USAID Supports Cambodian Banks’ Gender-lens Investing

 In News

BANGKOK, July 20, 2020 – More than 50 members of the Association of Banks in Cambodia (ABC) discussed the benefits – and business necessity – of gender criteria in Cambodian banking practices on a July 15th webinar to support the Cambodian Sustainable Finance Initiative (CSFI) organized by the United States Agency of International Development  (USAID) Green Invest Asia.

While almost 80 percent of microfinance borrowers in Cambodia are women, they make up only 15 percent of bank borrowers. Women own and lead almost 200,000 formal micro, small and medium enterprises in Cambodia; the estimated unmet credit demand for women nationwide is a little over $1 billion, according to SME Finance Forum. 

One tangible business outcome of integrating gender into bank policy is increased access to capital markets through international lenders and correspondent banks, which provide services on behalf of Cambodian banks, that require client  banks to have such policies. “Banks with sustainability policies become more bankable.” said John McGinley, USAID Green Invest Asia’s senior advisor and founder of Mekong Strategic Partners.

Gender-lens investing – or incorporating gender as an investment criteria– helps flag risks that conventional financial analysis could miss, said presenter, Caterina Meloni, head of Connecting Founders, a capital advisory firm that works with female business leaders in Southeast Asia. One governance risk for agribusiness and forestry companies in Southeast Asia is insufficient female leadership. With at least 40 percent of the agriculture workforce being female, key business opportunities and risks are overlooked if leadership does not reflect the value chain, said Meloni. 

A critical mass of female leadership is important. Having one female director or one board member is too little to give women sufficient voice. A reasonable target is 30 percent of a board should include female leadership,” said Meloni. For most boards, this would mean at least three female directors. Firms with high gender diversity on their board of directors have been more profitable than those with less, according to S&P.  

Sochal Dith, chairman of ABC’s sustainable finance committee, noted the National Bank of Cambodia’s National Financial Inclusion Strategy pledges to halve the number of women excluded from the financial system by 2025.

Less than half of some 20 Cambodian banks surveyed for the webinar replied they had gender policies in place, mostly for internal operations  (i.e. staffing) versus gender-inclusive lending policies/processes, or client advisory support on gender equality. USAID Green Invest Asia has a gender policy toolkit – tailored Environmental and Social Governance (ESG) bank criteria to address gender —that is available with implementation support to banks. 

Nearly nine out of 10 participating bankers surveyed said they wanted to design and implement gender policies and processes for their institutions.

Background on Cambodia Sustainable Finance Initiative: 

The Cambodian Sustainable Finance Initiative was founded in 2015 with support from USAID. In September 2016,  ABC, the Ministry of Environment, and National Bank of Cambodia publicly committed to the development of sustainable finance principles to guide the Cambodian banking sector toward greater sustainability, and create safeguards that mitigate banking practices’ negative social and environmental impacts. USAID Green Invest Asia formalized its relationship with ABC in 2019, and is supporting ABC with member trainings, the most recent one focused on greenhouse gas measurements.

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