Chea Serey (centre) attends the ‘Training on ESG [environmental, social and governance] Risk Management’ workshop on July 14. NBC
The National Bank of Cambodia (NBC) has encouraged financial institutions in the Kingdom to promote green finance within the industry, in a move to reaffirm the country’s commitment of carbon neutrality by 2050.
During the COP26 UN climate summit in Glasgow, Scotland in November, Cambodia pledged to reduce greenhouse gas (GHG) emissions by more than 40 per cent of median levels by 2030.
And economic assessments have found that investments to be made under Cambodia’s Long-Term Strategy for Carbon Neutrality could generate 449,000 new jobs and provide an extra 2.8 per cent of annual gross domestic product (GDP) growth by 2050 for the Kingdom.
Although climate change may pose financial risks, with a robust strategy, the global phenomenon could avail economic opportunities for the Kingdom.
NBC assistant governor and director-general for central banking Chea Serey on July 14 delivered a speech at the closing ceremony of the “Training on ESG [environmental, social and governance] Risk Management” workshop.
She told participants that the central bank has been working with financial institutions, government ministries and development partners on green and sustainable finance projects aimed at supporting Cambodia’s vision on carbon neutrality.
“Such platforms allow us to enhance our journey on green and sustainable finance initiatives that are simultaneously pursued by the Association of Banks in Cambodia [ABC]. It’s worth mentioning that in 2016, the [ABC] officially joined the Sustainable Banking Network, an initiative of the IFC [International Finance Corporation], committing [to] sustainable financing.
“In addition to these achievements and efforts, we have taken further steps in the green and sustainable finance journey, such as building knowledge; identifying green and sustainable finance taxonomy and standard practices in the banking sector; and taking stock of the existing initiatives and assessing the potential exposure of the financial sector to climate related risks.
“We have and will continue to mobilise multi-stakeholder partnerships to achieve [a] sustainable financial system and we welcome more contributions and participation from relevant stakeholders and partners to support our sustainable finance endeavours,” she said.
The Fair Finance Cambodia Coalition (FFCC) on February 24 published a study on the Green Financing Policy Implementation in Cambodia, along with the ASEAN Taxonomy for Sustainable Finance, to offer policy recommendations and criteria for the NBC, Ministry of Economy and Finance, and other government bodies “to assess the quality of financing activities and benchmark eligible green activities and investments”.
In a statement issued on the occasion, the FFCC described itself as a platform under the umbrella of the regional Fair Finance Asia network of civil society organisations established in eight countries with intent to encourage sustainable finance in the Kingdom.
“The study makes six key recommendations, comprising raising awareness about definitions and criteria for green financing across stakeholders, financial institutions considering international benchmarks to rethink their role and policies, [and] rewarding banks that fully comply with the [ABC’s] Cambodia Sustainable Finance Principles [CSFP].
“[Others included] evidence-based research by NBC for use as a reference for the development of regulations and guidelines, and capacity-building for policymakers and executioners for effective formulation and implementation of policies,” the statement said.
It cited the report as saying that “there is no legal basis or provision for the inclusion or integration of promotion of ecological and social issues and natural resource protection within the policies and practices of the financial sector in Cambodia”.
