Research to Develop Financial Instrument to Promote Sustainable Energy Practices in the Garment Sector in Cambodia

Cambodia’s garment industry is losing its edge compared to countries like Bangladesh, Myanmar, and Viet Nam given its high energy costs as well as recent increase in the monthly minimum wage, lagging infrastructure, productivity, and logistics. There is currently an opportunity for Cambodian factories to use sustainability as a competitive advantage. An increasing number of international brands, to which Cambodian factories supply garments, have set corporate targets to lower the environmental footprint of their supply chains. 

The project provided an opportunity to design a range of technical and financial services for the benefit of garment factories, including the establishment of a financial instrument and facility to enable sustainable energy investments.

Under the mandate, Econoler carried out the following tasks:

• Conducted an ESCO lending market analysis;

• Characterized the energy service provider market;

• Provided a review of recommended finance risk mitigation alternatives and credit facility design options;

• Recommended management criteria for sustainable energy project portfolios;

• Investigated blended finance strategies, instruments, and transaction risk mitigation requirements;

• Provided an analysis of the benefits and drawbacks of the blended financing facility vs green bond mechanism as the transaction model.

The client benefited from Econoler’s worldwide experience in designing financial instruments that are in line with contemporary green financing initiatives and concepts.