EBRD Supports Sustainable Agriculture Development Through Green Financing In Mongolia

Agriculture remains one of the most important pillars of Mongolia’s economy and society. Across the country, livestock herders, crop growers and greenhouse operators contribute not only to food production but also to the livelihoods of rural communities. In a nation known for its vast landscapes and challenging climate conditions, agriculture plays a critical role in ensuring food security, generating employment and supporting economic stability.

Yet the sector faces growing pressures. Climate change, unpredictable weather patterns, land degradation and productivity challenges are making agricultural operations increasingly difficult. These risks threaten both rural incomes and the long-term sustainability of food production systems. As a result, investments that help farmers and agribusinesses adapt to changing environmental conditions have become increasingly important.

Recognising these challenges, the European Bank for Reconstruction and Development (EBRD) has been working to strengthen Mongolia’s agricultural sector through its Green Economy Financing Facility (GEFF). Supported by funding from the Green Climate Fund (GCF) and the Government of Japan, the initiative is designed to help businesses invest in modern technologies that improve efficiency, reduce environmental impact and build resilience against climate-related risks.

The need for such investment is evident on a global scale. Food systems are responsible for more than 30 percent of worldwide greenhouse gas emissions, yet funding directed toward transforming agricultural systems remains far below what is required. As countries seek ways to improve food security while reducing emissions, sustainable agriculture has become a key area of focus for both policymakers and financial institutions.

In Mongolia, the importance of agriculture is particularly significant. The sector employs approximately 30 percent of the national workforce, making it one of the country’s largest sources of employment. Its influence extends far beyond food production, serving as the economic foundation for many rural regions.

According to EBRD representatives overseeing the GEFF programme in Mongolia, agriculture accounts for more than 85 percent of economic activity in many provinces. This makes sustainable agricultural development essential not only for environmental protection but also for economic resilience and long-term growth.

To address these challenges, the EBRD has adopted a comprehensive approach that supports agricultural businesses across the entire value chain. Rather than focusing solely on primary production, the bank works with companies involved in food processing, storage, logistics and distribution.

The goal is to improve efficiency throughout the agricultural ecosystem while helping businesses become more resilient to climate and environmental risks.A key component of this strategy involves providing financing to companies seeking to modernise their operations. At the same time, the EBRD works closely with local financial institutions to expand access to sustainable lending for small and medium-sized enterprises as well as individual producers.

By combining financing with technical expertise and advisory support, the programme aims to encourage long-term improvements in productivity, competitiveness and environmental performance.One of the most important milestones in this effort has been the introduction of a sustainable agriculture credit line through Khan Bank.

This initiative represents the first agricultural financing facility in Mongolia delivered through a partner financial institution that directly incorporates environmental sustainability considerations into lending decisions.Through this partnership, several rural agribusiness projects have received financing under the ongoing GEFF programme.

The funding has enabled businesses to invest in equipment and infrastructure designed to improve both operational efficiency and environmental performance. Supported technologies have included combine harvesters, tractors, heat pumps, insulation systems and four-season greenhouses. Many of these technologies were selected from the EBRD’s Green Technology Selector, a catalogue of pre-approved solutions that meet established energy-efficiency and environmental standards.

Among the businesses benefiting from the programme is Sansargoo, a greenhouse company that has steadily expanded its operations since its establishment in 2009. Initially focused on greenhouse production, the company has broadened its activities in recent years to include crop cultivation, children’s food production and green infrastructure development.

It also conducts research aimed at identifying vegetable varieties that can successfully grow in Mongolia’s demanding climate conditions.As the business expanded, maintaining a stable and reliable production cycle became increasingly important. One of the company’s key challenges was extending its growing season while managing energy consumption more effectively.

To address these issues, Sansargoo secured financing through the GEFF programme to improve the insulation of its winter greenhouse and upgrade its heating systems.These improvements have helped create a more dependable growing environment, allowing seedlings to be started earlier and ensuring a more reliable supply of raw materials.

The investment has strengthened the company’s operational capacity while reducing energy-related challenges that are common in Mongolia’s extreme climate.Looking ahead, the company plans to continue investing in sustainable technologies. Its future development plans include the construction of a 2,000-square-metre smart greenhouse powered by renewable energy.

The project is expected to increase production capacity significantly while introducing advanced greenhouse technologies that could help modernise the country’s broader agricultural sector.Beyond commercial activities, the company is also contributing to environmental education. Through a school-based initiative known as the “model green programme,” it is promoting awareness around sustainability, food security and waste reduction among younger generations.

Such programmes demonstrate how agricultural innovation can create benefits that extend beyond farm operations and into local communities.The environmental impact of the GEFF-supported projects is already becoming evident. Collectively, the agricultural investments financed under the programme have generated approximately 750 megawatt-hours of annual energy savings.

They have also reduced carbon dioxide emissions by around 238 tonnes each year, an environmental benefit comparable to the annual carbon absorption of more than 10,000 trees.These results highlight the growing role that sustainable finance can play in supporting agricultural transformation. By helping businesses adopt modern technologies and climate-smart practices, programmes such as GEFF are improving productivity while reducing environmental pressures.

They also demonstrate how targeted financial support can help agricultural producers adapt to changing conditions without compromising economic growth.As Mongolia continues to balance economic development with environmental sustainability, investments in climate-resilient agriculture are likely to become increasingly important.

Through initiatives that combine financing, technical expertise and practical solutions, sustainable agriculture is gradually becoming a more achievable goal for farmers and agribusinesses across the country. The experience of Mongolia’s agricultural sector illustrates how strategic investment can strengthen food production systems, support rural communities and contribute to a more resilient and sustainable future.