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‘Issue green bonds, build green ecosystem’

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Securities and Exchange Regulator of Cambodia (SERC) director-general Sou Socheat. POST STAFF

‘Issue green bonds, build green ecosystem’

Securities and Exchange Regulator of Cambodia (SERC) director-general Sou Socheat has urged the private sector to consider issuing green bonds to build the green business ecosystem and investment community in the Kingdom.

Socheat told The Post on May 26 that SERC has been working with the Asian Development Bank (ADB) for several years now on the project while assessing companies which are eligible and might be ready to issue the bonds.

“We encourage private companies to issue green bonds but it doesn’t mean that by the law they must only issue green bonds as they can issue any bond. If they issue green bonds, they will enjoy more incentives than from normal bonds,” he said.

Funds raised via green bonds must be used for green businesses or investments which would not significantly harm the environment.

“For instance, the fund to be used for investment in clean energy must not affect the environment. Green bond issuance requires experts to help with fundraising and it is used according to the plan,” Socheat said.

Here, he noted, ADB is expected to extend its expertise for companies planning to issue green borders so as to save costs for the company while making sure the funds are properly used.

So far, several companies have expressed their interest in issuing green bonds but they have not submitted an official letter yet, Socheat said, adding that SERC is actively encouraging companies and relevant stakeholders.

On May 24, SERC and ADB, via the Asian Bonds Market Initiatives (ABMI) co-organised an online consultative meeting on “Sustainable Bond Issuance Processes and Opportunities for Cambodia”.

The meeting, attended by 143 participants, was aimed at promoting awareness on sustainable finance among corporate bond issuers and how these bonds can be integrated as part of financing strategies.

It also told participants that development partners such as ADB, Credit Guarantee and Investment Facility (CGIF) can assist with the issuance of sustainable bonds in Cambodia.

In his speech, Socheat asked securities underwriting companies and financial advisory firms to work closely with SERC and ADB to promote the green bond market in Cambodia.

A group of ADB experts, who published an opinion piece on January 20, noted that Cambodia’s capital market has developed fast in recent years.

They said this presented participants and regulators with an important question as to how they can harness the market’s power to promote environmental protection and socio-economic development.

“One way to accomplish this is through financial instruments that take environmental, social and governance [ESG] objectives into consideration – such as green, social and sustainability [GSS] bonds.

“Proceeds from these innovative debt securities are used to finance or refinance projects with positive environmental or social outcomes,” they wrote.

However, they found that a key challenge to making this happen, despite recent progress, is that Cambodia’s corporate bond market is still at a nascent stage.

“To mobilise private capital for sustainable investments, it is critical to tackle these issues and continue developing the market’s overall capacity.

“At the same time, however, policymakers can act to ensure the market develops in a direction that is supportive of ESG-aligned investments,” said the experts.

As the chair of the ASEAN Capital Markets Forum, a grouping of ASEAN securities regulators, SERC should also ensure that the local GSS bond market development is consistent with regional initiatives, such as the ASEAN Taxonomy for Sustainable Finance.

“With the right policies and strong support from stakeholders and development partners, regulators and participants can use the capital market to help achieve positive environmental and social outcomes, even for Cambodians who do not participate directly in the market,” ADB’s experts said.

Separately, the Cambodia Securities Exchange has nine stocks listed on its Main Board and secondary Growth Board while five companies have issued bonds. Together, these firms have raised about $281 million.

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