Bank financing focusing on environmental protection, natural resource management and climate change in Cambodia may be strengthened following the signing of two memorandums of understanding (MoUs) by several relevant institutions on Wednesday.
The MoUs on “Cooperation of Sustainable Finance” were signed by the Association of Banks in Cambodia (ABC).
One was signed by the ABC, the Ministry of Environment and the National Bank of Cambodia. The other was signed by the ABC and USAID Cambodia.
The goal of the MoUs are to strengthen and develop sustainable financial cooperation in the banking sector and support environmental protection, natural resource management and climate change in the Kingdom.
In Channy, president of the ABC, which comprises more than 60 members, said the signing is testament to the involvement of the Kingdom’s banking sector in sustainable environmental preservation.
“Banks caring about lending to customers who take care of the environment is a key part of sustainable financing,” said Channy.
For an investment to work well, a bank’s lending should take into account key factors, including people, profit and the planet, he said.
He continued that sustainable financing may provide banks with access to low-interest loans from large banks abroad for their business operations.
Before the signing, there was no standard set of common principles concerning the environment and natural resources regarding domestic bank lending to investment projects, Channy said.
Foreign Trade Bank of Cambodia deputy general manager Lay Rachana said lending is currently made only in compliance with each banks’ respective policies.
She expressed her hopes that following the signing, bank financing will follow one common set of principles.
She added that through the MoU, the ABC will receive both technical and financial cooperation for training on and promoting sustainable financing.
The Ministry of Environment will provide the ABC with relevant information – including environmental law and climate change – which the association’s members will assess before providing loans to customers.
“Without the MoUs, it would have been difficult for institutions to officially support the association,” she said.
Ministry of Environment secretary of state Sao Sopheap said working with the ABC is an example of cooperation between the government and the private sector to implement the state’s rectangular strategy related to environmental protection.
Sang Lee, director of Food Security & Environment Office at USAID Cambodia, which has supported the ABC on its Sustainable Finance Initiative since 2015, said his organisation will continue to play an important role to further its mission of building a green economy in Cambodia.