Strengthening the Financial Sector's Capacity to Support Green Growth and Decent Jobs in Iraq

ERBIL (ILO News) – As part of broader efforts to promote a just transition to a green economy and expand decent work opportunities in Iraq, the International Labour Organization (ILO), with funding from Italy through the Italian Agency for Development Cooperation (AICS) and in collaboration with the International Training Centre of the ILO (ITCILO) and the Central Bank of Iraq (CBI), conducted a five-day training workshop in Erbil from 11 to 15 May 2025. Under the title “Making Green Microfinance Work: Managing Product Diversification,” the training aimed to equip financial institutions with the skills and tools needed to design green financial products that serve sustainable small and medium-sized enterprises (SMEs) across the country.

The training is part of the ILO’s flagship project “Towards More and Better Employment through Enhanced Support to Private Sectors in Southern Iraq – With a Focus on Green Business,” and it is a part of Team Europe Initiative for Iraq “TAUFIQ initiative” and represents a critical step toward advancing Iraq’s transition to a green economy and strengthening inclusive financial systems.

The training was designed to empower Iraq’s financial institutions with the expertise needed to develop and diversify financial products that support green businesses. Participants from the Central Bank of Iraq (CBI), commercial banks, governmental banks, and microfinance institutions (MFIs) gained valuable insights into how they can tailor their financial offerings to meet the unique needs of businesses committed to sustainability. By strengthening this capacity, Iraq’s financial institutions are now better positioned to foster the growth of green enterprises and contribute to long-term economic and environmental sustainability.

Throughout the training, participants explored a range of critical topics, including strategies for new market development, where they examined ways to identify and cultivate new green market segments. Product strategy sessions focused on the creation of green loan products, savings schemes, insurance offerings, and non-financial services designed to support SMEs engaged in sustainable practices. The Training programme also addressed communication and client relationship strategies, as well as methodologies for tracking and evaluating the impact of green finance products.

The training also delved into global and regional green microfinance trends, providing participants with insights into the latest research and developments in the field. Discussions included strategies for product diversification, aligning financial services with Environmental, Social, and Governance (ESG) principles, and creating outreach initiatives that encourage SMEs to adopt green finance solutions. By combining technical knowledge with practical application, the training aimed to build long-term institutional capacity and promote a more sustainable financial ecosystem in Iraq.

In this context, Maha Kattaa, ILO Country Coordinator for Iraq, stated:  “Our partnership with the Central Bank of Iraq, the International Training Centre, and all stakeholders in Iraq represents a strategic step toward building a robust green finance ecosystem. It aligns with Iraq’s green growth strategy, which promotes environmentally responsible practices and the development of sustainable businesses. These efforts also contribute to the creation of decent work by empowering financial institutions to support environmentally and socially oriented small and medium-sized enterprises—fully in line with the ILO’s vision of promoting social justice and decent work for all.”

Dr. Ammar Khalaf, Deputy Governor of the Central Bank of Iraq, affirmed that “the partnership with ILO in this pivotal initiative is fully aligned with Iraq’s vision to modernize its financial sector. By promoting green finance, we are not only supporting business growth but also contributing to Iraq’s environmental and sustainability goals. This partnership equips financial institutions with the necessary tools to build a more sustainable economy, in line with Iraq’s strategy to achieve sustainability under the 2030 Sustainable Development Agenda. These efforts are also consistent with the Environmental, Social, and Governance (ESG) Guidelines issued by the Central Bank in September 2024, which mandate banks to comply with environmental sustainability standards.”

This activity forms a core component of the broader ILO project” project “Towards More and Better Employment through Enhanced Support to Private Sectors in Southern Iraq – With a Focus on Green Business,”. which operates across three interrelated levels, each directly connected to the training initiative. At the macro level, it supports the development of evidence-based policy recommendations for micro, small, and medium-sized enterprises (MSMEs) through an assessment of the business environment using the ILO’s Enabling Environment for Sustainable Enterprises (EESE) tool, which informs policies for green and sustainable enterprise development. At the meso level, the training builds the capacity of banks and microfinance institutions to design green finance products, while also strengthening business intermediary organizations to deliver continuous skills development. At the micro level, the training complements the SIYB and Financial Education programs by enabling youth and small business owners in green sectors to access financial services—supported by the Central Bank of Iraq’s 4 trillion-dinar initiative to provide affordable financing to MSMEs.

Together, these efforts represent a comprehensive approach to advancing green enterprise development in Iraq. By equipping financial institutions with the tools and capacities needed to support environmentally sustainable businesses, the initiative lays a strong foundation for inclusive economic growth and decent job creation. In the next phase, the International Labour Organization, the Central Bank of Iraq, will provide targeted technical support and guidance to participants in order to develop and implement green lending products that address the needs of environmentally impactful small and medium-sized enterprises across the country, while also strengthening financial inclusion and accelerating the transition to a sustainable economy.