Logo of Phnom Penh Post newspaper Phnom Penh Post - Banking with a positive spin

Banking with a positive spin

Customers talk with tellers at a bank branch in central Phnom Penh earlier this year.
Customers talk with tellers at a bank branch in central Phnom Penh earlier this year. Hong Menea

Banking with a positive spin

A banking sector initiative launched yesterday aims to advise Cambodia’s financial sector on best practices for sustainable lending while capitalising on the growing pool of international funds that could flow into green and socially responsible projects.

The Sustainable Finance Initiative will conduct two years of research to identify best practices that can be applied by financial institutions when formulating their lending policies, such as ways to mitigate the damage associated with infrastructure, energy and large-scale agribusiness projects.

The initiative is being carried out under the management of the Association of Banks in Cambodia (ABC), which includes 50 member financial institutions. Its supporting partners include the USAID-funded project Mekong Partnership for the Environment, which is managed by the international NGO PACT, the Wildlife Conservation Society, and the private investment firm Mekong Strategic Partners.

Charles Vann, acting chairman of ABC, said that with rapid economic development, private sector lending needs to be underpinned by a sense of conservation.“The ABC understands that it needs to support sustainable financial principles,” he said. “We need to create more green-oriented funding through the private sector.”

Vann added even ahead of the two-year study’s findings, it is hoped that Cambodia’s commercial banks and microfinance institutions (MFIs) will adopt environmentally credible lending platforms that would boost the Kingdom’s investment reputation.

Julie Chung, charge d’affaires at the US Embassy in Phnom Penh, said that not having sustainable financial safeguards in place “runs the risk of damaging” the country.

John McGinley, managing partner at Mekong Strategic Partners, said that the initiative aims to influence the financial sector through risk management to avoid “social risks, financial losses, reputational risks and harm to the environment”.

“Bank lending helps the economy grow,” he said, “but finding environmental outcomes is a major shift globally and the future of developing a sustainable growth path.”

He added that with the recent ratification of the Paris Climate Agreement by China and the US recently ahead of the G20 summit held earlier this month, “sustainable finance has reached a new level”.

“The Cambodian banking sector needs to adopt better environmental safeguards to attract international finance from investors that are trying to balance social and environmental impacts,” McGinley said. “Cambodia can take a lead in the region in terms of climate financing, but banks need to talk about current lending practices that pose risks to the environment.”

This program, he said, would help position banks for more foreign funding down the line. Eang Sopalleth, undersecretary of state for the Ministry of Environment, said that with global concerns over environmental protections growing, “the ministry will capitalise on this momentum by taking measures to stronger protect and manage natural resources”.

Companies that harm the environment will be “removed”, he said.

MOST VIEWED

  • Phnom Penh placed in two-week lockdown

    The government has decided to place Phnom Penh in lockdown for two weeks, effective April 14 midnight through April 28, as Cambodia continues to grapple with the ongoing community outbreak of Covid-19, which has seen no sign of subsiding. According to a directive signed by Prime Minister

  • Cambodia on the verge of national tragedy, WHO warns

    The World Health Organisation (WHO) in Cambodia warned that the country had reached another critical point amid a sudden, huge surge in community transmission cases and deaths. “We stand on the brink of a national tragedy because of Covid-19. Despite our best efforts, we are

  • Hun Sen: Stay where you are, or else

    Prime Minister Hun Sen warned that the two-week lockdown of Phnom Penh and adjacent Kandal provincial town Takmao could be extended if people are not cooperative by staying home. “Now let me make this clear: stay in your home, village, and district and remain where

  • Vaccination open to foreigners in Cambodia

    The Ministry of Health on April 8 issued an announcement on Covid-19 vaccination for foreigners residing and working in Cambodia, directing the Ministry of Labour and Vocational Training and local authorities to register them. Health minister Mam Bun Heng, who is also head of the inter-ministerial

  • Ministry names types of business permitted amid lockdown

    The Ministry of Labour and Vocational Training singled out 11 types of business that are permitted to operate during the lockdown of Phnom Penh and Takmao town, which run through April 28. Those include (1) food-processing enterprises and slaughterhouses; (2) providers of public services such as firefighting, utility and

  • Culture ministry: Take Tuol Sleng photos down, or else

    The Ministry of Culture and Fine Arts has told Irish photographer Matt Loughrey to take down the photos of Khmer Rouge victims at Tuol Sleng Genocidal Museum which he allegedly colourised and altered to show them smiling. The ministry said Loughrey's work is unacceptable, affecting