enterprises and their customer segments, the financial providers who reach them, climate and satellite data providers, and the insurers and risk-capital providers standing behind them. The lab runs each idea through a simple loop: understand the problem, design a product, de-risk it enough until a provider is willing to offer it, and deliver it through a channel people already use.
The design reflects how these losses actually compound. About half of affected firms in the CFI study coped by drawing down business savings — which looks like resilience but leaves the buffer thinner for the next event. Development economists have long shown that households and firms pushed below a critical asset threshold cannot rebuild unaided. The first shock rarely does lasting damage; it is the second, arriving before the buffer has been restored. The climate resilience product design spans the full shock cycle: savings-linked buffers and contingent credit lines that sit dormant until a shock hits, forecast-triggered early warnings paired with small anticipatory payments before a flood or heatwave arrives, and parametric insurance that pays out automatically once a rainfall, heat, or drought threshhold is breached — no claims process, no proof of loss, just a fast, pre-agreed payout. Catalytic capital covers the actuarial and trigger-design work in the early stages, the first-loss or premium support that gets financial institutions comfortable underwriting an untested segment, and the monitoring that turns a pilot into evidence, with each pilot designed to lower its subsidy over time as the enterprise or end-user share rises.
One early example comes from Green Worms, a waste-management enterprise in Kerala, India, that diverts waste from landfills and recycles it into raw materials for manufacturers. Working with Green Worms, Accion and KMD designed a parametric rainfall cover for Haritha Karma Sena’s 510 women waste pickers, which pays out automatically when monsoon rainfall crosses a pre-agreed threshold in their area. When monsoon rainfall prevents them from collecting waste, they lose their daily wages, which depend on the collection. No claim form, no assessor visit, no wait: when the rain exceeds the threshold, the money is paid out. The cover payment is deliberately small – small enough to build, price, and learn from.
Parametric cover pays on an index, not on a loss. That means it can pay a household that was fine during a climate event and fail to pay one that was not. Index insurance has twenty years of pilots behind it in which exactly that happened. The ones that failed usually failed in the same place: the trigger was set where the data was convenient rather than where the damage starts. CRIL treats basis risk as a design constraint, not a disclaimer, in the policy wording. Triggers are built against the loss a segment actually reports – a waste picker’s lost collection days, not a generic rainfall anomaly – and every pilot collects the loss data needed to test whether the index fired when it should have. CRIL’s real output is not a single product, but evidence. Every pilot generates segment risk profiles, tested trigger designs, and real loss data so insurers and financial providers can price covers for customers the market currently underserves. If that evidence holds up across enough hazards, segments, and geographies, the lab’s goal is to enable markets to serve customers once considered too risky to price on ordinary commercial terms without ongoing subsidy, helping close the protection gap through commercially sustainable models.
The tools to solve this already exist. What’s missing is a coalition willing to test them where they have rarely been tested. Building that coalition is CRIL’s next phase. The opportunity now is for funders, insurers, financial institutions, climate data providers, distribution partners, and policymakers to work together to generate the evidence needed to make climate risk protection viable at scale for climate-vulnerable communities.
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