With Pact’s support, Cambodian banks commit to developing sustainable financing principles
The Association of Banks in Cambodia (ABC) has taken its first major step toward sustainable lending practices by committing to develop sustainable finance principles and integrate environmental and social safeguards and lending standards into banks’ business decisions.
Adhering to these principles can help banks lower investment risks while also preserving the environment and supporting local cultures and communities.
The Cambodian Sustainable Finance Initiative is a result of strategic efforts by Pact and partner Mekong Strategic Partners under the USAID-supported Mekong Partnership for the Environment (MPE) project. Among other objectives, the MPE project is working to strengthen the social and environmental risk management capacity of Cambodian and other banks in the region.
During an announcement ceremony on Sept. 19, 2016, ABC Acting Chairman Charles Vann signed a commitment statement to begin developing the sustainable finance principles, which will lead to banking policies that protect the environment and promote social responsibility in making financial decisions.
“The intent is to develop and design environmental and social standards which are appropriate for Cambodia, designed by Cambodian banks with the assistance of international partners,” Vann said.
The ABC was formed in 1994 and is recognized by the Royal Government as the official organization representing the country’s private banking sector.
ABC’s commitment to socially and environmentally sound lending principles comes at a critical time, when both Cambodia’s economy and foreign direct investments into the country, particularly large-scale infrastructure projects such as hydropower dams and special economic zones, are growing rapidly.
“Not only are sustainable lending practices vital to Cambodia’s economic growth and environmental health, but they just make good business sense,” said Pact’s Christy Owen, who is MPE’s director. “These practices benefit communities but they also benefit banks by reducing risks and opening up new markets.”
ABC’s commitment has also enabled it to join the International Finance Corporation’s Sustainable Banking Network, an international community of financial sector regulatory agencies and banking associations from emerging markets committed to advancing sustainable finance in line with international best practices.
“The Sustainable Banking Network (SBN) welcomes the launch of the Cambodian Sustainable Finance Initiative with the leadership of the Association of Banks in Cambodia. IFC and SBN will continue to support the association in their commitment to responsible and sustainable financing practices in Cambodia through knowledge sharing and capacity building,” said Rong Zhang, SBN’s Global Coordinator and IFC’s Senior Policy Officer in Sustainability.
Read the signed commitment here.
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