Signal · indexed from World Bank Documents & Reports
World Bank
Low-income households and small businesses are increasingly vulnerable to climate shocks that disrupt livelihoods, destroy assets, and deepen poverty, while also creating financial risks for financial service providers (FSPs). This paper explores Climate-Focused Contingent Lines of Credit (CLOCs) as an innovative solution that enables rapid access to pre-arranged emergency financing following verified climate events. By providing timely liquidity without requiring new credit assessments, CLOCs help clients cope with and recover from shocks while encouraging greater investment and resilience before disasters occur. The paper highlights evidence from institutions such as BRAC and VisionFund, demonstrating that CLOCs can improve client welfare, strengthen portfolio performance, increase revenues, and build customer loyalty. As climate volatility intensifies, CLOCs offer FSPs a practical tool to protect clients, maintain financial stability, and transform climate-related risks into opportunities for resilience and inclusive growth.
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| Field | How we know | State | Confidence |
|---|---|---|---|
| Publication date | Official API or feed | Data quality: Source-backed | 100 |
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