Ahead of CBD COP17 in Yerevan, we spoke to Gevorg Machanyan, Chairman of the Management Board and Executive Director at ArmSwissBank, about their two decades of sustainable finance and the growing role of banks in protecting Armenia’s natural capital.
TEXT : Nazareth Seferian Photo : ArmSwissBank
While Armenia’s financial system has had a strong foundation for more than a couple of decades, the banking sector was very different in the early 2000s to what it is today. Customers were much more limited in how they could manage their money or what they could get financed by a bank. Looking at the range of solutions available today, it is easy to forget that loans for renewable energy activities, for example, were not on the radar of most banks back then. But, even in the early 2000s, there were pioneers that stood out from the rest.
“We recognized early that renewable energy was both a national priority and a promising long-term business opportunity. Armenia has limited conventional energy resources but considerable renewable energy potential, so supporting this sector made strategic and economic sense,” says Gevorg Machanyan, Chairman of the Management Board and Executive Director.
But there are always challenges for first movers in a market. Back then, technical expertise was limited, regulation was evolving slowly and there was very little operating history on this topic. ArmSwissBank turned to international financial institutions to develop the necessary capacity to assess the financial, technical, environmental and social dimensions of such projects. “That early experience became part of ArmSwissBank’s identity. Today, green and sustainable finance represents both a strategic business direction and an important element of our corporate responsibility,” the CEO of ArmSwissBank says.
Industrial solar power station financed by ArmSwissBank
In those early years, the Bank’s renewable energy portfolio consisted mainly of small hydropower projects, which constituted the first commercially viable segment. But the company’s approach evolved in line with market demand, technological development and Armenia’s changing energy landscape. Declining technology costs created significant opportunities in solar energy, and ArmSwissBank was quick to explore the business case. “When evaluating new sectors, we consider market demand, technological maturity, environmental impact, regulatory conditions and long-term financial viability. We also assess whether the Bank can help create a new market rather than simply finance an established one,” says Mr. Machanyan, “This approach now guides our work in areas such as energy storage, green buildings, industrial efficiency, sustainable agriculture, water management, circular economy and biodiversity-related finance.”
This same pioneering spirit made ArmSwissBank among the first banks in Armenia to finance a residential building with green certification, even when the market did not yet seem fully prepared for the concept. “Introducing a new environmental standard is never simply a financing exercise. Developers and buyers must understand the practical value behind it,” Gevorg Machanyan recalls the story behind that business decision, “We worked with the client to establish benchmarks and demonstrate that green certification should be viewed as an investment rather than an additional cost. Lower utility expenses, greater comfort, improved building quality and stronger long-term marketability all contribute to its value. Preferential financing conditions provide an additional incentive.”
The lesson for other businesses is that environmentally responsible choices gain traction when customers understand them, can measure the benefits and see that they are financially attractive.
Banks can accelerate this process by combining advice, credible standards and appropriate incentives. Meanwhile, ArmSwissBank is seeing evidence that the market is being positively influenced by the policy favoring construction projects with higher energy-efficiency ratings. “We increasingly incorporate energy performance and environmental characteristics into our financing decisions. We are already seeing greater awareness among developers and more frequent discussion of energy ratings, certification and operating efficiency during the project-design stage,” says Mr. Machanyan.
Eco-shelter supported through ArmSwissBank’s concessional financing in cooperation with FPWC
It is not easy to cite a clear figure in terms of impact. Comprehensive market-wide impact requires consistent, long-term measurement. But there is a clear trendline. When stronger environmental performance is linked to better financing conditions, developers have a tangible incentive to improve their projects. So, ArmSwissBank is clear in its objective – making energy efficiency and responsible use of resources standard considerations in construction finance, not just optional features.
There is also another area in which the Bank is having the double impact of economic acceleration and environmental conservation – modernizing aging industrial equipment. “Sustainable finance should not be limited to highly visible renewable energy projects. Replacing outdated equipment can reduce energy and water consumption, production losses, emissions, and the use of raw materials. For Armenian manufacturers, these investments can simultaneously improve productivity, product quality and international competitiveness. We see considerable potential to expand this segment in cooperation with international financial institutions,” says Gevorg Machanyan.
