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with IFC for Mongolia

19 September 2018 | Strategic Frameworks

READINESS AND PREPARATORY SUPPORT

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PAGE 1 OF 21 | Ver. 15 June 2017

Readiness and Preparatory Support Proposal

How to complete this document? - A Readiness Guidebook is available to provide information on how to access funding under the GCF

Readiness and Preparatory Support programme. It should be consulted to assist in the completion of this proposal template.

- This document should be completed by National Designated Authorities (NDAs) or focal points with support from their delivery partners where relevant.

- Please be concise. If you need to include any additional information, please attach it to the proposal.

- Information on the indicative list of activities eligible for readiness and preparatory support and the process for the submission, review and approval of this proposal can be found on pages 11-13 of the guidebook.

- For the final version submitted to GCF Secretariat, please delete all instructions indicated in italics in this template and provide information in regular text (not italics).

Where to get support? - If you are not sure how to complete this document, or require support, please send an e-mail to

[email protected]. We will aim to get back to you within 48 hours. - You can also complete as much of this document as you can and then send it to

[email protected]. We will get back to you within 5 working days to discuss your submission and the way forward.

Note: Environmental and Social Safeguards and Gender

Throughout this document, when answering questions and providing details, please make sure to pay special attention to environmental, social and gender issues, particularly to the situation of vulnerable populations, including women and men. Please be specific about proposed actions to address these issues. Consult page 7 of the readiness guidebook for more information.

http://www.greenclimate.fund/documents/20182/466886/Readiness_and_Preparatory_Support_Guidebook.pdf/9eea580f-a109-4d90-b281-c54695114772

mailto:[email protected]




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SECTION 1: SUMMARY

1. Country submitting the proposal

Country name: Mongolia

Name of institution representing National Designated Authority (NDA) or Focal Point: Ministry of Environment and Tourism, Nature Conservation Fund

Name of NDA/Focal Point: Dr. Batjargal Zamba Position: GCF Focal Point

Telephone: +976 70000743 Email: [email protected];

[email protected]

Full office address: 7th Floor, 22 Building, Amar Street, 8th Micro-district Sukhbaatar district, Ulaanbaatar, Mongolia

2. Date of initial submission

09/02/2018

3. Last date of resubmission

28/08/2018

4. Which entity will implement the Readiness and Preparatory Support project?

National Designated Authority Accredited Entity ☒Delivery partner

Name of institution: International Finance Corporation

Name of official: Batmunkh Batbold Position: Senior Financial Sector Specialist

Telephone: 976-70078287 Email: [email protected]

Full Office address: 4th floor, MCS Plaza Building, Seoul Street-4, 14250, Ulaanbaatar, Mongolia

5. Title of the Readiness support proposal

Readiness Support to Strengthen Sustainable Finance Practices in Mongolia and Encourage Regional Knowledge Sharing

6. Type of Readiness support sought

Please select one option below (one box or circle)

☒ Readiness

o Establishing and strengthening national designated authorities or focal points o Strategic frameworks, including the preparation of country programmes o Support for accreditation and accredited direct access entities

☐ Adaptation Planning

7. Brief summary of the request

As part of its climate commitments, Mongolia has approved an ambitious set of goals focused on economic growth, ecological balance, social stability and climate resilience. However, Mongolia faces many challenges in achieving its climate and sustainability targets in terms of financial barriers: lack of climate funding, need for policy and regulatory alignment to support and promote sustainable finance in a systematic way ensuring creation of a level playing field, and insufficient capacity of regulators as well as FIs. The purpose of this proposal is to seek GCF’s Readiness and Preparatory fund to support Mongolia’s efforts to develop a sustainable financial system aligned with Mongolia’s climate and green development targets and furthermore, promote Mongolia’s vision to become a sustainable finance knowledge centre in the region. The activities under this proposal directly builds on the Mongolian Sustainable Finance Initiative, an industry wide voluntary initiative implemented by the banks to integrate environmental and social risk considerations in their lending operations, and compliments the ongoing work to




