In a bid to spur green and renewable energy projects in Mongolia, IFC is investing in a green bond to be issued by the country’s largest commercial financial institution, Khan Bank, which is the first-ever green bond to be issued in the country.

IFC is investing USD 15 million in the USD 60 million, five-year bond and the offering has attracted another USD 45 million from international investors, including USD 35 million from Dutch entrepreneurial development bank (FMO), and USD 10 million from MicroVest Capital Management (MicroVest).

This investment will allow the bank to grow its climate portfolio by funding projects that support renewable energy, energy efficiency, green buildings, green mobility, and climate-smart agriculture in Mongolia. IFC’s subscription will also contribute to improved sustainability of the country’s financial market.

IFC’s investment in Khan Bank’s green bond is expected to support Mongolia’s goal to increase green lending from 1.4 percent at present to 10 percent of all banking sector lending by 2030. In addition, the project is expected to help mitigate climate change by avoiding tens of thousands of tons of greenhouse gas emissions annually.

IFC advised Khan Bank on adopting a green bond framework for this issuance and plans to help the bank develop more climate and gender finance products. Earlier this year, Khan Bank received a USD 130 million syndicated loan arranged by IFC to support micro, small, and medium enterprises, especially women-owned businesses, in Mongolia.

Mongolia has committed to reducing greenhouse gas (GHG) emissions by 22.7 percent by 2030. The annual financing required to achieve Mongolia’s green development targets is estimated to be USD 413 million, with 80 percent from international investors and private sector players.