June 24: A new report by the International Finance Corporation (IFC)-facilitated Sustainable Banking Network (SBN) shows Nepal, Bangladesh and Mongolia have identified green finance as a top priority for sustainably developing their financial sectors.

According to the report titled “Necessary Ambition: How Low-Income Countries Are Adopting Sustainable Finance to Address Poverty, Climate Change, and Other Urgent Challenges”,  these countries face immediate and significant impacts from climate change, pollution, biodiversity loss, and social inequality that require urgent responses.

Issuing a press statement, IFC said that in the wake of the challenges, the report says in Asia, promoting green finance, such as green bonds and green loans, is particularly a focus in Bangladesh and Mongolia. According to IFC, The two countries, along with Nepal, are also working on developing national sustainable finance roadmaps as part of efforts to reduce market risk and incentivize green finance flows.

“At a time when low-income countries across Asia and the Pacific are being adversely impacted by COVID-19, it’s all the more vital for countries to embrace sustainable financial development to build resilience for the future,” the statement quoted Nena Stoiljkovic, vice president for Asia and Pacific of IFC as saying. She said that the report highlights these Asian countries are resolute in their commitment to promoting sustainable finance and going green in planning for the future.

"The country should develop and implement sustainable finance related policies for a better and safer financial system. These policies should not be detrimental to development activities, rather should guide the initiatives taken," the statement quoted Dev Kumar Dhakal, executive director of the Nepal Rastra Bank as saying.

Similarly, Naidalaa Badrakh CEO and board member of Mongolian Sustainable Finance Bankers Association and Co-chair of the SBN IDA Task Force said that there is positive evidence of changes in the way banks are managing environmental and social risks, compared to five years ago.

In addition to green finance, the report shows the three Asian countries are also exploring ways to expand sustainable finance to other areas such as financing for small and medium sized enterprises and agriculture. 

“In the context of a circular economy, resource efficiency is the key. Thus, sustainable finance has a larger role to play in poverty reduction,” the statement quoted Asif Iqbal, joint director, Sustainable Finance Department at Bangladesh Bank as saying.

According to the statement, IFC’s green bonds issuance in Asia-Pacific crossed USD 1 billion last year, addressing environmental and social challenges in some of the world’s most vulnerable and poorest countries. Last month, Mongolia’s Financial Regulatory Commission and IFC signed a MoU to further develop the market for green finance in Mongolia.