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establish the Mongolian Green Finance Corporation, the country’ first national green finance vehicle. Up to date, Mongolia received the readiness funds to strengthen the NDA capacity and prepare the country program and to support the establishment of the Mongolian Green Finance Corporation project. This proposal has close interlinkages with these readiness programs as it will contribute substantially to accelerate the private -public partnerships, implementation of the relevant national policies and commitments against climate change and low carbon development and creation of an enabling environment for future green investments and strengthens the climate finance capacity of key stakeholders. The need to engage the non-banking financial sector Even though the current share of the non-banking financial sector is small (5%), the non-banking financial sector represents a strong room for growth with annual growth in total assets of 26.7%. Microfinance companies serve about 1.35 million customers nationwide, about 30% of the total population, mostly small businesses or clients who are usually excluded from the formal banking system. A large share of nonbanks’ clients operate in rural areas that are sensitive to climate and disaster risks and the majority of funding of microfinance institutions go to consumer loans and business loans to support mining, construction, manufacturing and agriculture sectors that are considered high E&S risk industries. Therefore, nonbanks represent a critical role in contributing to sustainable development through enhancing access to finance and alleviating poverty and creation of the level playing field in the financial sector. Another major constraint for Mongolia’s green finance sector development is the unavailability of long-term funding. Therefore, new green finance instruments such as the green bond market have the potential to mobilize various funds for sustainable project finance. The specific objectives of this proposal are to seek co-funding to:

I) Integrate sustainability and ESG considerations in financial policies and regulations to promote sustainable finance in a more systematic way and ensure sector wide uptake and consistency in implementation by all financial institutions

II) Support the creation of a level playing field through the expansion of the Mongolian Sustainable Finance Initiative into the non-banking sector focusing on NBFIs and the capital market

III) Strengthen the sustainable finance practices of the Mongolian financial sector through capacity building and the development of guidelines and tools in the area of green finance definition, gender policy and E&S performance monitoring.

IV) Promote Mongolia as a regional sustainable finance knowledge hub through the facilitation of knowledge exchange with other countries.

In overall, the activities included in the proposal sets an enabling environment for future GCF projects and programmes and strengthens Mongolia’s financial sector’s capacity to manage and mitigate ESG, gender and climate risks.

8. Total requested amount and currency

USD 291,783.6

9. Anticipated duration October 2018 – Sep 2020 (24 months)


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1 0 – No official framework in place 1 – Official framework launched 2 – Implementation phase with banks in compliance with framework

SECTION 2: LOGICAL FRAMEWORK Please complete the table below by including proposed outcomes, baseline situations, the targets for implementation period, and the activities to be undertaken, including key outputs or deliverables. Please add rows for additional outcomes as needed. For further guidance on completing the table, please refer to the guidebook “Accessing the GCF Readiness and Preparatory Support Programme”, including specific Outcomes to select from.

OUTCOMES BASELINE TARGET ACTIVITIES

Please include at least one specific deliverable output for each activity, and the timeframe (month number) in which it will be delivered to GCF.

1. Country capacity strengthened

1.1 Effective coordination mechanism 0 1 2 0 1 2 • Establish a national sustainable finance committee to ensure consistent interagency collaboration across the entire financial system to achieve Mongolia’s sustainable finance targets stipulated in the National Sustainable Finance Roadmap (Annex 1). The national committee will consist of members from the Ministry of Environment and Tourism (MET), Ministry of Finance, Central Bank, Financial Regulatory Commission, Mongolian Stock Exchange, Mongolian Bankers Association and Mongolian Sustainable Finance Association (as the secretariat) and will meet on a quarterly basis. Deliverable: Share with GCF kick off meeting and quarterly meeting reports, action plan recommendations for enhanced green finance coordination mechanism, and ToR to guide the operations of the committee,

1.2 Monitoring, oversight and streamlining of climate finance flows

0 1 2 0 1 2 • Develop and approve a commonly accepted definition of “green finance and climate finance/investment” including key indicators and guidance materials. Deliverable: Share with GCF green finance and climate finance/investment definition and guideline document approved by the National Sustainable Finance Committee

• Organize a training to enhance banks’ capacity on green finance and climate finance/investment referring to international best practice examples. The anticipated number of participants is 50. Deliverable: Share with GCF comprehensive training report including training evaluation feedback. The training materials will be maintained by MSFA and integrated into regular sustainable finance training programs

1.3 Sustainable finance policy and regulatory environment

0 1 2 0 1 2 • Develop and approve central bank policy/guideline and reporting requirement1 on the mandatory implementation of ESG considerate lending practices by banks. The guideline and reporting requirements will ensure the consistent measurement and reporting frameworks are in place and followed by all the banks and will be built on the Mongolian Sustainable Finance Principles as well as


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international standards including the GCF E&S and Gender Policy and Action Plan, IFC Performance Standards and Equator Principles. Deliverable: Share with GCF the approved Central Bank policy/guideline

• Organize an international study visit to Netherlands for Central bank mid-managers, supervisors, bank mid managers and E&S officers and MET with the focus on sustainable finance supervision, green finance business opportunities and green fund management. /Detailed description and draft agenda attached as Annex 3/ Deliverable: Share with GCF study visit report covering actions and recommendations for enhanced green finance coordination mechanism, ToR to guide the operations of the committee, feedback from participants and follow up action plan

• Organize practical training for Central bank supervisors on the supervision of banks’ sustainable finance performance. The anticipated number of participants is 30. Deliverable: Share with GCF comprehensive training report including training evaluation feedback. The training materials will be maintained by MSFA and the Central bank for future trainings and integration into the sustainable finance e-learning platform.

