Publish Date : 18-Dec-2014
FMO, the Mongolian Bankers Association (MBA), the Mongolian Ministry of Environment, Green Development and Tourism, the Bank of Mongolia and IFC (a member of the World Bank Group) have today launched the Mongolian Sustainable Finance Principles and Sector Guidelines, a voluntary framework to help local banks integrate environmental and social considerations into lending decisions and product design, promoting sustainable development in the resource-rich country.
The new guidelines, which will take effect in January, were introduced to the public at today's Mongolia Sustainable Finance Forum 2014. The guidelines cover four key industries: mining, agriculture, construction, and manufacturing. By implementing these practices, banks will reduce the risk of loan defaults and identify new business opportunities, such as in renewable energy and clean technologies. The newly launched principles are based on international benchmarks, particularly the IFC Performance Standards, the World Bank Group Environmental, Health, and Safety Guidelines, and the Equator Principles, a private sector-led credit risk management framework for determining, assessing, and managing environmental and social risk in project-finance transactions.
"Sustainable finance presents a new economic model, one in which growth no longer comes at the expenses of communities and the environment, but instead contributes to a thriving green economy," said Oyunkhorol Dulamsuren, Minister of Environment, Green Development and Tourism. "We are keen to support initiatives like this to promote long-term and inclusive growth in Mongolia."
As one of the fastest growing economies in the world, Mongolia relies on industries – mining, livestock, and real estate development – that can contribute to pollution or water scarcity, making banking practices that take environmental and social considerations into account all the more necessary.
"Sustainable banking practices protects bank assets and create business opportunities by opening new markets and products," said Naidalaa Badrakh, CEO of MBA. "To help banks adopt such practices, we are keen to promote knowledge sharing and productive dialogue among stakeholders, building sector capacity and a level-playing field."
In 2013, several CEOs of major Mongolian banks gathered at the first Mongolia Sustainable Finance Forum and agreed to create a working group, convened by MBA and supported by regulators, to develop a framework to address Mongolia's environmental and social issues through lending. "The positive link between environmental and social standards and improved commercial performance is firmly established and has opened up new lending and investment opportunities in many countries", said Vivek Pathak, IFC’s Director for Asia and the Pacific.
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