The Asian Development Bank (ADB) and Gobi Joint Stock Company have signed a US$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 US$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 incentivize the achievement of sustainable performance goals in return for a variable or lower interest rate. ADB says the 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 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,” says ADB director general for private sector operations Suzanne Gaboury. “While women are heavily engaged in Mongolia's livestock sector, they lack income-generating jobs and training. Gobi and ADB share a commitment to make sure that women receive a fair share of financial rewards for their hard work, and are able to play a greater role in the industry’s development.”
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.
ADB will help Gobi to advance gender equity and women’s empowerment in its operations. Key milestones include ensuring that at least half of new operations staff are women; providing training opportunities to female staff; dedicating nearly half of Gobi’s training outreach to women herders; encouraging female herders to join herder groups promoting scalable pasture and herd management; and developing awareness materials on gender-based violence.
“With our partnership with ADB, Gobi JSC will produce more finished goods with value-add, which will increase foreign currency revenue inflow into the country’s economy, as well as create more jobs,” says Gobi JSC chief executive officer Baatarsaikhan Tsagaach.
Gobi is the largest cashmere manufacturer in Mongolia. As a member of the Sustainable Fiber Alliance, Gobi focuses on sustainable value chain practices including sustainable animal husbandry and community management, and procures raw cashmere from Mongolian herders. Gobi is part of Tavan Bogd Group, one of the largest conglomerates in Mongolia and an existing ADB client.