2. Stakeholders engaged

2.3 Gender considerations 0 1 2 0 1 2 • Conduct baseline study to understand current gender mainstreaming in the banking and non-bank sectors. Deliverable: Share with GCF baseline study report

• Develop guidelines, tools and templates (sample policy framework, reporting and monitoring template, sample action plans) to help banks and NBFIs develop gender policies and frameworks that meet GCF’s Gender Equality and Social Inclusion Policy and Action Plan. Deliverable: Share with GCF gender guidelines, tools and templates developed

• Conduct practical training on gender mainstreaming. The anticipated number of participants is 50. Deliverable: Share with GCF comprehensive training report including training evaluation feedback. The training materials will be maintained by MSFA for future trainings and integration into the sustainable finance e-learning platform.

3. Private sector mobilization

5.2 Crowding-in private sector investments

0 1 2 0 1 2 Strengthen banks’ sustainable finance performance:

• Develop an assessment tool to measure banks’ E&S performance and conduct assessment on individual banks Deliverable: Share with GCF E&S performance measurement assessment tool and report of the results of the individual bank’s assessment

Introduce sustainable finance into NBFI sector/micro finance:


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• Conduct research to understand the characteristics of the NBFI/MFI market and develop a strategy to introduce sustainable finance in microfinance Deliverable: Share with GCF research report that includes findings of the assessment as well as recommendations and strategies to introduce sustainable finance into the NBFI/MFI market

• Establish a working group consisting of major NBFIs/MFIs, FRC, MET and the Mongolian Sustainable Finance Association and organize quarterly working group meetings Deliverable: Share with GCF Working Group ToR and kick-off meeting report

• Develop principles and guidelines for NBFIs/MFIs to incorporate E&S considerations in lending operations Deliverable: Share with GCF NBFI/MFI Sustainable Finance Principles together with guideline document

• Develop relevant tools and templates to assist NBFIs/MFIs with the development of ESMS Deliverable: Share with GCF NBFI/MFI Sustainable Finance tools and templates developed

• Organize training for the Financial Regulatory Commission on sustainable finance supervision. The anticipated number of participants is 25. Deliverable: Share with GCF training report and participants’ feedback

• Organize training for NBFIs/MFIs on ESMS development and mainstreaming. The anticipated number of participants is 50.

Deliverable: Share with GCF training report and participants’ feedback

Introduce sustainable finance into the capital market:

• Conduct green bond scoping study Deliverable: Share with GCF study report including findings, recommendations and strategies

• Establish a joint working group by MSE, FRC, MET and the Mongolian Sustainable Finance Association (MSFA) and organize quarterly working group meetings

• Deliverable: Share with GCF Working Group ToR and kick-off meeting report, green bond guidelines, green bond catalogue, reporting guidance

Deliverable: Share with GCF guideline, green bond catalogue and reporting guidance

• Organize training for regulators, issuers and potential investors on green bonds. The anticipated number of participants is 40. Deliverable: Share with GCF training report. Training materials will be maintained by MSFA for future trainings.


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2 Sustainable finance is about integrating environmental and social risk management considerations into lending and investment decision making process and also mobilizing green finance flows to support green and environmentally beneficial projects and initiatives. The environmental benefits include for example: reductions in air, land and water pollution, reductions in GHG emissions, improved energy efficiency while utilizing existing natural resources, as well as mitigation of and adaptation to climate change and their co-benefits. 3 In 2012, IFC supported the establishment of the Sustainable Banking Network (SBN), a global, member-driven, knowledge and capacity building network on sustainable finance for financial sector regulators and banking associations from emerging markets. By taking a market wide approach, SBN helps accelerates sustainable finance globally. As Secretariat and technical partner to the SBN, IFC leverages the SBN platform to enable technical knowledge transfer and capacity building among the regulators and partners in the targeted countries.

