IFC Partners with Association of Banks in Cambodia to Boost Climate Finance Initiatives

On October 17, a training program was organized to equip over a hundred bankers with the necessary knowledge and tools to drive sustainable finance initiatives.

To combat the impacts of climate change and foster a sustainable financial ecosystem, the International Finance Corporation (IFC) is collaborating with the Association of Banks in Cambodia (ABC) to enhance the capacity of local financial institutions in the climate finance sector.

Cambodia’s Climate Financing Needs

According to the World Bank-IFC Cambodia Country Climate and Development Report (CCDR), Cambodia will require an estimated $36 billion in additional investments from both private and public sectors between 2023 and 2050 to achieve its climate goal of carbon neutrality by 2050. This significant financial requirement underscores the urgency to unlock capital for climate-friendly projects and initiatives.

Training Program for Sustainable Finance

On October 17, a training program was organized to equip over a hundred bankers with the necessary knowledge and tools to drive sustainable finance initiatives. This event is part of a broader cooperation between the IFC and the National Bank of Cambodia (NBC), aimed at promoting green finance through the development of capital markets in the country.

Facilitated by IFC experts and key stakeholders, including the NBC and the Securities and Exchange Regulator of Cambodia, the training covered a wide range of topics, from Sustainable Finance Taxonomy and Environmental and Social Risk Management Systems to the latest trends and opportunities in sustainable finance.

Emphasizing the Importance of Sustainable Finance

“The importance of sustainable finance cannot be overstated,” remarked Towfiqua Hoque, the newly appointed IFC Resident Representative for Cambodia. “It is not just about mitigating risks associated with climate change, but also about seizing opportunities that come with the green transition. By integrating environmental, social, and governance considerations into financial systems, we can create a more resilient and inclusive economy.”

In her new role, Hoque will lead IFC’s initiatives to strengthen the country’s financial sector, advance renewable energy, promote green transport and logistics infrastructure, and expand climate finance opportunities.

Challenges in Cambodia's Green Finance LandscapeCurrently, several barriers hinder Cambodia's potential in green finance, including:

A lack of clear guidance on what qualifies as green finance

Limited green policies among local financial institutions

Insufficient innovation in sustainable finance practices and products

Dith Sochal, a Council Member of ABC and Chairperson of its Sustainable Finance Committee, emphasized the critical need for capacity building: “Cambodia is at a critical juncture where climate change impacts are becoming increasingly evident. There is an urgent need to build capacity and expertise within the financial sector to effectively manage and promote green finance initiatives. The training provided participants with valuable insights and practical strategies that they will take back to their respective institutions.”

The Economic Impact of Climate Change

The CCDR warns that without proper adaptation and mitigation measures, climate change could cost Cambodia up to 9 percent of its gross domestic product by 2050. Given the country’s vulnerability to floods, droughts, and rising sea levels, these projections highlight the importance of urgent action in the financial sector.

Commitment to Sustainable Development

Recently, the World Bank Group approved its Country Partnership Framework for Cambodia for 2025-2029, emphasizing the promotion of the nation’s human capital to enhance competitiveness and foster resilience. Hoque stated, “IFC’s efforts aim to support a strong and competitive private sector, which will play a pivotal role in driving the country’s next phase of low-carbon and sustainable economic development.”

Through collaborations and training initiatives like this, the IFC and ABC aim to pave the way for a robust climate finance landscape in Cambodia, contributing to the nation’s sustainable development goals while ensuring resilience against climate change.