Most governments and companies rely on financial institutions (FIs) for the global distribution of financial flows, which enable them to produce goods or products and provide services in various sectors. Funds provided by FIs can have unintended negative consequences on the environment, human rights, and development opportunities. The criteria of the emerging twin concepts of environmental, social, and governance (ESG), and sustainable finance (SF) are socially and economically constructed. These concepts have led to the development of the ASEAN Taxonomy1, which serves as a common framework for
assessing the financial returns and related impacts of investments for ASEAN Member States (AMS) and other countries. According to the National Green Growth Roadmap of the Ministry of Environment (MoE), green growth is defined as environmentally sustainable economic progress that fosters low-carbon, socially inclusive development. As a result, the ESG and SF criteria have been incorporated into various policies and laws to encourage green growth, a green economy, and sustainable finance, but most of the governmental officers are quite familiar with “green finance”. In May 2023, the Department of Green
Economy2 of MoE launched the United Nations Partnership for Action on Green Economy (UN PAGE)3 with support from the five UN agencies to reaffirm its commitment towards sustaining the country’s economic growth on a sustainable and inclusive trajectory. Many policies, action plans and guidelines to promote the green economy were developed by the department.
This paper has two main objectives. Firstly, based on the desk review, it aims to provide a simplified explanation of key terms and findings related to ESG and SF. Secondly, it presents a policy tracker that includes relevant policy and legal documents such as royal decrees, sub-decrees, and other announcements concerning ESG and SF.
this policy track is an interactive list of online-policy platforms that enable relevant
agencies, investors, and regulators to have access for different purposes. It provides online resources to help policymakers and policy practitioners identify and use policy and legal documents. In long-term use, this policy track should be developed into a platform where all actors can track the progress, update documents, and see key indicative outcomes of each policy and legal framework. Moreover, it can be used as an online mode where all users can identify policy changes, policy compliance, and obligations of key actors and agencies.
The author suggests that the policy tracker outlined in this paper can be used as a starting point to analyze policy areas and develop policy and legal frameworks for promoting a green economy and sustainable finance in Cambodia. To achieve this, regulators, bankers, microfinance institutions, investors, and other development partners should consider Cambodia’s Green Economy Policy. Furthermore, it is crucial to propose relevant regulations pertaining to the Green Growth and Green Economy in order to foster long-term sustainable finance, development, and growth. To enable such policies, feasibility studies to support
the drafting of regulations, are essential.
Disclaimer: The content of this publication is the sole responsibility of Fair Finance Cambodia and can in no way be taken to reflect the views of the Fair Finance Asia/ Fair Finance International network.
About Fair Finance Cambodia
The Fair Finance Cambodia (FFC) coalition aims to reduce the negative impacts of cross-border investments on human rights, the environment and climate change, particularly those made by multinational financial institutions, banks and insurers while increasing inclusive economic development. FFC is operational in Cambodia – wherein the Fair Finance Cambodia Civil Society Organization (CSO) coalition leads research and engagement with key stakeholders, including financial regulatory and policymaking institutions, banking and investment associations, multilateral development banks and academia. FFC is a member of Fair Finance Asia, a regional network of CSOs committed to ensuring that financial institutions’ funding decisions in the region respect local communities’ social and environmental well-being.