Consulting Services to carry out Due Diligence on Financial Institutions for PNG’s Green Finance Facilities

Date documents can be requested until : 22 September 2025 16:00
Title : Consulting Services to carry out Due Diligence on Financial Institutions for PNG’s Green Finance Facilities
Procurement No. : 100013771
Process : RFP
Description : Global Green Growth Institute in Papua New Guinea seeks to engage the services of a competent “audit” firm to conduct Due Diligence on Financial Institutions for PNG’s Green Finance Facilities.

ELIGIBILITY:
This Request for Proposals (RFP) is only open to audit firms.

ABOUT GGGI:
The Global Green Growth Institute (GGGI) is a treaty-based international, inter-governmental organization dedicated to supporting and promoting strong, inclusive and sustainable economic growth in developing countries and emerging economies. To learn more please visit about GGGI web page.
Since joining GGGI in 2012, Papua New Guinea (PNG) has embarked on a partnership to foster sustainable and inclusive economic growth. GGGI established its presence in PNG in 2018, working closely with the government to integrate climate-resilient green growth (CRGG) strategies and execute green growth projects by mobilizing climate finance and investments
The GGGI PNG main office is strategically positioned within the Climate Change Development Authority (CCDA) of the Government of Papua New Guinea, with additional presence housed within the Bank of Papua New Guinea (BPNG) and seven select provincial governments.
GGGI PNG is currently implementing several national and regional projects supported by bilateral and multilateral donor partners. One of the flagship projects under the GGGI PNG Program is the Inclusive Green Finance Project (IGFP) which has established the Green Finance Center (GFC) with funding from New Zealand and the Agence Française de Développement (AFD). The IGFP is being implemented by GGGI as the delivery partner in collaboration with the BPNG, CCDA and Department of Treasury (DoT). The GFC which is responsible for implementing the IGFP Policy and Roadmap which aims to enhance the financial ecosystem in PNG by integrating green finance principles, creating an enabling environment to mobilize climate finance, and promoting green investments in the country. The GFC office, strategically located within the BPNG, provides a platform for collaboration with financial stakeholders to advance green financing initiatives at both national and sub-national levels.
Through the AFD’s regional initiative, the Greening the Pacific Financial System (GPFS) program, AFD is providing critical support to the Green Finance Centre (GFC) in delivering priority components of Papua New Guinea’s Inclusive Green Finance Policy (IGFP) Roadmap. Under this program, GFC is leading the development and rollout of two key financial instruments: the Green Refinancing Facility (GRF) and the Green Guarantee Facility (GGF). To date, AFD has committed EUR 1.8 million in seed capital to operationalize the GRF.
Beyond financial instruments, AFD is supporting several other GFC-led initiatives. These include the institutional strengthening of GFC through staff recruitment and capacity development, as well as technical assistance for integrating the Green Taxonomy into the lending practices of financial institutions—such as through the development of a Green Catalogue to guide green loan eligibility.
The GPFS program is a five-year regional initiative funded by AFD and implemented by the GGGI. It is dedicated to building climate-resilient financial systems and fostering green finance in Pacific Island Countries (PICs), with the broader aim of accelerating sustainable and climate-aligned investments across the region.

PROJECT OBJECTIVES AND BACKGROUND:
Background
Bank of Papua New Guinea (BPNG) is developing Green Financial Instruments (GFI), a Green Refinancing Facility (GRF) and a Green Guarantee Facility (GGF) under the IGFP Roadmap. The objective of the GFI is to incentivize and scale up the volume of inclusive or green loans in Papua New Guinea, aligning with the country’s Inclusive and Green Taxonomy.
Objective
The GFI will provide additional resources and de-risk the financial sector in Papua New Guinea to develop a robust green portfolio. The GFI will work with every financial institution operating in PNG. However, at its inception, the GFI will work with 3 commercial banks: ANZ, BSP, and Kina Bank, and 2 microfinance banks: MiBank and Women’s Micro Bank Ltd.
A due diligence will be conducted on the five above-mentioned financial institutions operating in PNG to evaluate their ability to absorb and disburse funds for the development of their green finance portfolio.
The aim of due diligence is to confirm the validity and integrity of all financial and accounting documents of the company. The due diligence exercise includes a review of the institution’s documented policies and procedures and numerous interviews with senior management as well as bank staff.
In that respect, a reputable audit firm implemented in Papua New Guinea will be contracted to undertake a due diligence exercise on the five local financial institutions mentioned above.