SECTION 3: ADDITIONAL INFORMATION

Please explain how this grant will help deliver on the country’s readiness needs as identified above and build on institutions, processes or existing work already underway in the country. Please refer to the Guidebook for more specific information on completing this section.

Contributing to 95 percent of the entire financial sector, banks have been actively leading the sustainable finance2 agenda in Mongolia since 2013. Convened by the Mongolian Bankers Association (MBA) and supported by the Ministry of Environment and Tourism (MET) and international partners such as IFC, the banking sector has been leading the process of market transformation to integrate environmental and social (E&S) considerations in lending and investment activities through a collective sustainable finance framework (Mongolian Sustainable Finance Initiative) on voluntary basis. Many developments are taking place but still a vast reform agenda in the financial sector lies ahead for Mongolia. Aligning the financial system with sustainable development will require actions across the entire financial system and the involvement of all actors, including banks, NBFIs/MFIs, the stock exchange, as well as the central bank and other financial regulators. Contributing to this agenda, this proposal aims to introduce mandatory sustainable finance policies, develop consistent measurement and reporting guidelines and frameworks and comprehensive definition on green finance and start engagements in sectors such as microfinance and capital markets to ensure that all financial institutions have same requirement for their clients and borrowers. There is also still a large room for the improvement of banks’ sustainable finance performance through strengthening their capacity in gender, climate/green finance and monitoring and reporting areas. Moreover, the MSFI is emerging as one of the regional pioneers and have started sharing its experience with other countries with the support of the IFC SBN3. Therefore, further knowledge sharing with other countries will be supported through the readiness fund to assist them to develop their own national sustainable finance frameworks in their respective financial sectors. The activities in this proposal will provide substantial contribution to the realization of the NGDP4 and NDC5 and promotes the mobilization of private capital towards a low-emissions, climate-resilient development path. The proposal also compliments the currently on-going GCF readiness programme to support the set-up of the Mongolian Green Finance Corporation project as it creates an enabling environment for future green investments and strengthens the climate finance capacity of various actors. Also, it will contribute substantially to the successful implementation of the previous readiness program in the area of NDA capacity strengthening and preparing the country program through the promotion of the private -public partnerships, and realization of the financial sector related objectives of the relevant national policies and commitments against climate change and low carbon development.


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4 The Mongolian NGDP recognizes the importance of sustainable finance and has integrated it as Strategic objective #3: “Increase investment in natural capital, human development and clean technology by introducing financing, tax, lending and other incentives to support green economy growth”. The strategy focuses on enhancing more environmentally and socially responsible lending practices across financial institutions, promoting the trade of low carbon and energy efficient technologies, creating a green taxation system, promoting green public procurement, incorporating green growth indexes into national statistic systems and increasing investments into green industries and projects. 5 Mongolia’s NDC has its conceptual roots in the NGDP and has outlined a series of policies and measures that the country commits to implement up to 2030, in the energy, industry, agriculture and waste sectors. The expected mitigation impact of these policies and measures will be a 14% reduction in total national GHG emissions excluding Land use, land use change and forestry by 2030, compared to the projected emissions under a business as usual scenario.


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SECTION 4: BUDGET, PROCUREMENT, IMPLEMENTATION AND DISBURSEMENT

4.1. Budget Plan

Please provide a breakdown of cost estimates and implementation schedule analysed according to the activities suggested in Section 2. Please feel free to replicate this table on Excel spreadsheet if needed.

OUTCOMES

(same as in section 2)

ACTIVITIES

(same as in section 2. Include at least one specific deliverable output for each activity, and the month

number in which it will be delivered to GCF)

TOTAL COST

(per activity)

COST CATEGORIES EXPENDITURE AND IMPLEMENTATION SCHEDULE

(add columns if >24 months)

IFC staff/Consultants

Travel

Workshops/ Trainings/p

olicy meetings

Others

3m

Aug - Dec 2018

9m

Jan - Jun 2019

12m

Jul - Dec 2019

18m

Jan - Jun 2020

24m

Jul - Sep 2020

1. Country capacity strengthened

1.1 Effective coordination mechanism

1.1.1. Establish a national sustainable finance committee to ensure consistent interagency collaboration across the entire financial system to achieve Mongolia’s sustainable finance targets stipulated in the National Sustainable Finance Roadmap (Annex 1). The national committee will consist of members from the Ministry of Environment and Tourism (MET), Ministry of Finance, Central Bank, Financial Regulatory Commission, Mongolian Stock Exchange, Mongolian Bankers Association and Mongolian Sustainable Finance Association (as the secretariat) and will meet on a quarterly basis.

