The National Bank of Cambodia (NBC) and the UN Economic and Social Commission for Asia and the Pacific (UNESCAP) have entered into a memorandum of understanding (MoU) to promote sustainable finance in Cambodia. The initiative aligns with the government’s Pentagonal Strategy-Phase I, according to the organisations.
The MoU was signed on December 8 by NBC deputy governor Yim Leat and Subathirai Sivakumaran, chief of financing at UNESCAP’s development division.
Alissar Chaker, UN Development Programme (UNDP) country representative, emphasised the importance of transforming economies into drivers of sustainability to effectively address major challenges such as resource scarcity, pollution, climate change and economic volatility.
She said there is wide recognition of the need for an alternative vision for economic growth and development; one that recognises the necessity of expansion while reducing external economic strain and unsustainable pressure on the quality and quantity of the country’s natural resources and ecosystem.
She acknowledged the government’s prudent adoption of the climate-resilient economic model in its strategy and other sectoral policies and plans. UNDP and other sister UN agencies have been supporting the country’s transition towards a more sustainable and greener economic model to accelerate socio-economic development.
“The UNDP’s Country Programme 2024-2028 strongly aligns with the Pentagonal Strategy and other key national plans, particularly the Nationally Determined Contribution [NDC] for domestic greenhouse gas emissions, and Cambodia’s long-term strategy for carbon neutrality by 2050,” she added.
NBC governor Chea Serey noted that the MoU will enhance the cooperation between the central bank and UNESCAP, especially in promoting sustainable finance in line with the government’s strategy.
She highlighted the recent collaboration between the two organisations which resulted in an inception report to assess the country’s current financial environment, which recommended the creation of a national sustainable finance roadmap.
Serey stated that the current agreement marks the start of that initiative.
“Through the MoU, we will develop a roadmap that is inclusive, integrated, multi-stakeholder and strategic to accelerate the development of a sustainable finance system. The roadmap will include a clear plan for aggregating finance needs, gaps, sources and options in line with the national sustainable development climate targets. It will also identify prospective projects and investment pipelines eligible for financing.
“I am confident that with collaboration and support from UNESCAP, we will be able to provide a proper legal framework, supportive infrastructure, incentives and clear guidelines to ensure that the financial sector can better fulfil its role as an effective … intermediary between private capital and sustainable activities in Cambodia,” she added.
Chaker stated that after supporting the feasibility study and facilitating experience transfer from other countries, UNDP is now providing technical assistance to the Ministry of Economy and Finance.
The support aims to develop capacities and an enabling ecosystem for issuing green or sustainable bonds, in partnership with UNESCAP, the Global Green Growth Institute (GGGI) and the Securities and Exchange Regulator of Cambodia (SERC).
She noted the “Cambodia Sustainable Development Goal (SDG) Investor Map” effort launched last year, highlighting opportunities for the private sector for resilient, sustainable and inclusive development.
“This market intelligence tool helps inform private investors about green investments with high growth potential and social benefits. We are now focusing on ventures with [advantages] for adaptation to climate change,” she stated.
A 2020 joint study by the finance ministry and UNDP predicted a potential loss of 9.8% of the Kingdom’s GDP by 2050, even under an optimistic scenario, due to climate crisis-driven disasters impacting infrastructure, lives and livelihoods.
“Beyond these initiatives, UNDP will continue its support of Cambodia in scaling up climate finance and assisting in achieving the national climate agenda through ambitious finance strategies,” she added.