The five due diligence exercises will be done in two parts:
(i) in September and October 2025 for Kina Bank, MiBank and Women’s Micro Bank
(ii) in November and December 2025 for BSP and ANZ.
Project Summary & Impact
To engage Audit consulting firms to provide expert services in conducting due diligence on financial institutions for the purpose of participating in the GFI.
The project scope involves supporting the establishment and operation of the GFI and enabling the initial capital injection of EUR 1.8 million from AFD into the GRF as a component of the IGFP. The project will be managed by GFC under the guidance of the IGFP Steering Committee in close collaboration with BPNG. The facility will lead to increased volume of green and/or inclusive loans (as determined with reference to PNG’s Inclusive and Green Taxonomy) by participating financial institutions citizens.
Project Context
Summary of IGFP Phase I (2020-2023). The first phase of IGFP project involved the following:
• Establishment and operationalization of the IGFP Steering Committee (chaired by BPNG),
• Establishment and operationalization of the IGFP Technical Working Group (comprised of line ministries, local financial institutions, bilateral/multilateral development agencies, and NGOs)
• Development of the Inclusive and Green Finance Policy (IGF Policy) of PNG, which includes:
o A Diagnostic Report on the State of Inclusive and Green Finance in PNG,
o Inclusive and Green Taxonomy, and,
o IGFP Implementation Roadmap
Establishment and operationalization of the GFC to be responsible for implementing the IGF Policy and all future initiatives related to green finance in Papua New Guinea.
Summary of IGFP Phase II (2024-2027). The second phase of IGFP project involves the following:
• Enhancing the readiness of local financial institutions to apply the taxonomy to their lending operations and receive/utilize funding (e.g., grants and concessional loans) from donors to increase their portfolio of inclusive or green loans, and,
• Developing green loan products aligned with the taxonomy with participating financial institutions.
• Development of GRF and GGF to incentivize and scale up the volume of inclusive or green loans in PNG.
• Establishing a robust and user-friendly Green Catalogue

PROPOSED ACTIVITIES & DETAILED SCOPE OF WORK:
1. Proposed Activities:
The GFI will be implemented in 2025-2026 to incentivize and scale up the volume of inclusive or green loans in PNG. The GFI will work with local financial institutions through the extension of credit lines that will be used by these financial institutions to extend green loans (sub-loans) to targeted MSMEs, individuals and entrepreneurs.
The final selection of the participating financial institutions (FIs) will be based on a due diligence exercise. A due diligence exercise assesses both the institutional and financial performance of a financial institution. The institutional assessment covers financial management, corporate governance, and risk management, and identifies the financial and operating risks faced by the participating financial institution. The financial performance assessment evaluates the likely financial sustainability of the financial institution by analyzing various financial data points. It is a quantitative assessment that determines both the historical and the projected financial performance of the financial institution. The historical financial performance review helps evaluate the financial institution’s track record in (i) delivering sub-loans, (ii) efficiently recovering sub-loans, and (iii) covering all operating and other costs to make a reasonable profit on the invested capital.
The capital adequacy, asset quality, management quality, earnings quality, liquidity and sensitivity (CAMELS) framework is to be used to assess the historical financial performance of the financial institutions. Financial projections help assess whether (i) the proposed credit line is sized appropriately considering the market demand, and (ii) the financial institution has the capacity to absorb the proposed credit line. Finally, the assessment will consider the support (training, capacity building, technical assistance) to be provided to the financial institution.
The management quality assessment is common for both commercial banks and microfinance banks and is completed first; the financial performance is conducted on completion of the management quality assessment.
The due diligence exercise will focus on the following key areas:
• Management, Board, and Staff. Most important element of a due diligence is the assessment on the quality of the management team and staff of the bank. Through interviews and numerous discussions, the audit firm will attempt to gauge the mission, qualifications, and overall attitude of the staff and will seek to understand the financial institution’s current governance structure.
• Financial. The financial analysis includes a thorough review of the bank historical and projected financial position, including earnings potential, operating efficiency, portfolio quality, capital adequacy, and liquidity. A specific issue to be analyzed during the due diligence exercise is the capacity of the financial institution to co-finance its green portfolio and the necessary leverage on the financial institution’s resources to be determined by the Green Refinancing Facility.
• Procedures. The due diligence will review the overall procedures of each financial institution with a special focus on loan approval, monitoring and recovery procedures.
• Market. Through conversations with the senior management team and research and development department (if any), as well as through various third-party sources, the audit firm will evaluate the overall supply and demand for micro-finance services in PNG and will analyze the adequacy between services and products offered by the financial institution and the demand for green products from the market (with a focus on each product and service’ terms and conditions).
• Economic and political. The audit firm will review the relevant regulatory framework and government policy specifically that could affect positively or negatively the performance of the financial institution.
• Risks. The due diligence will review the potential operational, financial, market, and governance risks of each financial institution.

