IFC and Mongolia's FRC sign MOU to expand thematic bonds

The IFC and Mongolia's Financial Regulatory Commission signed an MOU launching the second phase of the IFC Green Finance Market Development Project to introduce blue bonds, sustainability-linked bonds, and align disclosure with IFRS Sustainability Standards 1 and 2. The IFRS S1/S2 alignment pathway mirrors disclosure transitions Indian regulators and issuers are navigating.

The International Finance Corporation (IFC) and Mongolia's Financial Regulatory Commission (FRC) formalised cooperation through a new Memorandum of Understanding, marking the second phase of the IFC Green Finance Market Development Project. The collaboration aims to deepen access to climate finance, introduce frameworks for thematic instruments such as blue bonds, sustainability-linked bonds, and broader sustainable bonds, and align Mongolia's ESG disclosure standards with the recently released IFRS Sustainability Standards 1 and 2. Mongolia has raised over $338 million through seven green and social bond issuances since 2021.

The partnership affects Mongolian issuers, banks, and the FRC as regulator. In 2021, supported by the Government of Japan, IFC helped FRC draft Mongolia's inaugural Green Bond Regulation and Guideline. The FRC introduced ESG and Sustainability Reporting Guidance in 2022 referencing global frameworks and the IFC Disclosure and Transparency Toolkit, and joined the IFC-supported Sustainable Banking and Finance Network in 2023. IFC earlier conducted a banking-sector climate risk assessment and made catalytic investments in Mongolia's first green and social bonds in 2023 and 2024.

Mongolian issuers should prepare to use the expanded thematic instruments to diversify capital sources, with FRC Chairman Jambaajamts Tundev noting the expansion will help access new funding for sustainable projects. Companies should align disclosures with IFRS Sustainability Standards 1 and 2 as the regulatory framework develops. IFC Resident Representative Matthieu Le Blan highlighted opportunities in infrastructure, farming, and forestry. Stakeholders should monitor implementation of the second-phase project and new regulatory frameworks for blue and sustainability-linked bonds.

Key figure — Capital raised: over $338 million across seven green and social bond issuances since 2021