The Inclusive Green Finance Policy (IGFP) Project

The Inclusive Green Finance Policy Project

▬ Financial Inclusion ▬

The Inclusive Green Finance Policy Project

The Inclusive Green Finance Policy (IGFP) Project was initiated on 25 June 2021 with the aim of a greater understanding of climate resilience and inclusive green growth in PNG. IGFP marks the first step towards green finance in PNG, thereby facilitating future efforts to monitor, regulate, and promote green finance flows in the country.

‘Climate Resilience and Inclusive Green Growth’ is one of the key pillars of Papua New Guinea’s Development Strategy. Its importance is emphasized in ‘PNG Vision 2050’, ‘PNG Development Strategy Plan 2010-2030’, ‘National Strategy for Responsible Sustainable Development (StaRS)’, and ‘Medium Term Development Plan 2018-2022’. The government has set various targets to achieve this goal under the enhanced National Determined Contributions (NDCs) such as reducing annual net emissions from deforestation and forest degradation due to agriculture expansion and commercial logging by 10,000 Gg CO2 eq. compared to the 2015 level, encourage the introduction of fuel-efficient transport equipment, promote climate-friendly agriculture in oil palm, cocoa, and coffee platform, reduce electricity demand through energy efficiency, promote REDD+, downstream processing and enforce economic productive and sustainable livelihoods. Meeting these targets requires – in addition to sound policies and enabling environment for the public sector- a significant and sustained investment from the private sector. These investments (or “green” finance) should be directed towards “green” activities that contribute to building climate resilience and promoting inclusive green growth.

Since the project started, there have been some very broad and comprehensive processes involved that included desktop research, TWG workshops, and one-on-one stakeholder consultations leading up to the successful drafting and completion of the Inclusive & Green Finance Policy document which was launched on 8 June 2023 by Prime Minister Rt. Hon. James Marape.

The IGFP features PNG’s Inclusive & Green Taxonomy as its key component accompanied by a Diagnostic Report and an Implementation Roadmap. The Green Taxonomy will assist government agencies to monitor, regulate and promote green financial flows into and within the country. Also, it will help financial institutions and private-sector entities to know whether they are complying with a certain policy (e.g., mandatory disclosure on green investments) or are eligible for incentives related to green activities (e.g., low-interest green loans). Hence the IGFP will help promote green activities and overall help achieve NDC targets on climates resilience and inclusive growth for PNG.

Meetings

The number of Steering Committee and Technical Working Group meetings held so far include:

First Steering Committee Meeting: 11 October 2021
Second Steering Committee Meeting: 7 February 2022.
First Technical Working Group Meeting: 23 February 2022.
Third Steering Committee Meeting: PART 1-28 April 2022, PART 2-5May 2022
Second Technical Working Group Meeting: 18 May 2022
Fourth Steering Committee Meeting:10 June 2022
Fifth Steering Committee Meeting: 5 August 2022
Sixth Steering Committee Meeting: 13 February 2023
Third Technical Working Group Meeting: 9 March 2023
IGFP Launch: 8 June 2023
Seventh Steering Committee Meeting: 19 July 2023
Eighth Steering Committee Meeting: 25 August 2023
Ninth Steering Committee Meeting: 26 December 2023
Tenth Steering Committee Meeting: 27 February 2024

Policy Model

The Inclusive & Green Finance Policy was officially launched on 8 June 2023 by Prime Minister Rt. Hon. James Marape. It is made up of 3 key component outputs:

The Inclusive & Green Taxonomy of Papua New Guinea. A classification system designed for investors, lenders, and other financial sector participants to identify, monitor, and demonstrate- through quantitative metrics- the scope and volume of their inclusive and green financial flows, whether it is in the form of loan, equity, guarantee, or some other financial instrument.
The Diagnostic Report on the state of Inclusive & Green Finance in Papua New Guinea. The report contributes to the development of the Inclusive & Green Taxonomy and the Implementation Roadmap. The main purpose is to provide a straightforward overview of the financing ecosystem answering key questions such as: How is PNG doing in terms of Inclusive & Green Finance? What are the facilitating factors and obstacles in financing inclusive and green activities and projects?
The Implementation Roadmap. The Implementation Roadmap sets out the practical steps necessary to implement the Inclusive & Green Finance Taxonomy. It is more of a practical step-by-step to-do list and work plan with deliverables and timelines essential to operationalize the taxonomy.

Next step

The project is now in Phase II and has been included in the recently launched BPNG-CEFI National Financial Inclusion Strategy 2023-2027 as a key strategic objective. It will aim to achieve 3 main outputs which are:

Setting up a Green Finance Centre within the Bank of Papua New Guinea to lead the transformation of PNG’s financial sector into one that is sustainable, resilient, and inclusive.
Piloting the Inclusive & Green Taxonomy in one or two Financial Institutions in PNG to understand the difficulties faced, the salient barriers, and propose solutions.
Setting up a Green Finance Refinance Facility within the Bank of Papua New Guinea.

Project Governance

The project is led by a steering committee and advised by a technical working group. The steering committee helps to steer the project through from start to completion and its role is to provide advice and ensure the delivery of the project outputs and the achievement of project outcomes. The steering committee members are:
- Bank of Papua New Guinea (Chair),
- Department of Treasury,
- Climate Change & Development Authority,
- Centre for Excellence in Financial Inclusion,
- Alliance for Financial Inclusion,
- Global Green Growth Institute (Observer), and the
- New Zealand Ministry of Foreign Affairs & Trade (Observer).
The Technical Working Group (TWG) defines the necessary regulatory, technical, and financial preconditions to be put in place within a feasible period to allow the IGFP to become operational. It includes government agencies, financial institutions, private sector entities, international organizations, industry associations, and academia who offered valuable inputs. They are:
- Department of National Planning & Monitoring (DNPM)
- Department of Treasury
- Investment Promotion Authority (IPA)
- Conservation & Environmental Protection Authority (CEPA)
- Department for Community Development & Religion (DfCDR)
- Department of Agriculture & Livestock (DAL)
- National Agriculture Research Institute (NARI)
- PNG Forest Authority (PNGFA)
- National Energy Authority (NEA)
- Department of Transport
- PNG National Weather Service
- Tourism Promotion Authority (TPA)
- Bank South Pacific
- Kina Bank
- Nationwide Micro Bank Ltd
- Women’s Micro Bank
- BPNG- Financial Sector Development Strategy Secretariat
- Federations of Savings & Loans Society
- SME Corporation
- Bank of South Pacific Life (BSP Life)
- International Finance Corporation, World Bank Group
- Solar Energy Association of PNG
- Emstret Holdings Ltd
- The Voice Inc.
- World Vision PNG
- United Nations Development Programme (UNDP)
- World Wildlife Fund (WWF)
The Global Green Growth Institute serves as the secretariat providing the main technical support with assistance from Agriculture and Finance Consultants GmbH (AFC).

Contact

Mr Saliya Ranasinghe Financial Inclusion Adviser, Centre for Excellence in Financial Inclusion
Email: saliya@thecefi.org
Mr. Sakiusa Tuisolia Country Representative, GGGI PNG Office
Email: sakiusa.tuisolia@gggi.org
Mr. Jisu Min Green Finance and Regional Program Development Specialist, Green Growth Planning & Implementation, GGGI Headquarters
Email: jisu.min@gggi.org