Bhutan Embarks On Green Financing Roadmap, To Mitigate Climate Change Impact
A Joint Learning Program on ‘Inclusive green finance’ was held in the capital, Thimphu from 20-22 January 2020.
By Kinley Dem | BBS
Climate change and its dire consequences could potentially pose a big threat to Bhutan’s economy.
Despite conservation being at the forefront of development in the country, the impact of climate change is inevitable.
According to the Alliance for Financial Inclusion (AFI), the effects of climate change are already visible.
To address this pertinent issue, solutions have been sought. One of which is ‘Inclusive Green Financing’ and it refers to the provision of financial services for climate action and related projects.
Source: Alliance for Financial Inclusion
“We can see the effects quite differently, rise in sea levels, it can be hurricanes and storms, increasing temperatures and melting glaciers. These effects can also be seen here in Bhutan in a number of different ways and it will be increasing in the next decades to come. It is important to see that Bhutan as a country, as a whole, coming together to mitigate and adapt to climate change. And ‘inclusive green finance’ is one part of those efforts,” said Johana Nyman, the Head for Inclusive Green Finance at AFI.
Co-hosted by the Royal Monetary Authority (RMA) of Bhutan and AFI, over 70 participants comprising of RMA Bhutan staff, local financial and non-financial institutions as well as government agencies attended the JLP.
In addition, international experts from Bangladesh Bank, the National Bank of Cambodia, Nepal Rastra Bank. Central Bank of Sri Lanka and the Bank of Thailand also attended and shared their insight and experience in this emerging policy area, while the Central Bank of Seychelles was also present throughout the JLP as an observer.
What is ‘Inclusive Green Finance’?
Inclusive green finance is all about how financial regulations can enable financial inclusion that builds resistance and mitigates climate change.
Source: Asian Development Bank
“There are so many initiatives happening at the national level in Bhutan when it comes to climate change and environmental protection and having a strong green finance component of that will even make it even stronger and hopefully more efficient as well. It’s all about protecting the people from the effects of climate change and to the possible extent of stopping climate change,” Johana Nyman added.
Lending schemes from the Royal Monetary Authority (RMA) of Bhutan
Royal Monetary Authority (RMA) as the central bank in Bhutan, on the other hand, is working to come up with a framework to engage banks towards lending to environment-friendly projects.
According to the RMA, they are taking the lead with AFI’s endeavour to develop a common framework which can be followed by all member countries.
RMA said that Bhutan is way ahead of other countries in terms of pursuing inclusiveness as well as green financing.
Merits of Green Finance
“As it is, all loans are actually green finance because environment clearance is one of the criteria for assessing a loan from a bank. Now when you package it as green finance then it becomes very attractive to the outside world and it also becomes very meaningful within the country saying that we are actually environmentally very conscious. Even if you take a loan and do business, we are very much within the consciousness of following strong principles of environmental protection,” said Dasho Penjore, the Governor of RMA.
Underscoring the importance of the Green Finance roadmap, Dasho Penjore said that in the modern era, everyone must play their part in ensuring environmental protection and sustainability.
Therefore the roadmap must be easily understood across all levels, from governors to financiers and even borrowers, emphasising that banks can contribute significantly to green initiatives.
This article first appeared in BBS and has been edited for Daily Bhutan.