Nomindari Enkhtur: ‘We cannot succeed in a world that fails’
In order to curb Mongolia's significant environmental and social problems, government agencies, industry players and financial institutions met in May 2013 at the first Mongolian Sustainable Finance Forum in Ulaanbaatar. The main topic: the question how to steer Mongolia towards a greener development path. All banks signed a joint statement committing themselves to promote sustainable banking. The Mongolian Sustainable Finance Working Group (MSFWG) was launched, a joint initiative by all Mongolian banks, the Central Bank of Mongolia, the Ministry of Environment and Green Development and the Financial Regulatory Commission, spearheaded by the Mongolian Bankers Association (MBA). Upsides spoke to Ms Nomindari Enkhtur, MBA's international relations and partnership manager.
photo (resized): urban Mongolia – Al Jazeera English
With less than three million Mongolians sharing a country four times the size of Germany, one would not expect air pollution to be of major concern. Yet Mongolia's capital Ulaanbaatar has the world's second worst air quality. Its high altitude and freezing temperatures are partly to blame. Another culprit is its booming economy fuelled by a natural resource bonanza. Thanks to the influx of foreign investors and mining companies, per capita GDP has doubled over the last five years. While this unprecedented economic growth is more than welcome in a country where approximately a third of the population lives below the poverty line, it comes at a high price, not only in the air but also on the ground. People fear that all this mining activity will ruin their land. In spite of Mongolia's huge size, good farming and herding grounds are scarce and often in rapid decline. Half a million people have already been forced to move from their ancestral land to avoid further degradation.
What role can banks play in making Mongolia's development more sustainable?
'Compared to other sectors, banking is one of Mongolia's best developed sectors. Ninety-five percent of investment funding in Mongolia comes from the banking sector. All banks see the need for change. We cannot succeed in a world that fails. The government has formulated green development goals and both the public and private sector want our country to embark on a more sustainable path. There is a lot we can do, starting with ourselves. We can improve our transparency by publishing more extensive sustainability reports.
'We also plan to promote green economy incentives like low carbon financing.' — Nomindari Enkhtur
We also plan to promote green economy incentives like low carbon financing. For example, a lot of the smog in Ulaanbaatar is caused by inefficient stoves. About half of its residents live in so called ger districts, shanty towns that often lack basic public services like water, sewage systems and central heating. Efforts have been made to introduce more efficient eco-stoves for heating and cooking, but it did not really take off due to problems with production and financing. By supplying cheaper financing, finding international investors and promoting these eco-stoves, we might make a big change. Within our own organisations there is also a lot to be won by reducing our use of water, paper and energy. And by making our buildings more accessible for disabled people for example. Banks are quite aware that this sustainability initiative will give them a competitive edge, it is something society demands.'
What stage is the MSFGW-initiative in?
'The MBA board has just approved the Mongolian Sustainable Finance Principles and Sector Guidelines. On December 16 the MBA in cooperation with the Ministry of Environment and Green Development, Bank of Mongolia, International Finance Corporation (IFC) and the Dutch Development Bank (FMO) will organize the "Mongolian Sustainable Finance Forum 2014″ under the theme "Sustainable Finance: Creating Sustainable Development through Collaboration" in Ulaanbaatar. In January 2015 the Mongolian Sustainable Finance Principles and Sector Guidelines will be implemented. The sector guidelines apply to our four most important industries: agriculture, construction, manufacturing and mining. Representatives of these industries will of course also be consulted.Banks will integrate environmental and social considerations into business decisions, promote green initiatives, services and products as well as consider E&S issues of their own operations. The principles and guidelines offer banks a framework to ask the right risk-related questions and understand the associated E&S risks before deciding whether to finance or not. It is not about forcing all kinds of regulations on banks and companies, but about creating a joint framework, a basis. Some banks may choose to be stricter than others.'
But is not there a risk that everybody will go to the bank that asks the least questions?
'No, not if all banks are involved and committed. It is really necessary to have everyone aboard and thankfully we have joint commitment signed by all banks. The overall idea is not for banks to just ask a lot of questions but focus is on relevant risk-related questions, enabling the banks to understand the associated E&S risks before deciding whether to finance or not. We want to seize the opportunity to take the initiative in formulating the guidelines instead of waiting for a central bank, regulator or government to impose them. Even so, at some point it may be necessary for the central bank to make those guidelines mandatory to ensure a level playing field. But still, getting and keeping everybody involved and committed is the biggest challenge in this process. Not just the banks, but also the government, the central bank and other stakeholders like the public and private sector. That's our (MBA's) main role. You cannot do this on your own.'
How about the big international mining companies? Will they not just turn to big international banks for financing?
'They do, yes, but the international sustainability standards in banking are usually quite high already, so I don't consider that a problem. Don't forget that we are in the early stage of developing our own sustainability standards, we can learn a lot from the rest of the world. We simply don't want to make the same mistakes we made in the past -poor urban planning, pollution, social tensions, etcetera. Especially with all these mega-projects coming up, there is no time to waste.'
by Hanno Bakkeren