Cambodia advances sustainable finance with Taxonomy Draft

Cambodia advances sustainable finance with Taxonomy Draft

The National Bank of Cambodia (NBC), in partnership with the International Finance Corporation (IFC), is developing a sustainable finance taxonomy to guide investments in key sectors.

The Central Bank and the IFC jointly organised a consultation workshop on the draft Taxonomy for Sustainable Finance in Cambodia, in Phnom Penh on April 8 under the chairmanship of Yim Leat, NBC Deputy Governor.

The workshop, attended by IFC representatives and other stakeholders, aimed to provide a forum for discussion and consultation among sectoral authorities, banking and financial institutions, associations, investors, and so on to gather additional input for inclusion in this important draft document.

Documents for Cambodia’s sustainable finance taxonomy are designed to be a classification system for sustainable economic activities or investments for three priority sectors: energy, construction, and transport.

The NBC deputy governor emphasised the NBC’s commitment to building an enabling framework and environment to raise the necessary finance to meet the government’s climate ambitions.

“This ecosystem will contribute to addressing the impacts of climate change in Cambodia and help accelerate the transformation of the Cambodian economy into a green economy by strengthening the capacity of financial institutions and creating a financial ecosystem conducive to green investment projects, aiming to promote sustainable development, he said.

Furthermore, the NBC has completed a preliminary assessment of the banking sector on climate-related risks to better understand the extent of banks’ physical and potential risks from climate-related events to ensure that we set relevant and proportionate regulations to manage these risks, he added.

NBC has recently finalised draft guidelines on environmental and social risk management to help banks ensure that their financing flows do not end up in environmentally and socially destructive activities, and has integrated Environmental, Social, and Governance (ESG) principles into its capital management, as well as investing a significant amount of capital in sustainable assets.

“Recently, with the approval of the Prime Minister, NBC also established and led an inter-ministerial working group on green finance, which aims to serve as a national forum for consultation and decision-making on cross-sectoral issues related to sustainable financial policies,” Yim Leat said. 

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