A. BACKGROUND OF THE PROJECT AND THE ASSIGNMENT

Mongolia has received a credit from the International Development Association (IDA) for implementation of the Strengthening Fiscal and Financial Stability (SFFS) project. The Financial Regulatory Commission (FRC) is a beneficiary of the Project and is implementing activities under sub-component #C4. The main objective of the Sub-component is strengthening the institutional capacity of the FRC. 

The United Nations Conference on Sustainable Development, held in Rio de Janeiro in 2012 and The Future We Want declaration on sustainable development and a green economy was adopted. The Declaration recognised the green economy as a vehicle for achieving sustainable development and poverty eradication. 

The FRC is a parliamentary agency and regulates Mongolia’s non-bank financial sector to ensure financial markets function effectively. As a non-bank financial regulator, FRC aims to contribute to a sustainable, and low carbon, economy; through building a sustainable financial market. 

The Green Taxonomy Document joint order, was approved by the Governor of the Bank of Mongolia, the Chairman of the FRC, the Minister of Finance and the Executive Director of the Deposit Insurance Corporation, within the framework of the international principles of a green economy and the goal of developing a green economy in Mongolia. The Green Taxonomy Committee was established in 2019 to provide clarity on which activities could be considered eligible for green investment. Mongolia conducted two extensive consultations with banks and industries to develop the Taxonomy. The Taxonomy’s target users include (primarily) banks, but also capital market participants. The Taxonomy focuses on four environmental objectives: climate change mitigation and adaptation, pollution prevention, resource conservation and livehood improvement. 

The Commission signed (15 May, 2020) a Memorandum of Understanding (MoU) with the International Finance Corporation (IFC) to develop the market for green finance, and reinforce implementation of the sustainable finance framework in Mongolia. Within the project, the Commission and IFC have been working to develop and launch relevant guidelines and policies; including design of green financing instruments (such as green bonds), improvement of the capacity of key stakeholders, development and launch of specific policies and guidelines (to promote application of environmental, social and governance requirements within non-bank financial institutions’ - and stock market’s operations), and measurement and assessment of climate-related risks in the financial system (along with development of necessary tools and preparation of policy recommendations). 

Within this work framework, the FRC has launched a new program Improving financial inclusion in Mongolia. Expansion of financial access, and measures to introduce a green financing system in financial institutions are included in the Program. The Program was addressed at a regular meeting of the Financial Stability Commission of Mongolia and approved in 2021 by a joint decree of the Governor of the Bank of Mongolia, the Chairman of the FRC, the Minister of Finance, and the Executive Director of the Deposit Insurance Corporation. The regulatory system will be improved as a result of the introduction of this program, and advanced-technology products and services will be available in the market. Furthermore, the range of financial products and services will be expanded, the costs of services will be reduced, and the financial literacy of citizens will be improved.

The FRC is mandated to supervise and regulate six non-bank financial sectors; including: non-bank financial institutions, insurance companies and intermediaries, securities firms, saving and credit cooperatives, real estate brokers, and dealers in precious metals and stones. Currently there are approximately 6,000 legal entities licensed by the FRC in these six sectors. In 2021, the Alliance for Financial Inclusion (AFI) surveyed more than 300 NBFIs and SCCs operating in the financial market in Mongolia, and concluded that these institutions were ready to introduce green finance into their operations. 

Based on the above, the FRC is seeking to hire an experienced international consultant to:

• conduct baseline studies on how to introduce, regulate and inspect green products and services in the six regulated sectors (capital market, insurance market, savings and credit cooperatives, NBFIs, real estate brokers and dealers of precious metals and stones);
• complete a study on the preparation of a policy document for the development of the green financial market, within the framework of the green growth concept, and;
• provide related recommendation.

B. OBJECTIVE OF THE ASSIGNMENT 

The main objective of this assignment is to provide support to the Market Research and Development Department of the FRC, conduct baseline studies on how to introduce, regulate and inspect green products and services in the six regulated sectors (capital market, insurance market, savings and credit cooperatives, NBFIs, real estate brokers and dealers of precious metals and stones); complete a study on the preparation of a policy document for the development of the green financial market, within the framework of the green growth concept, and provide related recommendation.

