Credit Unions as Climate Finance Intermediaries: Reaching the Global South
Capital for Sustainability (C4S) is a philanthropic initiative whose mission is to align private capital with climate action in low- and middle-income countries (LMICs). C4S’s theory of change is that by visibly deploying grant capital across two strategic levers – (1) climate investments and (2) organizations shaping climate finance policy incentives – we can catalyze a cultural shift in the financial system that leads to significantly more private capital flowing to the Global South. C4S’s ultimate goal is to double LMIC private climate finance in five years. The following article is the first in a three-part series examining the role of credit unions as climate finance intermediaries, a question that sits at the center of C4S’s strategic work.
Part 1: Credit unions as an engine for climate finance in the Global South
In 2024, global climate finance surpassed USD 2 trillion.[1] It is a figure that commands attention. Yet for the communities in the Global South who are most exposed to climate shocks – smallholder farmers facing erratic rains, coastal households absorbing storm surge, informal workers whose livelihoods disappear with each drought – that number can mean very little. According to data from the Climate Policy Initiative, under 10% of international climate finance reaches emerging markets and developing economies.[2] Moreover, less than 1% of global climate finance reaches small-scale agrifood systems,[3] despite the two billion people in smallholder households globally.[4] Such a stark imbalance suggests that while the volume of climate finance is growing, the infrastructure for its distribution remains ill-equipped to facilitate small-scale or locally led action.
The reasons are well documented. Climate funds are predominantly designed for large projects and institutional recipients. Strict accreditation standards, complex due diligence requirements, and demands for sophisticated financial and environmental reporting systematically favor intermediaries that already operate at scale. National and regional implementing agencies absorb overhead costs before funds move further down the chain. The result is that capital concentrates in middle- and high-income markets; while private funding accounts for more than half of climate investment globally, in emerging markets and developing economies that share falls to around 22%.[5]
What this architecture misses is a financial infrastructure that already exists, already commands community trust, and already reaches the populations that climate investment seeks to prioritize. Credit unions – member-owned, community-governed cooperative financial institutions – represent one of the largest and most underutilized channels for directing climate finance where it is most needed.
A network built for inclusion
According to the World Council of Credit Unions (WOCCU), the global credit union network spans 101 countries and includes 67,137 credit unions, serving over 412 million members with USD 3.8 trillion in assets.[6] The Global South alone accounts for nearly 58,000 credit unions across 79 countries, serving 232 million members and managing USD 578 billion in assets.[7] These are not peripheral institutions. They are deeply embedded financial actors whose governance model – one member, one vote, surpluses reinvested locally – is structurally aligned with the inclusion and resilience goals that define the best of climate finance.
A major study published by WOCCU in October 2025, developed with the support of C4S founder Marilyn Waite, surveyed 186 credit unions across 40 countries. The study found that 80% of surveyed credit unions demonstrated strong financial performance, with 88% reporting compliance with prudential regulations.[8] These findings underscore that many credit unions have the financial strength and regulatory discipline required to serve as credible intermediaries for larger pools of climate and development capital.
Climate lending is already underway
Approximately 18% of surveyed institutions currently offer dedicated climate loan products – most commonly for renewable energy, sustainable agriculture, and energy-efficient housing. The WOCCU study notes that actual activity is likely considerably higher: many institutions finance climate-related activities without formally classifying them as green, because consistent taxonomies and reporting systems do not yet exist across the sector. Where they do exist, examples are compelling. Credit unions in Jamaica are financing solar installations and improved roofing for climate resilience. In Guatemala, an agriculture-reforestation loan pilot has already led to the planting of 1.6 million trees. In Senegal, cooperative networks are financing solar-powered irrigation systems under national renewable energy programs.
Perhaps the most important finding in the WOCCU research concerns motivation. When credit union leaders across Africa, Asia, and Latin America were asked why they are moving into climate finance, they said that while regulation matters, the strongest driver of climate engagement is more fundamental. Their members are already experiencing climate change, and climate action is part of the cooperative mandate to protect member well-being and resilience. For many, climate lending is an expression of institutional identity rooted in cooperative principles.
What investment would unlock
The barriers to channeling climate finance through credit unions are real but addressable. Cost of funds, loan tenor, currency risk, and administrative complexity are the primary concerns identified by institutions across regions. A blended finance model – combining concessional capital with technical assistance and proportional reporting requirements – could substantially reduce these barriers. Central finance facilities, which already pool liquidity and provide wholesale funding to credit union networks in countries including Brazil, Jamaica, the Philippines, and Senegal, offer a practical mechanism for channeling investment at scale and may help reduce the burden on individual institutions of navigating complex external funding requirements.
More than 74% of surveyed credit unions expressed interest in obtaining external funding, with climate finance among the leading priorities, and 83% identified capacity building as a priority, particularly in climate loan design, environmental risk management, and digitalization. The prerequisites for partnership are therefore already in place: institutional demand, community-level distribution, and practical vehicles for channeling capital at scale. What remains missing is not local appetite, but investment structures that recognize credit unions as credible climate finance intermediaries.
For global climate finance actors, the implication is clear. With concessional capital, technical assistance, and proportionate reporting requirements, credit unions could become one of the most effective channels for directing climate finance to households, farmers, and small enterprises that are currently left behind.
C4S is working with credit unions across the Global South to deploy catalytic capital and technical assistance programs needed to channel climate capital to underserved communities. Clean Energy Credit Union, a fossil-free credit union, is an example of this model in the United States. This April, Clean Energy Credit Union is directing a portion of every loan funded during the month toward Capital for Sustainability as part of its Earth Month campaign. To learn more about C4S’s work, visit https://capitalforsustainability.com/.
[2] Ibid
[8] Ibid