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Mongolian Banks Set a Precedent for Sector-led Reforms in Sustainable Finance, Global Report Reveals


In Ulaanbaatar:
Indra Baatarkhuu
Phone: +976 70078207
E-mail: ibaatarkhuu@worldbank.org

In Beijing:
Jing Yu
Phone: +86 10 5860 3062
Email: jyu1@ifc.org

Ulaanbaatar, Mongolia, February 26, 2018— Mongolian banks set an example for sector-led reforms in adopting sustainable finance principles, according to the first comprehensive Global Progress Report of the Sustainable Banking Network, an IFC-supported organization of banking regulators and associations.

The report points out that emerging markets have become a major force in driving development and fighting climate change as 34 countries have initiated banking reforms to expand sustainable lending. Those countries account for $42.6 trillion in bank assets—more than 85 percent of total bank assets in emerging markets. Some are wealthier than others, but all of them have made progress in advancing sustainable finance. Eight countries—Bangladesh, Brazil, China, Colombia, Indonesia, Mongolia, Nigeria, and Vietnam—have reached an advanced stage, having implemented large-scale reforms and put in place systems for results measurement. These reforms require banks to assess and report on environmental and social risks in their lending operations and put market incentives in place for banks to lend to green projects.

“This progress is an important step toward achieving the Sustainable Development Goals by 2030,” said Ethiopis Tafara, IFC’s Vice President for Legal, Compliance Risk and Sustainability. “It shows all countries can adopt sustainable finance reforms, regardless of their income level. The Sustainable Banking Network has demonstrated in a short time how much can be achieved when regulators, policymakers, trade associations and development institutions collaborate to advance sustainable finance.”

The report provides practical indicators and tools for countries to apply to their own domestic markets, regardless of their size or stage of development. This is important because it facilitates learning by all members and accelerates the pace of change. It is based on an innovative results-measurement approach that has been agreed by all 34 member countries—a remarkable achievement that is breaking new ground for measuring progress at the global level.  


“The intention of the report is to provide practical information to SBN member countries to help them develop public policy. It is a useful guide not only for regulators and the governments, but also for banks, steering them towards what they could and should do from the bottom up,” said Edi Setijawan, Sustainable Finance Director, Indonesia Financial Authority (OJK), and a co-Chair of SBN Measurement Working Group that led the development of the unique methodology behind the report.

The report recognizes the ambition and scope of the Mongolian Sustainable Finance Principles, the result of a joint effort by the Mongolian Bankers Association (MBA), the government (the Ministry of Environment and Tourism), and the banking regulator (the Bank of Mongolia). Notably, while committing to these principles is voluntary, all 15 banks in the country have chosen to apply them. The Principles are accompanied by guidance notes on implementation, which include references to relevant international standards and good practice. The MBA has developed specific guidelines for four key sectors (agriculture, construction, manufacturing, and mining) to help assess potential E&S risks and opportunities in these sectors. The report suggests that more detailed operational guidance — specifically regarding ongoing monitoring and reporting — could be developed and applied to all sectors of the economy. The Principles could also be expanded to other financial activities, such as insurance or asset management.


“The measurement report values the Mongolian banking sector’s work in the field of sustainable finance and encourages banks and other stakeholders to do more. Moreover, it provides important recommendations to look at sustainable finance from a long-term strategic perspective. Mongolia will use the report as a guide for developing a national sustainable finance roadmap, a holistic, context-based plan covering various financing solutions to direct investments for real progress in sustainable development and green growth. We would like to thank IFC and the SBN for this important work,” said Unenbat Jigjid, CEO of the Mongolian Bankers Association.

“The Mongolian Sustainable Finance Initiative has demonstrated a successful sector-led model with effective stakeholder engagements in both the private and public sectors. We are committed to working with all international and Mongolian partners to further advance Mongolia’s national sustainable finance agenda,” said Tuyen D. Nguyen, IFC Resident Representative for Mongolia. “We will also support MSFI to share their experiences with other emerging markets that are interested in applying a ‘bottom up’ approach to develop national sustainable finance frameworks.”

Emerging-market countries increasingly are learning from one another as they adopt sustainable-finance policies, according to the report. Earlier this month, IFC, Bankers Institute of the Philippines and MBA signed an MoU in Manila to promote knowledge sharing between banks in Mongolia and the Philippines.

To access the report, please visit www.ifc.org/sbnreport.

About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY17, we delivered a record $19.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit www.ifc.org

About SBN
The Sustainable Banking Network (SBN) is a knowledge and capacity-building platform of financial regulators, banking associations, and environmental regulators from emerging markets committed to developing sustainable finance frameworks based on national context and priorities, as well as international good practices. IFC acts as the Secretariat of the Network, playing the role of facilitator and technical adviser to SBN.  For more information on the Sustainable Banking Network, visit
www.ifc.org/sbn.

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