The Mongolian banking sector made a public declaration to jointly promote sustainable banking practices in Mongolia. This is part of on-going efforts of the industry to contribute to economic, green and inclusive development in the country. The public declaration was made through the signing of a joint commitment statement by all the 14 Mongolian commercial banks to introduce a sustainable funding framework in the Mongolian banking and financial systems. In May 2013, the first Mongolian Sustainable Finance Forum was organized in Ulaanbaatar city.
The event brought together all Chief Executives of the commercial banks in Mongolia and international development banks to jointly discuss environmental and social issues that are likely to impact Mongolia’s long term development goals. The initiative and program was supported by the Government of Mongolia, Ministry of Environment and Green Development, the Bank of Mongolia and Financial Regulatory Committee, who were also present. There was a unanimous agreement to cooperate and the matter of being responsible for economic growth and green and inclusive development was given a great significance. All CEOs of the banks present indicated that the Mongolian banking sector had an important role to play in promoting sustainable development in Mongolia through the loans they provide and the projects they finance in the country.
According to the President of the Mongolia Bankers Association, Mr Bold Magvan: “This is an important day for Mongolia. Banks are beginning to realize that they can be agents of change to encourage their clients to invest in projects that minimize damage to the Mongolian environment and protect the wellbeing of its people. The signing of the joint statement of declaration is one more positive step in that direction”.
Accordingly, several concrete actions are being planned to enable banks make informed and socio-environmentally friendly business decisions, to introduce internationally accepted sustainable financing standards into banking operations, to develop and implement certain policies and procedures specifically designed for the banking industry. Understanding of banking customers and the general public about the green development and sustainable financing will also be increased.
The initiative to jointly develop the Mongolian Sustainable Finance Initiative was introduced by the Dutch Development Bank (FMO), Trade and Development Bank of Mongolia (TDB), International Finance Corporation (IFC), Mongolian Bankers Association (MBA) and the Banking and Finance Academy (BFA), and the first Mongolian Sustainable Finance Forum was organized in May 2013.
Senior executives of the FMO and IFC partners have shown their support for the important steps the Mongolian banking sector is taking to promote sustainable development. Linda Broekhuizen, Director of Financial Institutions at FMO, mentioned that: “Through this joint commitment statement, Mongolia has shown leadership by taking concrete steps to work together as a banking industry to raise awareness on environmental and social issues and promote sustainable lending and investments”.
IFC has found that sustainable banking enhances risk management and opens up new markets for banks”, says Tuyen Nguyen, Resident Representative in Mongolia for IFC, a member of the World Bank Group. “We are also working with Mongolian partners to tap into new opportunities such as climate-friendly projects.”
The initiative of promoting sustainable finance among banking sectors is also being designed and gradually implemented in countries such as China, Vietnam, Nigeria, Brazil and a few other countries. International standards such as the “Equator Principles” and “International Finance Corporation Performance Standards” continue to be the benchmarks for sustainability and through proper implementation will help to drive environmental and socio-economic development.