USD 5,000 Kick-off meeting and quarterly committee meetings USD 5,000

Nov

Deliverable: Share with GCF kick off meeting and quarterly meeting reports, action plan and recommendations for enhanced green finance coordination mechanism, and ToR to guide the operations of the committee,

Dec: Kick off meeting report

Mar: Brief meeting report

Sep: Brief meeting report

Mar: Brief meeting report

Sep: Brief meeting report


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1.2 Monitoring, oversight and streamlining of climate finance flows

1.2.1. Develop and approve a commonly accepted definition of “green finance and climate finance/investment”

USD 28,000 USD 10,000 International consultant (USD 1000*10 days) USD 10,000 National Consultant (USD 250*40 days)

Jan-Jun

Deliverable: Share with GCF green finance and climate finance/investment definition and guideline document approved by the National Sustainable Finance Committee

Jul

1.2.2. Organize a training to enhance banks’ capacity on green finance and climate finance/investment product development referring to international best practice examples. The anticipated number of participants is 50.

USD 8,000 Aug

Deliverable: Share with GCF comprehensive training report including training evaluation feedback. The training materials will be maintained by MSFA and integrated into regular sustainable finance training programs

Sep

1.3 Sustainable finance policy and regulatory environment

1.3.1. Develop and approve central bank policy/guideline and reporting requirement on the mandatory implementation of ESG considerate lending practices by the banks. The guideline and reporting requirements will ensure the consistent measurement and reporting frameworks are in place and followed by the banks and will be built on the Mongolian Sustainable Finance Principles as well as international standards including the GCF E&S and Gender Policy and Action Plan, IFC Performance Standards and Equator Principles.

USD 25,000 USD 15,000

MSFA USD 10,000

Dec Jun

Deliverable: Share with GCF the approved Central Bank policy/guideline

Jul

1.3.2. Organize an international study visit to Netherlands for Central bank mid-managers, supervisors, bank mid managers and E&S officers and MET with the focus on sustainable finance supervision, green finance business opportunities and green fund management. /Detailed

USD 26,500 USD 26,500

Feb


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description and draft agenda attached as Annex 3/

Deliverable: Share with GCF study visit report covering actions and recommendations for enhanced green finance coordination mechanism, ToR to guide the operations of the committee, feedback from participants and follow up action plan

Mar

1.3.3. Organize practical training for Central bank

supervisors on the supervision of banks’

sustainable finance performance. The anticipated

number of participants is 30.

USD 9,000 USD 9,000 Apr

Deliverable: Share with GCF comprehensive

training report including training evaluation

feedback. The training materials will be

maintained by MSFA and the Central bank for

future trainings and integration into the

sustainable finance e-learning platform.

May

2. Stakeholders engaged

2.1 Gender considerations

2.1.1. Conduct baseline study to understand current gender mainstreaming in the banking and non-banking sectors.

USD 32,000 USD 15,000 International consultant (USD 1000* 15 days) USD 10,000 National consultant (USD 250*40 days))

Jan-Apr

Deliverable: Share with GCF baseline study report May

2.1.2. Develop guidelines, tools and templates (sample policy framework, reporting and monitoring template, sample action plans) to help banks and NBFIs develop gender policies and frameworks that meet GCF’s Gender Equality and Social Inclusion Policy and Action Plan.

May Sep

Deliverable: Share with GCF gender guidelines, tools and templates developed

Sep/Oct

2.1.3. Conduct practical training on gender

mainstreaming. The anticipated number of

participants is 50.

USD 7,000 Oct


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Deliverable: Share with GCF comprehensive

training report including training evaluation

feedback. The training materials will be

maintained by MSFA for future trainings and

integration into the sustainable finance e-

learning platform.

Nov

3. Private sector mobilization

3.1. Crowding-in private sector investments

Strengthen banks’ sustainable finance performance: 3.1.1. Develop an assessment tool to measure banks’ E&S performance and conduct assessment on individual banks

USD 15,000 USD 5,000

MSFA USD 10,000

Jul-Sep

Deliverable: Share with GCF E&S performance measurement assessment tool and report of the results of the individual bank’s assessment

Oct

Introduce sustainable finance into NBFI sector/micro finance: 3.1.2. Conduct research to understand the characteristics of the NBFI/MFI market and develop a strategy to introduce sustainable finance in NBFI sector/microfinance

