Khan Bank: making green finance work in extreme conditions
Country: Mongolia Sector: Local green finance
Khan Bank shows how local financial institutions can help make climate finance work in challenging conditions. As Mongolia’s largest financial institution, and the country’s leading green lender, with nearly 50% of Mongolia’s green loan market, the bank reaches households, SMEs and corporates across both rural and urban areas. This gives it an important role in bringing green finance into the real economy.
Through its partnership with responsAbility, Khan Bank has financed a range of climate-relevant projects, including energy-efficient industrial equipment, greenhouses and energy-efficient building measures. These projects help reduce energy use and CO₂ emissions while improving living conditions and supporting local economic resilience.
Market context: climate finance in extreme conditions
Mongolia is one of the countries most affected by climate change. Over the past 70 years, the country’s average temperature has increased by 2.07°C, contributing to more frequent and severe natural hazards, including harsh winters, droughts, floods, desertification and sandstorms.
At the same time, the capital Ulaanbaatar depends heavily on coal for power and heat. During winter, air pollution can reach levels far above internationally recommended thresholds. This makes energy efficiency, cleaner heating and resilient local infrastructure urgent priorities.
The case is especially relevant because climate finance in Mongolia is not only about reducing emissions. It is also about helping households, businesses and communities adapt to more extreme conditions, reduce reliance on coal-based heating and strengthen local food production.
Climate finance solution
The financed projects show what local climate finance can look like in practice.
Energy-efficient greenhouses help enable year-round vegetable production under extreme weather conditions. This can strengthen food security and reduce reliance on imports.
Energy-efficient building measures help reduce heat losses and lower the need for coal-based heating. In a city such as Ulaanbaatar, this is directly linked to air quality and quality of life.
Energy-efficient industrial equipment can support food and dairy production, which is closely connected to livelihoods in Mongolia’s rural and nomadic communities.
More than capital
The partnership is not only about financing. responsAbility has supported Khan Bank’s green lending journey through workshops, technical assistance, energy-efficiency studies and support from local energy auditors.
This helped the bank institutionalise its green lending vision and build capacity across commercial and risk teams. Khan Bank has also developed an open data platform that gives clients access to information on green technology, equipment suppliers, manufacturers and loan services.
This is an important part of the story. Climate finance can scale when local institutions have the tools, internal capacity and market knowledge to identify and finance viable solutions. In this case, the financial institution is not only a recipient of capital. It becomes a local climate finance catalyst.
Why it matters
Khan Bank shows how climate finance can reach the real economy through local financial institutions. By reaching households, SMEs and corporates, the bank can help make energy efficiency, cleaner heating, green housing and resilient infrastructure more accessible at scale.
The case illustrates why emerging market climate finance is not only about direct infrastructure investments. Local financial institutions can play a central role in translating climate capital into practical solutions that businesses and households can use.
In Mongolia, this means financing solutions that reduce emissions, improve air quality, support food security and help communities adapt to harsher climate conditions. It is a practical example of mitigation, adaptation and resilience coming together through local green finance.
Climate risk is becoming increasingly important for everyone. If we, as the largest bank in Mongolia, don’t take action, then who will?
Erdenedelger Bavlai First Deputy CEO, Khan Bank
Our continued collaboration with Khan Bank reinforces our shared vision of a more sustainable and resilient Mongolian economy. The innovative projects enabled by this partnership make a valuable contribution to CO₂ reduction and to improving living standards in one of the world’s most climate-vulnerable countries.
Quang Duy Bui Deputy Head of Financial Institutions Investments, Climate Finance, responsAbility
Sources and explanations
responsAbility, “Successful Continuation of Partnership with Mongolia’s Largest Bank”, 17 December 2024. Source for: USD 15 million renewed financing facility, Khan Bank as Mongolia’s largest financial institution, Mongolia’s 2.07°C average temperature increase over 70 years, Ulaanbaatar’s reliance on coal-fired power and heat, pollution levels up to 27 times WHO-recommended limits, energy-efficient industrial equipment, energy-efficient greenhouses, energy-efficient building measures, energy savings of 260,152 MWh and CO₂ emissions reduction of 0.25 million tonnes.
World Bank, “Electric power consumption (kWh per capita)”. Source used in the original responsAbility press release for the equivalence of 260,152 MWh of energy saved to the annual consumption of 40,000 average Mongolian households.
US EPA, “Greenhouse Gas Equivalencies Calculator”. Source used in the original responsAbility press release for the equivalence of 0.25 million tonnes of CO₂ emissions reduced to the annual emissions of approximately 54,000 cars.
Khan Bank / responsAbility project documentation. Source for: green lending journey, workshops, technical assistance, energy-efficiency studies, local energy auditors, open data platform, commercial and risk team capacity-building, and any company-specific details not covered by the public responsAbility press release.
CO₂ refers to carbon dioxide, the most commonly referenced greenhouse gas in climate reporting.
MWh means megawatt hour. It is a unit of energy commonly used to measure electricity consumption or energy savings.
Dzud refers to a severe winter event in Mongolia that can cause large-scale livestock losses and serious hardship for herder communities.