
Growing green(er)
Energy investments
Energy transition in the Asian steppe: How a Mongolian bank uses targeted loans to drive the adoption of renewable energy.
With over 250 days of sun per year, Mongolia is known as the “land of the blue sky”. Under these skies, about 800,000 of the country’s 3 million inhabitants continue to roam, allowing their herds of cattle to graze. But despite the sun, they must defy the long, bitter winters as they search for pastures across Mongolia’s vast steppes.
Traditionally, these pastoral nomads were almost completely isolated. But with new solar technology, change is happening fast. Mobile phones and televisions are becoming increasingly important with the possibility to harness the solar power from 2,500 hours of sunshine a year. Meanwhile, as people with modest incomes can now afford this energy, solar power has triggered a veritable development boom.
Money for new energies
In 2000, the Mongolian government launched a broad electrification programme. This and subsequent initiatives have resulted in an electrification rate of more than 70% among nomads. Now, mobile solar home systems can provide for new comforts in the steppe, such as milking machines and freezers. The retailer Purevdorj has focused exclusively on this customer segment, and sells package solutions comprised of imported solar systems, batteries and energy-efficient equipment. To conduct its business within an economically attractive framework, Purevdori funds its imports via energy loans from Mongolia’s XacBank.
XacBank is Mongolia’s fourth-largest commercial bank with more than 80 branches and 500,000 customers. Founded in 2001, it pursues the objective of a triple bottom line: positive impact on people, the environment and profits. With this in mind, in 2007 it launched a new initiative – environmental loans – and in 2009 established Asia’s first environmental division focusing on this area.
“We finance environmentally sustainable growth.” Tuul Galzagd, Director, XacBank Eco Banking Department
“We serve more than 50 companies in the environmental segment,” explains XacBank’s Tuul Galzagd. “Our client portfolio ranges from retailers like Purevdorj to construction companies that specialise in building insulation to improve energy efficiency.” However, the bank’s undisputed best-seller is hybrid vehicle loans, a product launched in mid-2015. “These loans offer people an incentive to replace their cars with more environmentally friendly models – a key measure to improve the quality of air in cities.”
Achieving greener growth
Galzagd knows what she is talking about: In Mongolia’s capital, Ulaanbaatar, home to about 40% of the country’s population, pollution is a dangerous issue, especially during the winter months. Smog covers the basin like a thick blanket. Besides the many poorly maintained cars, heating systems are the key cause of Ulaanbaatar’s poor air quality. Here, too, XacBank actively markets its loans and finances companies like ANU Services, which supplies heating to large public buildings such as schools. Most recently, ANU has been using state-of-the-art heating boilers that require 24% less coal for the same output. “Given the fact that the average heating season lasts 210 days, with temperatures dropping as low as -40°C, the financial and environmental payoff is significant,” Galzagd says.


Less smog thanks to energy-efficient boilers and hybrid cars: Environmental loans from XaxBank are supporting this development.
Thanks to initiatives such as XacBank’s environmental loans, Mongolians are becoming more aware of the fact that progress and growth do not have to come at the expense of the environment. Since 2013, XacBank has been financing its energy loans through climate investments, working with responsAbility. “This collaboration has enabled us to expand our environmental loan portfolio and to extend it to new segments,” Galzagd says. “Our goal is to continue expanding to larger projects in the future to ensure that Mongolia achieves environmentally sustainable growth.“
Source:: http://www.responsability.com/investing/en/1276/Newsletter-September-2016.htm