Cambodia Investment Review
Cambodia’s journey toward sustainable development reached a pivotal moment earlier this month, as key stakeholders convened to discuss the significant potential of the nation’s sustainable bond market. Organized by the Securities and Exchange Regulator of Cambodia (SERC), the Ministry of Environment (MoE), and the Asian Development Bank (ADB), the workshop aimed to uncover pathways for growth and address the supply-demand challenges in this niche sector.
“There’s an urgent necessity for enterprises and potential investors to pay heed to the benefits of investing in sustainable bonds in Cambodia,” said H.E. Sou Socheat, Director General of SERC. Emphasizing the phrase “Giving Back to Your Community,” he highlighted how these green investments reflect a commitment to both the community and future generations.
“We are in the early stages of sustainable development, and our investor base is still relatively small. This presents a significant opportunity for potential investors,” he said.
ADB’s willingness to provide technical assistance
His statement underscores the ADB’s willingness to provide technical assistance to sustainable bond issuers in Cambodia, which could greatly stimulate this nascent market. The workshop also emphasized the responsibility of non-banking regulators, with the ADB calling on them to require financial institutions and securities issuers to incorporate ESG considerations into their lending practices and business operations.
In an opinion article published by Cambodia Investment Review the ADB has previously stressed that institutional investors, particularly pension funds and insurance companies, should prioritize investments in GSS bonds. In addition, it pointed out the need for further training on GSS bonds for capital market intermediaries in Cambodia, highlighting a significant gap in knowledge and experience around GSS bonds’ principles and standards.
H.E. Sum Thy, Deputy Director General of the General Directorate of Policy and Strategy, underscored the nation’s vulnerability to climate change. “As a developing country, our climate resilience hinges on our investment in climate change adaptation,” he said. He argued that sustainable bonds could be the key to funding this necessary resilience, urging investors with long-term perspectives to consider the value and opportunities of investing in green growth.
Significant role in fighting climate change
Mr. Kosintr Puongsophol added that the financial sector could play a significant role in fighting climate change by supporting green finance. He pointed out that ASEAN is expected to lose more than 32% of GDP by 2100 under a High Emissions Scenario.
“To mitigate this loss, funds need to be mobilized urgently and on a large scale,” he said. “This can be achieved through the securities market by issuing green and other thematic bonds, mainstreaming climate finance in financial institutions, promoting local knowledge and talent, and strengthening international collaboration.”
The workshop made clear that Cambodia’s sustainable bond market is an untapped opportunity. However, supply and demand challenges remain, highlighting the need for increased education and regulatory support. With international and local stakeholders eager to contribute, the future of green investment in Cambodia looks promising.