Calls for eco-socio friendly finance
Calls for eco-socio friendly finance
The Fair Finance Cambodia Coalition (FFCC) has called on all financial institutions in the Kingdom to incorporate social, natural resource and other environmental considerations into their credit risk policies and procedures.
The FFCC is 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 Cambodia, it said in a statement.
The domestic arm is implemented by six coalition members, namely Oxfam, ActionAid, Cooperation Committee for Cambodia, SILAKA, NGO Forum on Cambodia and Transparent International Cambodia, the statement said.
FFCC on February 24 published a “detailed 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 Ministry of Economy and Finance, National Bank of Cambodia and other government bodies “to assess the quality of financing activities and benchmark eligible green activities and investments”.
“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 Cambodia Sustainable Finance Principles [CSFP] of the Association of Banks in Cambodia [ABC].
“[Others included] evidence-based research by NBC for use as a reference for the development of regulations and guidelines, and capacity building for policy makers 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”.
Hence, the statement suggested, “there is an opportunity for the negative environmental and social impact from the financial sector to be measured and regulated in terms of risk management coupled with monitoring support in a direct or indirect manner in Cambodia”.
Oxfam national director Phean Sophoan said in the statement that “the environmental and social safeguards in Cambodia’s banking and financial sector is a significant concern. Credit from this sector has broadly contributed to many development or investment projects, some of which have impacted social, natural resources and the environment.
“With potential growth of the finance and banking sector, the study would be very informative to all concerned stakeholders working together to promote sustainable green finance for mitigating adverse impacts to the environment and societies,” she said.
NGO Forum on Cambodia executive director Tek Vannara said: “The green financing policy is critical for contributing to equitable, inclusive and sustainable development in Cambodia and environmental and social standards are key to ensuring that all aspects of development projects benefit the people and all stakeholders in an equitable manner.
“Findings from this study are an important achievement for knowledge, consideration and discussion among stakeholders to practice and contribute to sustainable development in Cambodia,” he said during the seminar marking the launch of the report, according to the statement.
On February 25, the Swiss-based Bank for International Settlements (BIS) launched Asian Green Bond Fund, an open-ended fund for central bank investments in high-quality bonds issued by sovereign states, international financial institutions and corporations, in a move welcomed by the NBC.
The central bank’s governor, Chea Chanto, recognises the financial risks and advantages of investing in green bonds as well as to protect the Earth. He said the NBC plays a role in contributing to mitigating financial risks triggered by the impact of climate change on economic, social and environment conditions.
“We believe that every institution and individual can play a role in contributing to equitable and sustainable growth by reducing the rapid pace of climate change and its propagation channels.
“We strongly encourage all financial institutions to put in place policies that promoted green finance and support climate-friendly investments,” he said.
According to the NBC’s 2021 annual report, outstanding loans extended by financial institutions to all sectors have grown by 21.2 per cent to 186.4 trillion riel ($45.7 billion).
Financial inclusion was also on an upswing, as deposit and consumer credit accounts reached 12.1 million and 3.3 million, respectively, up by 40.7 per cent and 5.1 per cent year-on-year, the central bank said.
