The Asia LEDS Partnership (ALP) organised an online peer learning session on the 14th of February, 2022, in which an emission reduction assessment tool developed for the Trade and Development Bank, Mongolia (TDBM) was presented.

The bank has been implementing the Green Loan Programme for small and medium-sized enterprises in Mongolia to finance projects that show a potential for reducing at least 20% of the energy usage or carbon emissions in their operations. In support of this endeavor, Mongolia’s Ministry of Environment and Tourism was keen to commission the development of the tool.

To this end, the ALP, with technical expertise from South Pole, helped TDBM to develop the Excel-based tool that allows easy tracking of the project baselines and helps to assess potential energy/ emission reduction of projects funded through the Green Loan Programme. Based on the success of this tool, Mongolia is keen to develop an independent and a more broadly applicable tool that can be used by all commercial banks there.

During a discussion on the tool at the ALP session, Mr. Ajit Padbidri, Senior Manager, Climate Strategies, South Pole, described the eight modules (energy efficiency, renewable energy, farming, transportation, building construction, waste, fuel conversion and water) under which potential projects could be categorised within the loan assessment process.

Representatives of the Green Financing team of TDBM shared their experiences of using the tool for supporting green loan assessment requirements, and mentioned a project that was selected after the tool was used to identify its GHG emission reduction potential.

Speaking about the advantages of using the tool, TDBM representatives said that it helped to save the cost of auditing potential green projects, reduced the time needed to conduct the loan assessment, and could be easily adapted as required. However, as it is limited to the above-mentioned eight modules currently, the tool cannot be applied to every green project. The results from applying the emission reduction tool should also be considered as one of the criteria for loan assessment and not the only criterion. The experts said that it was a case-by-case learning process, with the sustainable financing field being new to the banking sector.

To learn more about the session, click here.