ADB, Gobi sign sustainability linked loan to support cashmere value chain in Mongolia
The grant will support capacity-building activities on sustainable pasture management, basic pasture ecology, financial literacy, and budget management for at least 200 nomadic herders
The Asian Development Bank (ADB) and the Gobi Joint Stock Company have signed a $30 million sustainability-linked loan to support the cashmere value chain in Mongolia and provide stable incomes and employment to 1,200 herders and 1,300 industry employees. The loan will be used to procure raw cashmere from herders, as well as for cashmere processing activities.
In addition, a $1 million technical assistance grant will be provided to support scalable sustainable pasture and herd management and to run workshops on climate-resilient practices for herder groups in the Khuvsgul and Bayankhongor provinces. Sustainability-linked loans incentivise the achievement of sustainable performance goals in return for a variable or lower interest rate. This loan will target increased direct procurement from herders, emission reduction, and water conservation, as well as training herders in pasture management.
Mongolian herders are severely affected by climate change, which is causing or contributing to increased heatwaves, droughts, dzuds (severe winter conditions), and desertification. Careful management of pasture and ecology is essential to mitigate the effects of overgrazing and improve climate resilience. The reliable income and technical support provided by the Gobi is critical to supporting herders in these endeavours.
“Mongolia contributes nearly half of the global raw cashmere supply, but most of it is exported and only a fraction is processed into final products inside the country. Fostering a sustainable cashmere production industry will help diversify this important industry and boost its contribution to the broader economy,” said Suzanne Gaboury, ADB Director General for Private Sector Operations.
The grant will support capacity-building activities on sustainable pasture management, basic pasture ecology, financial literacy, and budget management for at least 200 nomadic herders, of which at least 80 will be women. It will also fund support for the improvement of pasture ecology and management and seek solutions to help herders reduce herd sizes while maintaining or increasing income.
The grant will support capacity-building activities on