USAID Convenes Carbon Footprint Experts to Support Cambodian Banks’ Sustainable Finance Journey
BANGKOK, May 14, 2020 – The United States Agency for International Development (USAID), through its USAID Green Invest Asia project, facilitated more than 30 Cambodian banks’ carbon accounting efforts as part of a partnership with the Association of Banks in Cambodia. In a May 13 webinar, USAID Green Invest Asia convened consulting firm, South Pole, and Rabo Foundation to share processes and profit incentives for banks to report on carbon emissions.
“Carbon measurement is an evolving science, and reporting on it is still seen as unaffordable by smaller banks,” said Christy Owen, USAID Green Invest Asia’s director. “Our main message is banks can measure their direct and indirect impacts on greenhouse gas (GHG) emissions, and thereby contribute to national green growth plans.” Cambodia was the first low-income country in the region to develop a national green growth “roadmap” in 2010.
According to the Platform for Carbon Accounting Finance, an industry-led partnership to standardize carbon accounting for the financial sector formed by leading Dutch financial institutions, 57 financial institutions worldwide representing $2.9 trillion in assets under management as of September 2019 had committed to assess and disclose GHG emissions beyond their operations, to their investment and loans.
Some banks in Asia committing to voluntarily report on emissions from their own operations and/or investments via Carbon Disclosure Project include Malaysia’s Maybank, DBS bank headquartered Singapore, Bangkok Bank in Thailand and Shinhan Bank in the Republic of South Korea. Rabo Foundation, headquartered in the Netherlands, has launched its first portfolio-level carbon measurement in Indonesia.
The Association of Banks in Cambodia (ABC) has indicated its goal to become a leader in the Mekong region for sustainable finance – or financial services that integrate environmental, social and governance (ESG) criteria into investment decisions. It leads efforts to implement national sustainable finance principles adopted in 2016, which call for safeguards to mitigate negative social and environmental impacts attributed to banking practice nationwide.
“Through [USAID Green Invest Asia’s] support, it enables us and the entire banking industry in Cambodia make further progress in adopting and implementing the sustainable finance principles, and in contributing, jointly, to the global effort of combating climate change,” said Dith Sochal, chairman of ABC’s sustainable finance committee.
USAID Green Invest Asia has published sustainable finance operational guidelines designed for smaller banks to help them develop a low-transaction cost methodology to issue sustainability loans for smaller companies, and to assess environmental and social risks in a cost-effective way. An incentive for regional and national banks to improve reporting on ESG criteria, such as carbon emissions, is to qualify for investments from development finance institutions and multilateral funds with strict ESG standards in place, including Asian Development Bank, Green Climate Fund and International Finance Corporation.
USAID Green Invest Asia works with banks throughout Southeast Asia to help them analyze environmental risks in the agriculture, forestry and other land use sector.