C. SCOPE OF THE WORK 

The tasks of the Consultant include, but are not limited to, the following:

1. Inception report along with a Contract Implementation Plan; 
2. Hold meetings and lead discussions with the FRC and stakeholders; 
3. Conduct a review of international best practices on green financial products and services in each regulated sector (capital market, insurance market, savings and credit cooperatives, NBFIs, real estate brokers and dealers of precious metals and stones) and their regulation and regulated bodies’ functions within the framework of the green growth concept.
4. Conduct feasibility study on introducing international experiences and introducing regulation in Mongolia.
5. Identify green products and services in the financial and non-financial sectors, and set determine related criteria.
6. Study the inspection and regulation of green products and services within the six regulated sectors;
7. Draft and present a progress report covering the study results, incorporating feedback from the FRC.
8. Perform other tasks as reasonably requested by the FRC.

D. DELIVERABLES

The Consultant shall prepare and present the following deliverables to the FRC.

1. Inception report along with a Contract Implementation Plan;
   
2. Recommendations based on a review of international best practices in green financial products and services in each regulated sector;  
3. Recommendation on introducing international experience and making regulation in Mongolia;
4. Guidelines for identifying green financial products and services of financial and non-bank financial sectors and setting their eligibility criteria; 
5. Final report.

E. CONSULTANT’S QUALIFICATIONS/ SELECTION CRITERIA

The Consultant shall satisfy the following requirements and skills:

Education: The Consultant should have a postgraduate or higher degree in finance and economics, and/or management. Knowledge of regulation of formal financial market products and services will be an asset. 

Experience: The Consultant should have at least ten years’ work experience - with related international projects - and knowledge of methods and techniques required for drafting policy documents and legislation. A track record of working in similar projects for improving financial market regulation. Candidates specialized in legislation related to the non-bank financial institutions will be preferred. Previous experience in similar consultancy works/projects for financial product development in green finance/concept working with partnership of government or government agencies will be an advantage.

Language skills: The Consultant shall be fluent in English.

Other skills: 

• Ability to draft regulations, reports, and guidelines; 
• Advanced analytical skills and research ability;
• Well-organized and able to work independently; 
• Ability to advise others, and work collaboratively within a team environment; 
• Proficient in PC-based applications and data management, with excellent web research and navigation skills; 
• Ethical (confidentiality of information, governance and privacy).

F. SUPERVISION AND REPORTING 

The Consultant will report directly to the Director of the International Cooperation Department of the FRC; and work under direct day-to-day supervision of the Director of the Market Research and Development Department. A Contract Implementation Plan including a concise description of activities, and timelines shall be prepared by the Consultant within three working days of commencement of the consultancy service. 

The Market Research and Development Department and PIU (SFFS) shall evaluate the consultant’s performance based on outputs; and approve invoices for delivered outputs. All reports shall be prepared in English (in electronic and hard format) which shall be submitted to the FRC and the PIU (SFFS). 

The Consultant will also deliver other written outputs consistent with the Scope of work, as reasonably requested by the management of the FRC.

G. CONTRACT DURATION 

The duration of the consultancy 21 working days and will commence in July 2022. Upon signing the contract, the Consultant will start provision of services and will complete their duties within the period specified in the contract. In accordance with the agreement between the parties, the work specified in the terms of reference shall be completed and presented to the Client. 

Payments will be released upon satisfactory completion of all deliverables according to the following schedule: 

• Deliverables 1-3: 50% of the total contract amount;  
• Deliverables 4-5: 50% of the total contract amount.  

The FRC will provide office space (work desk, meeting room, etc.) and assign a coordinator to work with the Consultant to facilitate their work at the Commission (meetings, visits and other communications personnel, and stakeholders, etc.). The FRC's Market Research and Development Department will provide management and organizational support for the day-to-day work of the Consultant. 

H. INSTITUTIONAL ARRANGEMENTS

The Commission will provide office space (work desk, meeting room, etc.) and assign a coordinator to work with the Consultant to facilitate their work at the Commission. The Commission's Market Research and Development Department will provide management and organizational support for the day-to-day work of the Consultant. 

70120582