USD 60,000 USD 15,000

MSFA USD 35,000

Nov Feb

Deliverable: Share with GCF research report that includes findings of the assessment as well as recommendations and strategies to introduce sustainable finance into the NBFI/MFI market

Mar

3.1.3. Establish a working group consisting of major MFIs, FRC, MET and the Mongolian Sustainable Finance Association and organize quarterly working group meetings

USD 5,000 Mar

Deliverable: Share with GCF Working Group ToR and kick-off meeting report

Apr

3.1.4. Develop principles and guidelines for NBFIs/MFIs to incorporate E&S considerations in lending operations

Feb-Sep


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Deliverable: Share with GCF MFI Sustainable Finance Principles together with guideline document

Sep

3.1.5. Develop relevant tools and templates to assist NBFIs/MFIs with the development of ESMS

Feb-Sep

Deliverable: Share with GCF MFI Sustainable Finance tools and templates developed

Sep

3.1.6. Organize training for the Financial Regulatory Commission on sustainable finance supervision. The anticipated number of participants is 25.

USD 2,000 May


May

3.1.7. Organize training for NBFIs/MFIs on ESMS development and mainstreaming. The anticipated number of participants is 50.

USD 3,000 Jun


Jul

Introduce sustainable finance into the capital market: 3.1.8. Conduct green bond scoping study

USD 48,000 USD 20,000 International consultant (USD 1000* 20 days) USD 15,000 National consultant (USD 250*60 days)

Jun Jul

Deliverable: Share with study report including findings, recommendations and strategies

Aug

3.1.9. Establish a joint working group by MSE, FRC, MET and the Mongolian Sustainable Finance Association (MSFA) and organize quarterly working group meetings

USD 5,000 Jul

Deliverable: Share with GCF Working Group ToR and kick-off meeting report

Aug

3.1.10. Develop green bond guidelines, green bond catalogue, reporting guidance

Jul-Sep

Deliverable: Share with GCF guideline, green bond catalogue and reporting guidance

Oct

3.1.11. Organize training for issuers on green bonds. The anticipated number of participants is 40.

USD 8,000 Oct


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Deliverable: Share with GCF training report. Training materials will be maintained by MSFA for future trainings.

Nov

Total Output Budget: USD 248,500 USD 115,000 USD

26,500 USD 52,000 USD 55,000

CONTINGENCY (UP TO 5% OF TOTAL ACTIVITIES)

USD 12,425

Audit Cost US$ 8,000 $4000 $4000

DELIVERY PARTNER FEE (UP TO 10% OF TOTAL ACTIVITIES) – 8.5%

USD 22,858.6

TOTAL USD

291,783.6


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4.2. Procurement Plan

For goods, services, and consultancies to be procured, please list the items, descriptions in relation to the activities in section 2, estimated cost, procurement method, relevant threshold, and the estimated dates. Please include the procurement plan for at least the first tranche of disbursement requested below. Also, please feel free to replicate this table on Excel spreadsheet if needed.

ITEM ITEM DESCRIPTION ESTIMATED COST

(US $) PROCUREMENT

METHOD

THRESHOLDS (Min-Max monetary value for which indicated procurement

method must be used)

ESTIMATED START DATE

PROJECTED CONTRACTING

DATE

Consultancy Services

1.2.1. Develop and approve a commonly accepted definition of “green finance and climate finance/investment” 1.2.2. Organize a training to enhance banks’ capacity on green finance and climate finance/investment product development referring to international best practice examples. The anticipated number of participants is 50.

10,000 International open and

competitive bidding

Q1,2019 10,000

Local open and competitive bidding

2.1.1. Conduct baseline study to understand current gender mainstreaming in the banking and non-banking sectors. 2.1.2. Develop guidelines, tools and templates (sample policy framework, reporting and monitoring template, sample action plans) to help banks and NBFIs develop gender policies and frameworks that meet GCF’s Gender Equality and Social Inclusion Policy and Action Plan. 2.1.3. Conduct practical training on gender main-

streaming. The anticipated number of participants is

50.

15,000 International open and

competitive bidding

Q1,2019

10,000 Local open and

competitive bidding

3.1.8. Conduct green bond scoping study 20,000 International open and

competitive bidding Q2,2019


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3.1.9. Establish a joint working group by MSE, FRC,

MET and the Mongolian Sustainable Finance Associ-

ation (MSFA) and organize quarterly working group

meetings

3.1.10. Develop green bond guidelines, green bond

catalogue, reporting guidance

3.1.11. Organize training for issuers on green bonds.

The anticipated number of participants is 40.

