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01 December 2015

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Mongolia has taken a significant step forward in its transition towards a green economy, after the highly successful Mongolian Sustainable Finance Forum 2015, entitled Sustainable Finance: The Road to Green Economy  took place on 27 November. 

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The event – organized by the Partnership for Action on Green Economy (PAGE) and by UNEP Finance Initiative (UNEP FI), with the Mongolian Bankers Association (MBA) and XAC Bank – brought together over 400 participants from government ministries, regulators, banks and other financial institutions, along with development finance institutions and international organizations, clients, businesses and civil society representatives, to initiate a green financing framework to support green growth in Mongolia. The event centered on the establishment of a green credit fund as a potential incentive in financing the country’s green development. It encouraged the investment in clean, green and environmentally friendly projects and the development of a collaborative approach to enhance the implementation of sustainable finance and green economy in Mongolia in the coming years. 

Mongolia was the first country to join PAGE in 2013 and is leading the way in reframing its economic policies around sustainability.  The adoption of the Green Development Policy by the Mongolian Parliament in June 2014 was a milestone in Mongolia’s transition towards an inclusive green economy. However, the engagement among the finance sector, government agencies and the private sector can still be invigorated to mobilise finance for this transition to a green inclusive economy. 

Today, putting sustainability at the heart of economic policies and national planning is urgently needed if the Sustainable Development Goals (SDGs) are to be achieved and a low carbon development is to be realized.  This also implies looking at the governance structures and institutions which regulate market outcomes and human behavior, including in financial markets. 

In her keynote speech, UN Environment Assembly (UNEA) President and Mongolian Parliament member Ms. Sanjaasuren Oyun emphasized that financing the strategic objectives of the GDP will not only contribute to a green inclusive economy, but will also meet some of the Sustainable Development Goals.   

Panelists from the Ministry of Environment, Green Development and Tourism, Bank of Mongolia, International Finance Corporation, Dutch Development Bank (FMO), Mongolian Chamber of Commerce and Industry and MBA, agreed that an immediate next step would be to convene a working group through which the financing needs and possibilities for Mongolia can be better understood and eventually designed. 

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UNEP’s Inquiry: Design of a Sustainable Financial System provides a convincing case on the need for aligning the financial system with sustainable development. Case studies from developing and emerging economies show that amplifying these experiences through national and international action could channel private capital to finance the transition to an inclusive green economy and support the realisation of the SDGs. 

Mobilising domestic financial resources and enhancing the role of private investments are pivotal for achieving the national development targets related to SDGs. Mobilising non-debt-creating domestic resources is not only essential but also an important vehicle for leveraging development finance and a necessary condition for developing countries to reduce reliance on foreign aid in the long term. 

Globally, investment required in water, agriculture, telecoms, power, transport, buildings, industrial and forestry sectors amount to USD5-7 trillion annually. To significantly reduce the risk of climate change – by promoting energy efficiency and clean energy – an additional  investment of USD13 trillion is needed between 2015 and 2030, additional to what has been planned.  To finance SDGs in developing counties, ways must be found to fill the annual investment gap of USD2.5 trillion. 

Through its Positive Impact Finance workstream, UNEP FI is working with banks to catalyse a new kind of business expertise and business culture that enables banks to make a positive contribution to at least one of the three dimensions of sustainable development while ensuring that any potential negative impacts have been correctly mitigated. The workstream aims to realign the role, business and value proposition of the banking sector with the needs of economies, companies and individuals for a green and inclusive economy. 

Banks are uniquely placed to fill in the financing gap that enables industries, businesses, and individuals to actively participate in the green development of Mongolia. The momentum that has been created by the partnership between the public and private sectors should not be lost. 

Greening the economies to achieve SDGs will be built upon new green jobs, diversifying value added and production away from polluting sources of energy and providing sustainable energy to all and an alternative source of livelihoods for forestry and agriculture dependent populations, which will increase their income and reduce pressure on natural resources. 

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