Mongolian SDG Finance Taxonomy Development discussed at 2021 GFLP Webinar on Sustainable FinanceEconomy
Ulaanbaatar /MONTSAME/. The UN Joint Programme ‘Rolling Out an Integrated Approach to the SDGs (Sustainable Development Goals) Financing in Mongolia’ has shared the current progress on developing SDGs Finance Taxonomy in Mongolia in the 2021 GFLP (Global Green Finance Leadership Program) Webinar ‘GFLP in Support of Net Zero: Roadmap for Sustainable Finance’, in a panel with the Climate Bonds Initiative, International Capital Markets Association, Sustainable Finance Institute Asia, World Wide Fund for Nature and Green Finance Centre, Tsinghua University.
Mongolia approved the Green taxonomy by the Financial Stability Board in 2019 and started compiling green loan statistics from 2020. The green loans currently account for only about 2% of the total loan portfolio, highlighting the great potential for increasing green and sustainable financing. The green taxonomy is now being expanded to include broader SDG-aligned, bankable economic activities currently covering 13 sectors and 57 subsectors.
“The breadth of the current draft of Mongolian SDG Finance taxonomy illustrates that “the taxonomy is being developed with the view of attracting international capital flows,” said Sean Kidney, CEO of Climate Bonds Initiative. During the online webinar, participants highlighted the need for taxonomies to be an enabler for climate transition and focus on adjusting core principles to regional or country contexts.
With the adoption of the SDG Finance Taxonomy, the financial sector will be able to start tracking the financial flows dedicated to the SDGs, monitor its progress and implement tailored policy incentives to support the SDGs financing.
Mongolian SDG finance taxonomy development and creation of policy incentives to support SDG financing has been included by the Central Bank of Mongolia in the Monetary Policy Guidelines 2022 draft, which is pending discussion and approval by the Parliament of Mongolia in October 2021.
The SDG Finance Taxonomy will be finalised upon consultation with stakeholders by the end of the year.
The SDG finance taxonomy is a classification system of economic activities contributing to the SDGs, along with the criteria for measuring, verifying, and reporting the impacts of the financial flows towards the SDGs. The first SDG finance taxonomy was developed by China in 2020 and Mongolia is now among the early developers of SDG finance taxonomy.
Source: UNDP Mongolia