15,000 Local open and

competitive bidding

80,000

80,000


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4.3. Disbursement schedule Specify the proposed schedule for requesting disbursements from the GCF, including amounts and periodicity. For amounts requested, keep to multiples of USD 5,000, and for periodicity, specify whether it’s quarterly, bi-annually or annually only. 1st Tranche: USD 204,248.5 (Two hundred four thousand two hundred forty eight US Dollars and fifty cents) only will be disbursed upon or after effectiveness of the Grant Agreement and also upon fulfilment of the disbursement conditions specified in the Grant Agreement and Standard Conditions. Final Tranche: USD 87,535 (Eighty seven thousand five hundred thirty five US Dollars) only, will be transferred upon submission of a project completion report and final Audit Report. Submission of a completion and audit report will be furnished no later than three (3) months after the completion of the Readiness Support and also upon fulfilment of the disbursement conditions specified in the Grant Agreement and Standard Conditions.

4.4. Additional information This box provides an opportunity to include further explanations related to the budget, procurement plan and disbursement schedule, including any details on the assumptions to justify costs presented in the budget. In addition to the external consultants to carry out some of the specific assignments, MSFA and IFC staff will be also used to complete the proposed activities. The MSFA will be sub-contracted for two years to coordinate stakeholders, implement some key activities through its staff and additional subject specific local experts/consultants, and ensure timely and quality delivery of the readiness programme together with the delivery partner. Below is a breakdown of the funds to be contracted with MSFA. In the most parts, local experts/consultants will be engaged to ensure cost-efficiency as well as strengthen local capacity and ownership. 1.3.1. Develop and approve central bank policy/guideline and reporting requirement on the mandatory implementation of ESG considerate lending practices by the banks. The guideline and reporting requirements will ensure the consistent measurement and reporting frameworks are in place and followed by the banks and will be built on the Mongolian Sustainable Finance Principles as well as international standards including the GCF E&S and Gender Policy and Action Plan, IFC Performance Standards and Equator Principles.

No Staff/national consultant Rate per day Days Total amount

1 Project Manager USD 250 10 USD 2,500

2 Administration, finance, logistics and reporting USD 50 10 USD 500

3 Policy advocacy and stakeholders’ engagement consultant

USD 200 5 USD 1,000

4 E&S and climate expert USD 200 13 USD 2,600

5 Financial sector expert USD 200 17 USD 3,400

Total USD 10,000

3.1.1. Develop an assessment tool to measure banks’ E&S performance and conduct assessment on individual banks





USD 200 5 USD 1,000



Total USD 10,000


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3.1.2. Conduct research to understand the characteristics of the NBFI/MFI market and develop a strategy to introduce sustainable finance in NBFI sector/microfinance 3.1.3. Establish a working group consisting of major MFIs, FRC, MET and the Mongolian Sustainable Finance Association and organize quarterly working group meetings 3.1.4. Develop principles and guidelines for NBFIs/MFIs to incorporate E&S considerations in lending operations 3.1.5. Develop relevant tools and templates to assist NBFIs/MFIs with the development of ESMS 3.1.6. Organize training for the Financial Regulatory Commission on sustainable finance supervision. The anticipated number of participants is 25. 3.1.7. Organize training for NBFIs/MFIs on ESMS development and mainstreaming. The anticipated number of participants is 50.





USD 200 20 USD 4,000



6 Capacity development expert USD 200 30 USD 6,000

Total USD 35,000


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SECTION 5: IMPLEMENTATION ARRANGEMENTS AND OTHER INFORMATION

Please attach an “implementation map” or describe how funds will be managed by the NDA/FP or delivery partner If the entity implementing the readiness support is not an accredited entity of the GCF, please complete the Financial Management Capacity Assessment (FMCA) questionnaire and submit it with this proposal. The Readiness and Preparatory support in all the requested areas will be implemented by the International Finance Corporation (IFC) with close guidance from the National Designated Authority/Focal Point. The Mongolian Sustainable Finance Association (MSFA) will be sub-contracted to directly carry out some activities and actively cooperate with the selected consultants. The following diagram shows the key stakeholders and implementation arrangement of the Readiness and Preparatory support: About the Mongolian Sustainable Finance Association The Mongolian Sustainable Finance Association is a sister entity established in 2017 under the Mongolian Bankers Association (MBA) with the goal to expand sustainable finance into other parts of the financial sector, creating a national green investors’ network. The MSFA is a result of the successful implementation of the Mongolian Sustainable Finance Initiative that started back in 2013. The need for this unique platform arose from the growing recognition to adopt a market-wide approach to mobilize finance for sustainable development. The main functions of the MSFA are to develop and release sustainable finance standards and guidelines for various financial industries, track the performance of member financial institutions, conduct relevant research and studies to identify international best practices, support capacity building and green product innovation and conduct awareness raising activities. The MSFA also closely collaborates with international organizations, universities, the media and civil society organizations to create cross sector linkages and cohesive action to promote the role of finance in sustainability. Furthermore, the MSFA will promote international knowledge exchange with other countries pursing the sustainable finance agenda with the vision to become a knowledge and leadership centre in the region. The MSFA currently operates under the MBA with the total full-time staff number of 10 people and several professional councils and working groups consisting of representatives from banks, government organizations, international partners and civil society groups. The board of the MSFA consists of CEO and Deputy CEO level representatives of member FIs.

