National Bank of Cambodia & IFC join forces for green finance

The National Bank of Cambodia (NBC) has announced a partnership with the International Finance Corporation (IFC) aimed at boosting green finance in the country and supporting its transition towards a greener economy. This move comes as a strategic effort to mitigate the adverse effects of climate change and foster sustainable economic growth.

Cambodia faces significant climate risks, currently ranking 62^nd out of 191 countries on the 2022 Inform Risk Index. The nation's susceptibility to natural disasters like flooding and droughts threatens its development and economy. The World Bank-IFC's Country Climate and Development Report highlights a pressing need for substantial investment in climate adaptation and mitigation, projecting a requirement of up to $36 billion over the next three decades to meet its ambitious carbon neutrality goals by 2050.

Yim Leat, the deputy governor of the National Bank of Cambodia, emphasised the vital role of the financial sector in addressing these challenges. "Crafting a robust green finance policy framework is essential," he stated, outlining the NBC's commitment to fostering a supportive financial ecosystem. This system will channel investments into sustainable projects aligned with the government's climate targets under the Nationally Determined Contribution of the Paris Agreement.

However, the path to green finance is fraught with challenges, including a lack of clear guidelines and limited innovative sustainable finance practices among local financial institutions. The partnership between NBC and IFC seeks to overcome these barriers by establishing a national taxonomy of green assets and improving the capacity of financial institutions. This initiative will also involve setting guidelines for green lending and environmental, social, and governance (ESG) risk disclosures. The two entities said in a joint media release.

Asad Yaqub, IFC resident representative for Cambodia, expressed optimism about the collaboration's potential to bolster the country's green finance market and contribute to its climate resilience. "We are uniquely positioned to help Cambodia mobilise essential climate financing," he remarked, indicating the global leadership role of IFC in green finance initiatives.