USAID focuses on mobilizing climate finance in Cambodia Climate Change Summit – USAID
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USAID focuses on mobilizing climate finance in Cambodia Climate Change Summit
USAID focuses on mobilizing climate finance in Cambodia Climate Change Summit
By green invest asia
Posted September 30, 2021
In News
USAID focuses on mobilizing climate finance in Cambodia Climate Change Summit2021-09-302021-09-30https://greeninvestasia.com/wp-content/uploads/2018/08/horizontal_rgb_294_white.pngUSAIDhttps://greeninvestasia.com/wp-content/uploads/istock.com_weerapatkiatdumrong_id1072574072.jpg200px200px
TweetSeptember 30, 2021 (BANGKOK) – The United States Agency for International Development (USAID), through its sustainable land use finance technical assistance hub in Southeast Asia, USAID Green Invest Asia, organized two sessions focused on climate finance for the September 28 Cambodia Climate Change Summit 2021. Hosted by Cambodia’s Ministry of Environment and supported by a number of private sector and donor organizations including the U.S., U.K., and Australian embassies in Cambodia, the hybrid event in Phnom Penh featured experts working on four key components of climate change response: collaboration, mitigation, adaptation, and green finance, the latter of which facilitates investments to improve the environment and reduce greenhouse gas emissions.
One finance panel focused on opportunities for banks in Cambodia to integrate environmental, social and governance criteria – known in the banking sector as “ESG” – into their lending decisions to reduce climate impacts. The International Finance Corporation has recognized Cambodia’s progress in adopting sustainable finance practices; banks have increasingly recognized their roles and responsibilities to offer more sustainable lending products over the last five years, said Soeng Phorn, Senior Vice President of ACLEDA Bank.
In 2016, the government launched Cambodia’s first Sustainable Finance Initiative with USAID support, which promotes bank-led reforms to scale sustainable lending nationwide. “Cambodia’s adoption of sustainable finance policies and practices has been uniquely bank-driven and ground-up,” said John McGinley, senior advisor to USAID Green Invest Asia who heads the project’s design of bespoke trainings for banks in Cambodia through the Association of Banks in Cambodia (ABC). Banks have sought support to help understand, qualify for, and increase the confidence of their green lending products and services.
“The journey has started, but much work remains,” said Raymond Sia Say Guan, CEO of Canadia Bank. Bank panelists agreed on the need to safeguard future investments, while highlighting how sustainable finance literacy still lags among both clients and bank staff.
Sochinda Chan, head of business development at the ABC, said it is important to agree on what qualifies as green lending. Cambodia currently lacks a standardized approach to green lending, which would make it easier for banks in Cambodia to originate and structure green loans, and increase wholesale/international funders’ confidence to lend to Cambodian banks.
In support of the Association of Southeast Asian Nations’ (ASEAN) expected release of its official definition of green lending by the end of 2021, USAID Green Invest Asia is supporting the ABC to define and classify green lending, in coordination with the National Bank of Cambodia.
Attracting climate finance
The second finance session focused on ways Cambodian banks can attract international investment to increase green lending. The French Development Bank (AFD, or Agence française de développement) commits up to $150 million euros ($175 million USD) to Cambodia annually with a goal to ensure that at least half its commitments go toward projects with positive environmental benefits, including reduced greenhouse gas emissions. The agency’s country director, Ophélie Bourhis, noted the importance of working through local finance institutions, which are key to achieve climate transitions to direct monies into environmentally friendly projects. “Building capacity of [local] finance institutions is at the heart of [assisting] the government to align with the Paris Agreement…It is very important [to redirect capital flows] from both developed and local capital markets toward green investments,” said Bourhis.
Fenella Aouane, deputy director of the Global Green Growth Institute, told participants that to increase green lending, it is essential to create an enabling policy environment, as well as identify investment-ready projects. Any green finance institution must consider those projects’ green finance needs to ensure the institution is suitably structured, she said. With Green Climate Fund support, USAID Green Invest Asia is collaborating on the design of what will become Cambodia’s first national green financing institution.
A growing source of climate finance in Cambodia has been through the carbon market, where companies in Cambodia with emission-reducing schemes have generated carbon credits, which are then sold to companies and countries seeking to offset their carbon emissions. The U.S. government has facilitated more than $13 million in carbon credit sales to U.S. companies, including The Walt Disney Company and Delta Air Lines, said U.S. Ambassador to Cambodia, W. Patrick Murphy.
The global carbon market has expanded more than five-fold since 2017, reaching a record high of $272 billion in 2020, according to the financial analysis company, Refinitiv. The market for carbon offsets is expected to grow globally as companies and countries set ambitious goals for net-zero carbon emissions.
The next UN Climate Change Conference of the Parties (COP26) in Glasgow, which is set to open in one month, has been described as the “last best chance to get runaway climate change under control,” and for which signatories have been updating their greenhouse gas emission reduction plans.
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USAID Green Invest Asia is a facility of the United States Agency for
International Development (USAID) and is implemented by Pact in collaboration with Mekong Strategic Partners.
USAID Green Invest Asia is a facility of the United States Agency for International Development (USAID) and is implemented by Pact in collaboration with Mekong Strategic Partners.
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