- Bilateral agreement

- Funding

Reporting

Guidance and consultation

- Sub-contract

- Fee

- Reporting - Deliverables

GCF

Ministry of Environment and Tourism

(NDA)

IFC (Delivery partner)

MSFA

Consultants

Key Beneficiaries:

- Government of Mongolia

- Financial regulators

- Financial institutions

- NGO/CSOs

http://www.greenclimate.fund/documents/20182/104167/Financial_Management_Capacity_Assessment_Template.docx/5328f652-cf6e-44ab-b115-ae081be805fb

http://www.greenclimate.fund/documents/20182/104167/Financial_Management_Capacity_Assessment_Template.docx/5328f652-cf6e-44ab-b115-ae081be805fb


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Through the proposed readiness programme, Mongolia will strengthen its local capacity and ownership to drive its sustainable finance agenda forward in alignment to the national climate and sustainable development targets.

1.1. Other relevant information This box provides an opportunity to include any important information you wish to bring to the attention of the GCF Secretariat, but did not have an opportunity to provide in the sections above. Mongolia’s transition toward a sustainable financial system is mostly driven by a private-sector led initiative, named the Mongolian Sustainable Finance Initiative. As part of the Mongolian Sustainable Finance Initiative, the Mongolian Sustainable Finance Principles were launched in 2014 as the result of a joint effort from the Mongolian Bankers Association (MBA) and its member banks, backed by government support from the Ministry of Environment and Tourism and Central Bank of Mongolia and international support from IFC and FMO. The principles are designed to help banks identify, mitigate, and manage E&S risks associated with their lending portfolio, promote the business case of green finance and manage banks’ own environmental footprint. All 15 banks in the country supported the initiative and have been voluntarily implementing the principles, which increased the leverage and potential impact of this framework and counterbalances its voluntary nature. To enable the wider coverage of the entire financial sector, the MBA board made the decision to establish the Mongolian Sustainable Finance Association, a member driven NPO with the mandate to develop and promote sustainable finance practices in Mongolia. The operation of the association starts from 2018.

The MSFI has been also actively leading peer to peer knowledge exchange with other SBN member countries. The MoU with Cambodia has been signed to help the Cambodian banks to develop and implement the Cambodian sustainable finance framework. Mongolia has also made a commitment to become a sustainable finance knowledge and leadership centre in the region. This ambitious goal requires more alignment between policies in the financial and sustainability sectors to ensure resources and efforts are used efficiently and effectively. Sustainable finance in an integrated approach can also trigger more investment into clean, green sectors such as energy efficiency, renewable energy, green building, sustainable agriculture, and eco-tourism. It represents the opportunity of new market creation and development. On the other hand, it represents various benefits in terms of better resilience and risk management of the financial market through the integration of environmental, social and governance considerations. Sustainability has become a fundamental part for the stability of the financial system, contributing to sustainable economic growth, inclusiveness and new market opportunities. The expansion of the Mongolia Sustainable Finance Principles into non-banking financial sector and development of the relevant sustainable finance regulations will create a level playing field in the whole financial sector and opportunities for a long-term strategic approach towards mobilizing finance for Mongolia’s green development targets and better policy coherence among the public and private sector as well as international organizations and networks. The GCF Readiness and Preparatory support will be used to carry out necessary preparation activities and researches to successfully achieve this goal. Enclosure: Annex 1: Draft National Sustainable Finance Roadmap Annex 2: Mongolian Sustainable Finance Principles Annex 3: Study Visit Details


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with IFC for Mongolia - Green Climate Fund · finance instruments such as the green bond market...

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Transcript of with IFC for Mongolia - Green Climate Fund · finance instruments such as the green bond market...