news - FMO Invests in Mongolia’s First Ever Green Bond To Support Climate-Smart Investments


FMO Invests in Mongolia’s First Ever Green Bond To Support Climate-Smart Investments

March 17, 2023

As part of its commitment to support Climate Action, FMO, the Dutch entrepreneurial development bank, 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.

FMO contributed USD 35 mln in the USD 60 mln, five-year bond and offering, with IFC acting as lead arranger and investing USD 15 mln. MicroVest Capital Management (MicroVest) also contributed USD 10 mln to the bond. 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. The subscription will also contribute to improved sustainability of the country’s financial market.


Mongolia is a country facing significant environmental challenges. Air pollution levels in its capital Ulaanbaatar are among the highest in the world, with coal and wood burning in homes and coal power plants all contributing to the pollution. The country has also experienced significant climate change, with average temperatures increasing higher than the global average. Rainfall has also declined with more extreme climate driven hazards, including heat waves, droughts and river floods, all expected to put pressure on the country’s unique fragile ecosystem.

FMO’s investment in Khan Bank’s green bond alongside IFC and MicroVest 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.


 “Green finance is a priority for the bank. With the steadfast support of our longstanding partners, IFC, FMO, and MicroVest, Khan Bank, as the largest bank in Mongolia, is proud to issue Mongolia's first-ever green bond. This transaction marks a significant milestone for our bank and Mongolia’s banking sector to promote green financing and sustainable economy. This investment will enable us to provide long-term loans to our clients and help us diversify our funding sources,” said Munkhtuya Rentsenbat, CEO, Khan Bank. “We are committed to working with IFC and other partners to introduce more innovative financial instruments in the market.”

“We are thrilled to contribute to this first-of-its-kind green bond issuance in Mongolia, once again extending our cooperation with our long-term partner Khan Bank,” said Marnix Monsfort, Director Financial Institutions at FMO. “Through this bond—provided to the largest bank in the country reaching 82 percent of Mongolian households—we hope this paves the way for more sustainable green bond instruments across the country, contributing to significant climate action. Therefore, this transaction is fully aligned with our strategy to accelerate action towards climate change, contributing to SDG 13. FMO looks forward to intensifying our partnership with Khan Bank as they strengthen their green strategy.”


 “This marks an historic move for Mongolia and vital to help the country deliver on its climate ambitions,” said Allen Forlemu, Regional Industry Director, Financial Institutions Group, Asia & the Pacific, IFC,” Green bonds are an effective way to draw in funding to finance green projects for the benefit of the country and its people. By supporting the country’s first green bond, in line with international standards, IFC is helping set a standard in the market and we hope it will send a strong signal to other banks and corporates to tap into green finance and develop projects that will help the country meet its climate and development goals.” 

“As a long-term partner of Khan Bank, MicroVest is incredibly proud to participate in the Bank’s issuance of Mongolia’s first Green Bond,” said Joshua Moraczewski, Chief Executive Officer at MicroVest. “This offering represents a significant milestone that will help drive a low-carbon, climate-resilient future for Mongolia and facilitate the establishment of green initiatives while making progress toward net-zero targets."

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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 $413 million, with 80 percent from international investors and private sector players.

FMO and Khan Bank have had a strong relationship throughout the years, with Khan Bank having been an existing key FMO client since 2009 with a strong performance. Over these past years, FMO and Khan have concluded multiple transactions bilaterally as well as syndicated with other lenders. More recently, FMO arranged a USD 120 mln syndicated facility to help grow Khan Bank’s SME portfolio.


About IFC

IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit

 About Khan Bank

Khan Bank has been providing all types of banking products and services to more than 82 percent of the population, or 2.8 million customers, through its digital channels and 545 branches nationwide. Khan Bank supports MSMEs, which are the key drivers of the country’s economic growth, by offering business loan products and non-financial services such as customer training and advisory and consulting services through its Business Support Center. In the last decade, Khan Bank has been actively implementing projects in line with sustainable development initiatives, aiming to be greener and offering environmentally-responsible products and services. Click here to read Khan Bank’s Sustainable Development Report 2021. For more information, visit

About MicroVest:

MicroVest Capital Management (MicroVest) is an asset manager specializing in allocating private debt capital to responsible microfinance and SME financial institutions that lend to un- or under-banked borrowers and small businesses in emerging and frontier markets. Since its founding in 2003, MicroVest has disbursed more than $1.6 billion to over 200 responsible financial institutions in 60 emerging and frontier countries. MicroVest is wholly owned by DAI Global, LLC.

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