ArmSwissBank recognizes the importance of partnerships in advancing positive environmental impact. In this context, the Bank collaborates with the Foundation for the Preservation of Wildlife and Cultural Assets (FPWC) on an initiative aimed at promoting sustainable tourism while protecting Armenia’s natural heritage. The cooperation focuses on developing eco-friendly accommodation facilities in the Vayots Dzor region, prioritizing environmentally sustainable structures over conventional concrete construction. As part of this initiative, ArmSwissBank provides concessional financing to support the development of environmentally responsible tourism infrastructure, helping make sustainable investment solutions more accessible and financially viable. The initiative seeks to demonstrate how tourism development and nature conservation can go hand in hand, creating economic opportunities while minimizing environmental impact and preserving local ecosystems. “Our cooperation with FPWC reflects our belief that sustainable development should create economic value while protecting the environment. Through concessional financing and partnerships with specialized environmental organizations, we aim to demonstrate that business development and biodiversity conservation can reinforce each other,” says Gevorg Machanyan. This is, once again, a pioneering approach, this time promoting the idea of patient capital, which is important for biodiversity projects. Financial institutions must increasingly consider how economic activity depends on healthy ecosystems and how financing decisions can contribute to protecting Armenia’s natural capital.
LUYSER residential complex, one of Armenia’s first green buildings, financed by ArmSwissBank
The Bank’s commitment to the environment and biodiversity extends well beyond providing finance. “We believe that environmental responsibility should be reflected in the Bank’s everyday operations and in the personal conduct of our employees,” the CEO of ArmSwissBank explains, “This includes reducing paper consumption, using reusable materials, minimizing waste and encouraging more responsible use of energy and other resources.”
The Bank’s long-term sustainability strategy also focuses on protecting biodiversity. ArmSwissBank and its employees regularly participate directly in tree-planting activities. “Our employees contribute through their direct physical participation. As a team, we organize planting events near schools and within local communities, combining environmental action with awareness building and community engagement,” says Mr. Machanyan. One such significant initiative supported included new forest cover over approximately 150 hectares, implemented together with other Armenian banks, the Central Bank of Armenia and the Union of Banks of Armenia.
This strong commitment to the environment has been accompanied by a consistent investment in institutional development at ArmSwissBank, through long-standing partnerships with international institutions such as the EBRD, which has influenced the Bank’s risk-management standards, lending discipline and internal culture. “Cooperation with international financial institutions has contributed significantly to our institutional development. It has strengthened our approach to project appraisal, environmental and social risk management, monitoring, reporting and transparency,” Mr. Machanyan states, “These principles have become part of our internal culture. We assess projects not only through collateral and repayment capacity, but also through technical quality, environmental impact, governance and long-term resilience.”
ArmSwissBank’s accreditation by the Green Climate Fund (GCF) in Songdo, Republic of Korea (2025)
Their pursuit of higher standards led ArmSwissBank to Green Climate Fund (GCF) accreditation in 2025. This enables the Bank to develop programs and mobilize international climate finance more directly for Armenia. In practical terms, this can provide local businesses with longer-term financing, blended and concessional instruments, and support for preparing innovative projects that the domestic market may not otherwise be able to finance. “Although the GCF is primarily a climate institution, climate resilience and biodiversity are closely interconnected. Sustainable agriculture, water management, ecosystem restoration and nature-based solutions can simultaneously strengthen climate resilience, protect biodiversity and support local livelihoods,” the CEO of ArmSwissBank says, “Looking ahead, we intend to expand our work in energy storage, green buildings, industrial efficiency, sustainable agriculture, water management, circular economy and, increasingly, nature-positive finance.”
Banks have an important role in this process , directing capital toward responsible businesses, developing measurable standards and helping turn environmental priorities into viable investments. But impact is always limited when pioneers remain alone. A real change happens when stakeholders come together to act in unison. “In this sense, hosting CBD COP17 gives Armenia an exceptional opportunity to bring biodiversity into economic and financial decision-making,” Gevorg Machanyan concludes, emphasizing that they have a bigger role to play than simply providing capital,
“We believe banks can also serve as conveners, bringing together businesses, public institutions, communities and civil society organizations around shared environmental goals. Supporting biodiversity therefore means not only directing capital toward nature-positive projects, but also taking practical action and encouraging others to become involved.”