The Vietnamese government has approved a National Green Growth Strategy for 2011-2030, with a vision to 2050. This strategy focuses on three key tasks: reducing greenhouse gas emissions, promoting clean and renewable energy, and greening production and lifestyles for sustainable consumption.
Achieving net-zero emissions by 2020 is crucial, requiring substantial investment. According to the World Bank (WB), Vietnam needs to invest an average of 6.8% of its GDP annually, equivalent to $368 billion, by 2040.
At the International Green Capital Market Conference - Promoting Sustainable Development and Inclusive Finance in Vietnam on 5/9, Nguyen Quoc Hung, General Secretary of the Vietnam Banks Association (VNBA), noted that green credit accounts for less than 4.5% of total outstanding loans. Over the past 5 years, total green bond issuance reached only $1.16 billion, a small fraction of the approximately $20 billion needed annually for green projects.
Vo Hoang Hai, Deputy General Director of Nam A Bank, acknowledged the challenges of green lending, citing stringent conditions and standards from international financial institutions like the IFC, ADB, and European institutions.
Besides adopting these frameworks, domestic banks must adapt them to the local context and train staff to assess the environmental and social impact of each project. They must also monitor whether businesses fulfill their commitments after receiving funding.
"Green credit doesn't mean avoiding sectors with negative environmental impacts. Instead, it can help businesses restructure and improve techniques to mitigate those risks," the Nam A Bank executive added.
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Experts share insights at the International Green Capital Market Conference. Photo: Organizing Committee |
Experts share insights at the International Green Capital Market Conference. Photo: Organizing Committee
Le Thanh Tam, General Director of IDG Vietnam, expressed his admiration for the banking sector's specific policies implemented over the past decade. The interest from international organizations like the WB and IFC underscores Vietnam's market potential.
He emphasized the importance of businesses' capabilities, including management, networking, and a "green" mindset. This awareness, from top management to every employee, should be reflected in even small actions like turning off lights and adjusting air conditioning. Without this commitment, investors may eventually leave.
Do Ngoc Quynh, General Secretary of the Vietnam Bond Market Association (VBMA), highlighted the lack of a "common language," or national standards defining "green," as a major obstacle to unlocking green finance.
Nguyen Hoai Nam, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), agreed, noting the overuse and varied interpretations of "green production." "Businesses want to reduce emissions, but they need specific guidelines for each industry, not general regulations," he said.
According to the VBMA representative, the government's issuance of green classification criteria—the "common language"—will create a unified standard for defining "green." This will make support policies more practical and remove barriers for the domestic capital market. He also stressed the need for industry-specific emission reduction roadmaps to achieve net-zero goals.
Nguyen Huu Huan, an expert at the University of Economics Ho Chi Minh City, believes the establishment of the International Finance Center (IFC) will be crucial for attracting and allocating green capital.
"Without the IFC, banks must seek international investors to raise green capital for small and medium-sized enterprises (SMEs), which is costly and time-consuming. The IFC acts as a hub for green finance projects and portfolios, facilitating access for funds, reducing procedural barriers, and increasing transparency," Huan explained.
The IFC can bring clear standards to the green financial market, from green bonds and carbon credits to ESG-linked loans. The streamlined regulations, such as approving financial center membership within 1-7 days, will encourage international investment in Vietnam.
Quynh Trang
