National Bank of Cambodia & IFC to boost Green Finance

By Gloria Mathias

National Bank of Cambodia (NBC) and IFC have signed a cooperation agreement to boost financing for climate-friendly projects, supporting the country’s transition towards a green economy.

The partnership aims to help Cambodia address climate change impacts and create a conducive environment for the uptake of green finance.

“The financial sector plays a pivotal role in helping unlock capital for climate-friendly projects, but this will require the right policies and creation of an enabling environment,” said Yim Leat, Deputy Governor of the National Bank of Cambodia. “We are committed to crafting a robust green finance policy framework to create a supportive financial ecosystem to channel and incentivize investment into green projects in Cambodia in support of the government’s climate ambition as outlined in the Nationally Determined Contribution under the Paris Agreement.”

Currently, several factors hinder Cambodia’s green finance potential, including a lack of guidance on what qualifies as green finance and limited green policies amongst local financial institutions to innovate and introduce sustainable finance practices and products.

The partnership is expected to help strengthen the regulatory framework by developing a national taxonomy in line with best international practices, which will help define green assets qualifying for green investment. Additionally, the partnership will help improve the capacity of financial institutions and prepare relevant guidelines, including reporting and disclosure requirements on green lending and environmental, social, and governance (ESG) risks.

“This agreement supports Cambodia’s ambitious plans to address climate change risks and foster a strong green finance market. As leaders in global green finance, we are uniquely positioned to help the nation mobilise essential climate financing, contributing to the country’s green and inclusive growth map for future resilience,” said Asad Yaqub, IFC Resident Representative for Cambodia.

With support from the Facility for Investment Climate Advisory Services (FIAS), the project will be implemented in three years and the national taxonomy is expected to be in place by 2025.