This project, led by Global Green Growth Institute (GGGI) and the former Ministry of Natural Resources and Environment (MoNRE)’s Department of Planning and Finance (DPF) as a National Designated Authority (NDA), supports the Stage I accreditation process of two domestic financial institutions namely Banque Pour Le Commerce Exterieur Lao Public (BCEL) and ACLEDA Bank. The two institutions have been nominated as Direct Access Entities (DAEs) in Lao PDR, to access one of the world’s largest climate funds called the Green Climate Fund (GCF). This initiative focused on building the two nominated entities’ capacity to meet GCF accreditation standards for on-lending and blending fiduciary functions for small to medium project sizes of between USD 10-50 million. The project also supported the application submission to the GCF and enhanced the coordination among the NDA, nominated DAEs, and development partners in leveraging climate finance for Lao PDR to meet the ambitions described in the Second Nationally Determined Contribution (NDC).

Lao PDR’s Second NDC sets ambitious climate targets which includes a 60% greenhouse gas (GHG) emission reduction by 2030 and a net-zero emission pathway by 2050. The Government estimated that approximately USD 4 billion will be needed to finance the achievement of Lao PDR’s climate targets stipulated in the Second NDC. Lao PDR has not had GCF accredited entities to channel direct funding and managing large-scale climate investment projects.  This gap hinders Lao PDR’s ability to mobilize the required resources for meeting the NDC targets.  Furthermore, there is limited knowledge within nominated DAEs and the NDA regarding GCF accreditation processes and best practices.  This lack of capacity makes it difficult for Lao PDR to effectively engage with the GCF and secure the necessary funding for its climate action priorities.

The project strengthened Lao PDR’s capacity for direct access to climate finance and facilitated implementation of the updated NDC targets by:

– Supporting the accreditation process of two domestic financial institutions namely BCEL and ACLEDA Bank to meet GCF’s accreditation standards and requirements for on-lending instruments and blending fiduciary functions.

– Strengthening the capacity of the NDA and two nominated DAEs on GCF accreditation, including related knowledge and skills, project development, and pipeline development.

– Developing and disseminating best practices in institutional coordination on the direct access, and pipeline development to strengthen engagement by NDAs, DAEs, and delivery partners with the GCF.

Financial component

This Readiness grant (USD 250,000) addressed Lao PDR’s limited access to climate finance by supporting the Stage I accreditation of two domestic commercial banks as Direct Access Entities (DAEs). This enabled them to better understand the concept of green finance, enhance their internal standards to meet the GCF Standards for on-lending and/or blending fiduciary functions for small to medium size project of between USD 10-50 million.  The project grant covered costs related to international and national expert consultations, capacity building workshops and application preparation for submission by the nominated DAE to the GCF Digital Accreditation Platform (DAP).

Technical component

The grant enhanced technical capabilities of the two nominated DAEs to meet the GCF accreditation standards.  This included providing training on financial management, environmental and social safeguards, gender considerations, and project pipeline development.  It also strengthened the NDA’s oversight capacity and promoted knowledge sharing with other accredited entity in ASEAN on best practices to facilitate networking and build broader understanding on the experiences in accessing to the GCF.

The project aimed to to support the Stage I GCF Direct Access Entity (DAE) accreditation process and to build the capacity of two domestic financial institutions. The goal was to help these institutions  meet and fulfill GCF’s accreditation standards and requirements for on-lending instruments and blending fiduciary functions. Additionally, to strengthen the capacity of NDA and nominated DAEs on GCF accreditation.

Over the 24-months project implementation period, the project has achieved the following key results:

– Strengthening the knowledge of the NDA, Bank of Lao PDR and two nominated DAEs (ACELEDA Bank and BCEL) on the GCF DAE accreditation process. This included building their understanding of requirements for on- lending and/or blending fiduciary functions, specifically targeting small to medium project sizes of between USD 10-50 million.

– Two gap assessments for each nominated DAE were conducted by the project which also helped both selected banks to understand the compliance of their relevant internal and external policies against the GCF DAE accreditation requirements.

– Three capacity building workshops were held to enhance the understanding of both nominated banks’ focal points on the GCF accreditation requirements. They also developed their practical skills on developing GCF project pipeline development and monitoring frameworks to track the impact of climate finance projects.

– Two international learning visits to the Kasikorn Thai Bank (KBank) in Thailand and Vietnam Development Bank (VDB) in Hanoi, Viet Nam to learn about their experiences in the DAE accreditation process and project pipeline preparation after signing an Accredited Master Agreement.

– The BCEL has mainstreamed the work on DAE accreditation as part of their green growth and green finance policy in their upcoming 5-year BCEL Strategic Plan for the Period 2025-2029 in April 2025.

Advancing Lao PDR’s NDC 3.0 and 2050 net-zero emissions

“The project activities and deliverables will support the Government of Lao PDR in achieving the targets to be updated in the upcoming Third Nationally Determined Contributions (NDC 3.0) and net zero emissions by 2050.” – Mr. Sounadeth Soukchaleun, former Deputy Director General, DPF, MoNRE

GGGI is discussing the preparation of a new GCF Readiness Proposal to support the Stage 2 and 3 of the DAE Accreditation with MAE.

Download project reference sheet click: Lao version and English version