2. Scope of Work:
The Audit Firm will be responsible for conducting a thorough due diligence review of each shortlisted financial institution based on the following components:

1. Institutional and Management Assessment
• Evaluate the organizational structure, governance framework, and internal control systems.
• Assess the capacity, experience, and qualification of key personnel including Board of Directors, Executive Management, Credit Committees, and Risk Officers.
• Review management and staff commitment to sustainable and inclusive lending practices, including capacity to implement green loan products.

2. Financial Performance Analysis
• Perform a historical financial analysis (last 3–5 years) using the CAMELS framework, focusing on:
o Capital Adequacy
o Asset Quality
o Management Quality
o Earnings
o Liquidity
o Sensitivity to Market Risk
• Analyze financial ratios including portfolio at risk, default rate, provisioning level, and potentially income diversification if applicable
• Review financial projections to assess the institution’s capacity to absorb and deploy the proposed credit line and co-finance green loan portfolios.
• Identify the financial institution’s capacity to bear credit risk and leverage concessional resources provided by the Green Guarantee Facility.

3. Credit Operations and Procedures Review
• Assess policies, guidelines, and systems in place for:
o Loan origination and appraisal
o Credit approval and underwriting
o Loan monitoring and portfolio management
o Collection and recovery mechanisms
• Evaluate systems used to track loan performance, especially for MSMEs and potential green borrowers.

4. Product-Market Fit and Demand Assessment
• Assess the alignment between the institution’s existing product offerings and the anticipated demand for green financial products.
• Evaluate readiness and capability to design, price, and deliver green loan products under the GFI framework.
• Identify gaps in current product offerings and areas for capacity building or product innovation.

5. Risk Assessment
• Identify and assess operational, financial, market, environmental, and governance risks specific to each institution.
• Evaluate the institution’s existing risk management framework and its applicability to green lending.

6. Regulatory and Policy Review
• Examine the institution’s compliance with local financial sector regulations, prudential norms, AML/CFT frameworks, and environmental/social risk policies.
• Identify any potential regulatory constraints to the implementation of the GFI.

7. Training and Capacity Needs
• Identify capacity gaps in systems, processes, or personnel related to the management of green financial products.
• Recommend areas for technical assistance, staff training, and institutional support to effectively manage green lending portfolios.

8. Reporting and Deliverables
• Submit an inception report outlining the detailed due diligence methodology and schedule.
• Provide a detailed due diligence report for each financial institution assessed, including:
o Executive summary of findings and risk rating
o Peer comparison and benchmarking
o Detailed institutional and financial analysis
o Recommendations for participation and required capacity-building measures
• Participate in validation meetings with GFC, BPNG, and relevant stakeholders to present findings and discuss next steps.

For more details, please refer to the Terms of Reference (TOR) document attached.

IMPORTANT TIMELINES:
The tender submission deadline is 22 SEPTEMBER, 2025 16:00 HRS KOREAN STANDARD TIME (KST).

If any bidder has any request for clarification on the TOR or any part of the tender documents, GGGI will be happy to clarify if they are received on or before 7 days before the deadline (namely: if the tender submission deadline is 16:00 Sept 22, 2025 KST, then the due date for submission of request for clarification is 16:00 Sept 15, 2025 KST).

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