607247 - Climate Risk Management Program

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Summary of Advisory Services Project Information

Project Number

607247

Primary Business Area

Financial Institutions Group

Disclosure Date

Feb 6, 2024

Country

Mongolia

Region

East Asia and the Pacific

IFC Approval Date

Sep 9, 2022

Status

Active

Estimated Total Budget

$750,000.00
(Project budget includes all project-funded activities)

Last Updated Date

Feb 7, 2024

Project Estimated Start Date

Aug 1, 2022

Project Estimated End Date

Jun 30, 2025

Project Description

Climate Risk is a priority for Basel Committee on Banking Supervision (BCBS) as seen in the release of the document on the Principles for Effective Management and Supervision of Climate-related Financial Risks. The document provides an overview of the guidelines that will eventually be translated into regulatory rules by central banks/supervisors globally. It complements Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). These two relatively new frameworks are regarded as complex and ambitious, thus daunting to a lot of FIs. However, if they are supported to take an incremental approach, and move step by step, they will gain more confidence and build up their commitment. When banks complete all the components of the Climate Risk program, it is likely that they will become TCFD´s endorsers and will be better prepared to continue their transformational journey to be champions of sustainability and sustainable/green finance. Within IFC, as part of the Climate Action Plan of 2021-2025, FIG commits that 85% of its investments will be aligned with Paris Agreement goals starting from July 1st, 2023, and 100% starting from July 1st 2025. This is expected to require additional support for investment teams and for clients in assessing FIs climate risk management capabilities and providing guidance for them in action plan development and monitoring of the use of proceeds as well as the climate physical risk vulnerability both at portfolio and transaction level.

Development Results

IFC understands the need of the financial services industry to develop strategies for proactive management of climate risks and opportunities as well as align with the global pace of implementation of climate risk management frameworks. IFC’s FIG Advisory team is very active in promoting climate finance and risk management across the emerging markets and is working with a number of FIs to help them better understand the market opportunity and climate risk exposures in order to scale up their climate finance portfolios and meet their sustainability agendas. Moreover, the project will help support at least 2 target countries to have 100% of its investees/ Investment clients receive Paris Alignment (PA) training in compliance and in support of IFC's PA targets. The key objectives of this project include: a. In 2025, at least 2 FIs have developed an understanding of the imperatives of climate risk management for financial services industry as per the principles of the TCFD or other regulatory institutions. FIs have undertake readiness assessments of their climate risk management strategy and can address gaps in the same through tailored advisory services. b. FIs are able to utilize a fit-for-purpose climate risk management frameworks and toolkits and incorporate it in their climate strategy and business decision making. c. At least 2 banks have received in-depth advisory from IFC and implemented IFC's Paris Alignment (PA) commitments in line with the MDB PA (i.e. Multilateral Development Banks Paris Alignment) methodology.

Indicator	Cumulative
KM project: Number of follow-on IFC projects that benefited from the KM project	0
Number of participants in workshops, training events, seminars, conferences, etc.	179

E&S Risks / Impacts and Mitigation

Performance Standard	Description and Potential Impact	Mitigation
PS 1. Assessment and Management of Environmental and Social Risks and Impacts	As part of its Due Diligence, and as mandated by IFC Sustainability Policy, IFC team will screen the project to assess consistency with IFCs Performance Standards. Environment and social risks will be further reviewed throughout the life cycle of the project.	IFC advice will be provided in a manner consistent with the principles of the relevant Performance Standards. The IFC team will assist the client in gaining a good understanding of IFCs Performance Standards and provide recommendations for appropriate mitigation measures whenever

This Summary of Advisory Services Project Information (ASPI) is prepared by IFC to disclose a factual summary of the main elements of this advisory services project. It may also include findings and recommendations related to environmental and social considerations regarding this project. The purpose of the ASPI is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the client. IFC considers that this ASPI is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed within sixty days of project's approval and may be updated periodically afterwards. Total budget and start dates are estimates only. The following ASPI is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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