Microfinance and Climate Change : Threats and Opportunities, the Case of Brazil's Largest Rural MFIs, Agroamigo and Cresol

This paper reports a cross-case study of the interface between rural microfinance and climate change in Brazil. We use a simple theoretical framework to analyse climate change opportunities and threats of Brazil's largest rural microfinance institutions, Agroamigo and Cresol, along three main metadimensions: economic, financial and additional services. Our analysis focuses on vulnerability and adaptation to climate change and, to a lesser extent, mitigation. As proxy for climate change effects on clients and institutions, we use the recent droughts and floods affecting some of the areas of operation of these MFIs. We argue that the absence of a combination of climate change strategies in MFIs operating in weather hazard prone regions may result in greater and additional credit risks for their portfolios and a missing opportunity for these players to support their clients better respond to climate change impacts. The case studies under scrutiny corroborate our hypothesis