Mongolia Bankers Association Announces Next Steps Towards Mongolia Green Credit Fund

Blog by Altatsetseg Sodnomtseren - PAGE National Coordinator Mongolia

14 September 2017, Ulannbaatar, Mongolia - Today, we are celebrating a milestone achievement in Mongolia’s journey toward sustainability. It is with great pride we announce the next step towards the launch of the Mongolia Green Credit Fund, a national financing vehicle that will provide long-term finance to projects and programs that stimulate green growth. The MGCF is led by the Mongolian Bankers Association, and holds the special distinction in Mongolia as our first green financing institution. Its establishment came after detailed action plans of a working group, which consulted with instrumental players within and outside Mongolia, including the United Nations Partnership for Action on Green Economy, UN Environment Financial Initiative, International Finance Corporation (IFC) and Global Green Growth Institute (GGGI).

Today, we are excited that its core funding will be used to further sustainability in four green development areas that matter to Mongolia: energy, housing, waste management and sanitation. The Mongolian Ministry of Environment and Tourism authority will play oversight roles on the investment projects and programmes within the remit of the fund. The launch of the funds moves us closer to sustainable development, given the challenges identified in our transition to a green economy: “Mongolia has developed dramatically in the last two decades, but the economic side has excelled compared to its social and environmental development.” – Davaakhuu Tumurkhuu, Mongolia Bankers Association.

Today, we are starting a process to unlock green financing at scale. The MGCF enables the development of bankable funding proposals to help Mongolia excel on the social and environmental fronts. In 2013, Mongolia became the first country to join a partnership of five UN agencies known as the Partnership for Action on Green Economy. As a result, Mongolia committed to place sustainability at the heart of its economic policies and then developed a Sustainable Development Vision in 2016, which among other objectives, commits Mongolia to reduce greenhouse gas emissions by 14% by 2030. With our current development plans, we are also placed to advance the 2030 Agenda, and achieve positive climate targets in the Paris Agreement. The MGCF now enables a key source of financing – reinforced by the Green Climate Fund – to support these sustainable development plans.

Today, we reflect on our journey toward this launch announcement. The Mongolian Bankers Association organized the 1st Sustainable Finance Forum in 2013. The 2016 Forum on “Sustainable Development 2030: From Planning to Action” attracted 300 delegates from government, international organizations and the private sector. The forum resolved to advance the sustainable finance initiative, including through the establishment of the Mongolian Green Credit Fund together with the Prime Minister’s Office, the Ministry of Environment and Tourism, the Ministry of Finance and international partners - PAGE, IFC and GGGI.

Today, we also recognize the 5th Mongolian Sustainable Finance Forum held on September 14, 2017 at Shangri-La Hotel in Ulaanbaatar, Mongolia. The Forum focused on the theme: “Fostering Partnerships to Scale Up Sustainable Finance”. Mr. Erik Solheim, Executive Director of UN Environment made the keynote speech, having paid an official visit at the invitation of the Government of Mongolia. The Forum was hosted by the Mongolian Bankers Association, in cooperation with Ministry of Environment and Tourism, Arig Bank, IFC, GGGI, BMZ, UN Environment, PAGE, UNDP-Biofin, the Ministry of Finance, the Bank of Mongolia, the Financial Regulatory Commission, Ulaanbaatar City Mayor's Office, and the Mongolian National Chamber of Commerce and Industry (MNCCI).

Today, a Memorandum of Understanding was signed among the Ministry of Environment and Tourism, Ministry of Finance, Mongolian Bankers Association and Global Green Growth Institute on establishing the Green Credit Fund. The MoU aims  to maximize financing with preferential conditions to the financial market, to reduce interest rate, to develop green investment methods, to efficiently use natural resources, to reduce air, environmental pollutions and greenhouse gas emission, and to boost environmentally friendly economic development.

Today, we are assured the 5th Mongolian Sustainable Finance Forum has helped to accelerate momentum on the green economy. In his opening speech Mr. O. Orkhon, the President of Mongolian Bankers Association affirmed that the “United Nations is standing with us and supporting us." The Minister of Environment and Tourism Ms. D. Oyunkhorol highlighted that PAGE has provided continued support to Mongolia since the country joined PAGE in 2013 and took the opportunity to express her gratitude to Mr. Erik Solheim for UN’s full support through PAGE. She added that Mongolia has requested to UN Environment to join the BreatheLife campaign, an initiative by UN Environment and World Health Organization.  At the Forum. Ms. Bulgantuya, the Vice-Minister of Finance confirmed that the Mongolian Government sees tremendous opportunity for the MGCF to mobilise private sector funding for sustainable development and believes in its future. She also highlighted the Government of Mongolia is considering the establishment of state-led Mongolian Green Development Fund that will oversee green projects and programmes to be funded through development financing as well as from the state budget and offer a source of support to the privately-led MGCF.

Today’s announcement about the MGCF launch is a testament to the power of multiple, collaborative stakeholders to achieve results for Mongolia’s green development. Today, we are more confident about Mongolia’s transition to a green future. PAGE supported establishment and operations of the joint working group, an assessment to determine the market demand for green lending on various projects and the Forum. This was led by the Mongolian Bankers Association. The results of the assessment gives us confidence about the future impact of the MGCF. Bankers have been discovering who wants green finance—and why. They also reviewed key legal, regulatory and tax structures, before developing the concept note for a green credit fund in Mongolia. The findings were presented to the Cabinet and support from the administration has been instrumental to steps leading to the launch of the Mongolia Green Credit Fund.