Voices from Mongolia: Goat Herders and Cashmere Entrepreneurs on Green Loans’ Impact

Voiceover: The sunrise in eastern Mongolia is a fiery orange that spreads over pasturelands so vast, they seem to meet the horizon. The morning dew here twinkles like crystal. And the air is spiced with the scent of wild thyme carried on a barely perceptible breeze.

But at this early hour, you’d be forgiven for not noticing the rugged beauty of this range.

(Goats bleating)

Because it’s the goats here — many, many goats — that demand your attention. Not just this morning. Every morning. Year after year, after year.

(Audio from herder Bolor Arur in the background)

Translator: Our ancestors were herders, and we started raising cashmere goats as children and just like our ancestors, we take care of animals, without any help from outsiders.

Voiceover: That’s Bolor Arur, the herder who owns these goats. His nomadic roots run deep. He and his wife raised their two children here in Khentii Province, moving every few months to find suitable plants and grasses for their livestock. In their early years of herding, they were part of a farming cooperative. But Mongolia transitioned to a market economy in 1990. After that, he owned his own animals and kept the profits.

In contrast to the collectivist days, privatization meant he became solely responsible for building his business—which is supplying raw cashmere from a herd of 200 goats to knitwear companies. With that income, he sent his two children to university.

The peak time for cashmere herders is early spring. That’s when the soft underbellies of Bolor Arur’s goats are combed to harvest fibers prized by clothing manufacturers around the world. Mongolia is the second largest producer of cashmere, with a global market share that is steadily expanding to 40 percent, according to the World Bank.

Bolor Arur is glad that demand is growing. He wants to be able to supply enough cashmere to meet the industry’s demand and continue to support his family.

But he also prioritizes the health of the herd. And the sustainability of the grasslands. And he worries about the impact of climate change, which is already jeopardizing herders’ productivity and livelihoods.  

(Sounds of traffic and noise from Ulaanbaatar)

260 km away, in the bustling, busy capital of Ulaanbaatar, the CEO of Mongolia’s biggest bank—Khan Bank—has been working out solutions to these same problems.  Her name is Munkhtuya Rentsenbat, and she believes sustainable development is a key issue for financial institutions. She’s responsible for policies and financial tools that help motivate Mongolian industries to cut greenhouse gas emissions and confront the climate crisis.

(Audio from Khan Bank CEO, Munkhtuya Rentsenbat, in Mongolian)

Translator: Sustainable development means creating basic principles for economic choices that will allow us to exist sustainable for hundreds of years. It’s important that business models adapt to the social and environmental changes. Khan Bank’s goal is to contribute to and spread awareness about sustainable businesses.

Voiceover: Khan Bank’s clients include Mongolian cashmere companies that source their cashmere from Bolor Arur and other herders. That’s just one of the reasons that Khan Bank, which wants to help the Mongolian economy, and its cashmere clients grow, also wants to prioritize sustainable development. Its solutions, under an umbrella offering of tools known as green finance, are already making a difference to the domestic cashmere industry.

And last year, with IFC’s advisory and investment support, Khan Bank launched the country’s first green bond.

(“Rewind” sound)

Voiceover: Let’s back up a minute. You may be asking, What’s a green bond?

Green bonds are an investment tool issued by banks or governments. They’re like traditional bonds, but the proceeds of green bonds are earmarked for projects that will benefit the environment. How do they do that? The bank packages the bond proceeds as green loans. Then it grants those green loans to bank clients who meet strict criteria for environmentally friendly projects.

Here’s an example. One of Khan Bank’s clients is a local cashmere manufacturing company that sources its cashmere from herders in Khentii Province—including from Bolor Arur.  That company, called Tumen Suljee, wanted to modernize its factory with low-emission equipment, so it can process the cashmere from its herders in a more energy-efficient way—to make less of an impact on the environment.

(Audio of Tuman Suljee LLC CEO, Namkhaijamts Erdenebat in Mongolian)

Translator: As a CEO, as a Mongolian, I worry about climate change. I want to keep this beautiful country as it is. We should all try to be more energy-efficient—because what’s the point of being successful if nature is destroyed in the process?

Voiceover: That’s Namkhaijamts Erdenebat, the head of the cashmere company.

To cut energy consumption and water usage at his cashmere factory, he needed to purchase a machine called a “finisher.” It compresses two sewing and weaving processes into one. Think of whatever you wear to stay warm in winter: gloves, hats, sweaters, robes. The finisher produces these without seams, so they’re comfortable and soft. The new machine saves significant amounts of raw cashmere, leading to less waste.

It also boosts productivity by 90 percent.

(Sounds from the cashmere factory)

But the finisher was $70,000.

So, Khan Bank used the proceeds from its green bond to grant the company a green loan that enabled it to purchase the new machine.

Since the green bond was issued in Mongolia, Khan Bank has already approved scores of green loans to companies with climate-smart solutions for business.

(Sounds of sewing machines and/or washing machines at the cashmere company)

The head of the cashmere company plans to apply for more green loans. And purchase even more energy-efficient equipment, like the finisher. He and his mother, who founded the company, just bought an adjoining plot of land to build a new factory. They can see the fenced-in area, thick with overgrown grass, through their office window. Sometimes they just gaze at it, trying to visualize their future.

They feel like the company is on the cusp of change, and it’s very exciting. But he says there’s something else that deeply satisfies him, too.

(Audio of Tuman Suljee LLC CEO, Namkhaijamts Erdenebat in Mongolian)

Translator: “When I meet with the herders who supply our cashmere, and see them living happily on their land, it makes me feel good. The herders work very hard and are gratified when we pay them for their efforts and I love seeing that look on their faces.  It’s a joyful moment.”

Voiceover: If you enjoyed this episode of IFC Audio Stories, please share it with others. For more on IFC’s work in the area of green finance or to learn more about green bonds in Mongolia, you can visit ifc.org.

This episode was written by Alison Buckholtz and produced by me, Maria Galang. Thank you for listening.