Logo of Phnom Penh Post newspaper Phnom Penh Post - Banking with a positive spin

Banking with a positive spin

Customers talk with tellers at a bank branch in central Phnom Penh earlier this year.
Customers talk with tellers at a bank branch in central Phnom Penh earlier this year. Hong Menea

Banking with a positive spin

A banking sector initiative launched yesterday aims to advise Cambodia’s financial sector on best practices for sustainable lending while capitalising on the growing pool of international funds that could flow into green and socially responsible projects.

The Sustainable Finance Initiative will conduct two years of research to identify best practices that can be applied by financial institutions when formulating their lending policies, such as ways to mitigate the damage associated with infrastructure, energy and large-scale agribusiness projects.

The initiative is being carried out under the management of the Association of Banks in Cambodia (ABC), which includes 50 member financial institutions. Its supporting partners include the USAID-funded project Mekong Partnership for the Environment, which is managed by the international NGO PACT, the Wildlife Conservation Society, and the private investment firm Mekong Strategic Partners.

Charles Vann, acting chairman of ABC, said that with rapid economic development, private sector lending needs to be underpinned by a sense of conservation.“The ABC understands that it needs to support sustainable financial principles,” he said. “We need to create more green-oriented funding through the private sector.”

Vann added even ahead of the two-year study’s findings, it is hoped that Cambodia’s commercial banks and microfinance institutions (MFIs) will adopt environmentally credible lending platforms that would boost the Kingdom’s investment reputation.

Julie Chung, charge d’affaires at the US Embassy in Phnom Penh, said that not having sustainable financial safeguards in place “runs the risk of damaging” the country.

John McGinley, managing partner at Mekong Strategic Partners, said that the initiative aims to influence the financial sector through risk management to avoid “social risks, financial losses, reputational risks and harm to the environment”.

“Bank lending helps the economy grow,” he said, “but finding environmental outcomes is a major shift globally and the future of developing a sustainable growth path.”

He added that with the recent ratification of the Paris Climate Agreement by China and the US recently ahead of the G20 summit held earlier this month, “sustainable finance has reached a new level”.

“The Cambodian banking sector needs to adopt better environmental safeguards to attract international finance from investors that are trying to balance social and environmental impacts,” McGinley said. “Cambodia can take a lead in the region in terms of climate financing, but banks need to talk about current lending practices that pose risks to the environment.”

This program, he said, would help position banks for more foreign funding down the line. Eang Sopalleth, undersecretary of state for the Ministry of Environment, said that with global concerns over environmental protections growing, “the ministry will capitalise on this momentum by taking measures to stronger protect and manage natural resources”.

Companies that harm the environment will be “removed”, he said.

MOST VIEWED

  • Without shoes or a helmet, a young cyclist steals the show

    Pech Theara gripped the curved handlebars of his rusty old bike, planted his bare feet on its pedals and stormed as fast as he could towards the finish line. The odds were against him as the 13-year-old faced off against kids with nicer bikes at

  • Phnom Penh-Sihanoukville expressway on schedule

    The construction of the more than $1.9 billion Phnom Penh-Sihanoukville Expressway has not been delayed despite the Covid-19 pandemic, with more than 26 per cent of the project completed and expected to finish in about two years, according to Ministry of Public Works and Transport secretary of

  • Over 110 garment factories close

    A government official said on November 22 that at least 110 garment factories had closed in the first nine months of the year and left more than 55,000 workers without jobs – but union leaders worry those numbers could be much higher. Ministry of Labour and Vocational Training undersecretary

  • Singapore group seeks $14M in damages from PPSP over ‘breach of contract’

    Singapore-based Asiatic Group (Holdings) Ltd is seeking a minimum of $14.4 million relief from Cambodia Securities Exchange (CSX)-listed Phnom Penh Special Economic Zone Plc (PPSP) for allegedly breaching a power plant joint venture (JV) agreement. Asiatic Group’s wholly-owned Colben System Pte Ltd and 95 per

  • PM vows to protect Hun family

    Prime Minister Hun Sen has vowed to continue his fight against opposition politicians who he said intend to smash the Hun family. Without naming the politicians but apparently referring to former leaders of the Supreme Court-dissolved Cambodia National Rescue Party (CNRP), Hun Sen said there

  • Cambodia lauded for fight against Covid-19

    Cambodia has drawn global accolades for its handling of the Covid-19 pandemic, with a new report finding that the Kingdom has controlled the pandemic better than any other country in Asia. Dr Takeshi Kasai, director of the World Health Organisation’s (WHO) Western Pacific region,