Phnom Penh: The National Bank of Cambodia (NBC) in partnership with the International Finance Corporation (IFC) is developing a sustainable finance taxonomy to guide investments in key sectors.

According to Agence Kampuchea Presse, the Central Bank and the IFC jointly organised a consultation workshop on the draft Taxonomy for Sustainable Finance in Cambodia, in Phnom Penh under the chairmanship of H.E. Yim Leat, NBC Deputy Governor. The workshop brought together IFC representatives and other stakeholders, serving as a platform for discussion and consultation among sectoral authorities, banking and financial institutions, associations, investors, and others to gather additional input for enhancing the draft document.

The sustainable finance taxonomy is designed as a classification system for sustainable economic activities or investments, specifically targeting three priority sectors: energy, construction, and transport. NBC Deputy Governor Yim Leat highlighted the NBC’s commitment to establishing a framework and environment conducive to securing the necessary finance to achieve the government’s climate ambitions.

He stated that this ecosystem would address the impacts of climate change in Cambodia and expedite the shift of the Cambodian economy towards a green economy by enhancing the capacity of financial institutions and fostering a financial ecosystem supportive of green investment projects, ultimately promoting sustainable development.

Additionally, the NBC has conducted a preliminary assessment of the banking sector concerning climate-related risks to comprehend the extent of banks’ physical and potential risks from climate-related events. This understanding is aimed at ensuring that appropriate regulations are set to manage these risks effectively.

The NBC has also completed draft guidelines on environmental and social risk management to assist banks in ensuring that their financing does not support environmentally and socially harmful activities. Moreover, it has incorporated Environmental, Social, and Governance (ESG) principles into its capital management and invested significantly in sustainable assets.

H.E Yim Leat mentioned that with the Prime Minister’s approval, the NBC established and leads an inter-ministerial working group on green finance. This group aims to serve as a national forum for consultation and decision-making on cross-sectoral issues related to sustainable financial policies.