MONGOLIA-ECONOMY A general aerial view shows houses and Yurts in

The Greening Financial Systems programme aims to make climate finance part of banks’ core operations and expand businesses’ and households’ access to green technologies.

ULAANBAATAR, September 29 – The European Bank for Reconstruction and Development (EBRD) and the Green Climate Fund (GCF) have launched a new phase of their green finance programme in Mongolia. The programme will support households and businesses investing in water-efficient use, sustainable land management and resource-saving technologies.

The Greening Financial Systems (GFS) programme was formally introduced in Ulaanbaatar on September 16, although it had already begun operating. Earlier this year, the EBRD approved an $80 million loan to Khan Bank under the programme, with other financial institutions expected to join soon.

A change in approach. The new programme goes beyond traditional green lending, which finances individual projects. It is designed to help Mongolia’s banks and financial institutions incorporate climate considerations into their strategies, governance and risk management, making green finance part of their core operations rather than a standalone activity.

Khan Bank financing package. The loan to Khan Bank is part of a broader financing package that the EBRD has described as the largest it has provided to a Mongolian bank. The package consists of three loans worth up to $170 million in total. Of this amount, $80 million under the GCF and GFS programmes will improve access to green technologies for micro, small and medium-sized enterprises; $50 million will support a programme for women entrepreneurs; and $40 million will fund a programme for businesses led by people aged 35 or younger.

Continuation of an existing programme. GFS follows the Green Economy Financing Facility (GEFF), jointly established by the EBRD and GCF in 2018. GEFF has expanded into a $225 million financing framework and supported more than 330 subprojects, providing funding for energy-efficient buildings, renewable energy and resource-saving equipment. According to the bank, the projects save approximately 2 million gigajoules of energy each year and reduce carbon dioxide emissions by around 150,000 tonnes annually.

Part of a global initiative. The programme in Mongolia is part of a $620 million global initiative combining EBRD lending with concessional GCF finance for financial institutions in 13 countries stretching from the southern and eastern Mediterranean to Mongolia. It is supported by $49 million in grants. GFS aims to direct at least 20 percent of available financing to women-led businesses and approximately 30 percent to businesses in rural areas. Canada is supporting this component through the High Impact Partnership on Climate Action (HIPCA).

With Mongolia’s harsh climate and energy system having high carbon emissions, the programme comes at a timely moment. The EBRD says Mongolia needs significant investment in energy efficiency, renewable energy, climate-resilient infrastructure and the sustainable use of natural resources.

Over the past two decades, the EBRD has financed 172 projects worth $3.2 billion in Mongolia. Ninety percent of the bank’s lending has gone to the private sector, making the EBRD the largest lender to Mongolia’s private sector among international financial institutions.