At the "Enhancing the Effectiveness of Green Credit Capital Flows" workshop on the afternoon of 23/6, Doctor Bui Thanh Minh, Deputy Professional Director of the Private Economic Development Research Board Office (Board IV), highlighted that small and medium-sized enterprises (SMEs) have not effectively accessed green credit.

According to the State Bank of Vietnam, green credit reached a total outstanding loan amount of 828 trillion VND by the end of Q1. While this figure is 4,6 times higher than the outstanding loans in 2017, the first year of implementation, its proportion of the total outstanding loans across the economy is only about 4,3%. Outstanding loans are mainly concentrated in agriculture, forestry, and fisheries, accounting for over 32%, with green energy representing over 30%.

From this data, Doctor Minh pointed out that green capital predominantly flows into large-scale projects with clear models and collateral, meeting banks' appraisal requirements. This capital has not effectively reached SMEs, a sector characterized by small, dispersed, and difficult-to-standardize investments.

Doctor Bui Thanh Minh, Deputy Professional Director of Board IV Office, at the event. Photo: Lao dong

Meanwhile, a representative from Board IV stated that the majority of emissions, energy waste, inefficient resource use, and environmental risks are scattered across hundreds of thousands of small businesses, suppliers, and smaller links within value chains.

"If green financial policies only suit large businesses, the green transition process will lack inclusivity", he noted. In such a scenario, small businesses face a dual risk: difficulty accessing capital for transformation and the potential loss of market share due to an inability to meet increasingly stringent green standards.

In reality, 97-98% of Vietnamese businesses are SMEs, and 80% of them lack a history of credit access. This means they struggle to secure even conventional credit. Green credit, however, comes with specific requirements such as standardizing data, processes, and management models, as well as criteria for defining "what is green". These demands create a dilemma for SMEs: they need capital to transition to green practices, but these very requirements make it hard to get that capital.

At Agribank, green loans totaled 28 trillion VND, with over half concentrated in renewable energy. Nguyen Quang Ngoc, Deputy Head of the Bank Credit Policy Board, identified one of their challenges as balancing capital sources, since green projects typically require long-term, low-interest capital. Additionally, most customers lack complete environmental records, have weak ESG reporting capabilities, often operate on a small scale, and have insufficient collateral.

Collateral is a significant hurdle for many small businesses seeking capital. A Board IV representative cited this as the reason a marine aquaculture business in Quang Ninh could not access green capital, despite its good model. Doctor Minh recommended that the criteria and verification process for green projects for SMEs should be simplified, rather than applying the same requirements as for large enterprises.

Furthermore, Doctor Minh suggested that support policies should shift from "lending green" to "helping businesses qualify for green loans". The State's responsibility as an "enabler" needs clear definition, rather than placing the burden on commercial banks. Banks operate on market principles and profit motives. Board IV recommended that the State use budget resources to subsidize interest rates, enabling businesses to access a 2% interest rate support.

Doctor Minh also emphasized the importance of building a supporting ecosystem. In addition to green transition, this support platform needs to integrate digital transformation. "If there were an intermediate agency to digitize all data related to green transition and connect it with the banking system, capital access would be much more convenient", he said. Businesses would then only need to input information and geographical coordinates to retrieve data on electricity consumption, water usage, emissions, and more, gradually completing the data needed for green credit assessment.

With comprehensive data, banks can confidently make green lending decisions. This reduces capital costs for businesses while creating a mechanism for sharing responsibilities and benefits among all ecosystem stakeholders.

Experts also agreed that the carbon credit market needs to become fully operational. When businesses undergo transformation, generating carbon credits and selling them on the exchange will provide an additional financial source for reinvestment in their operations.

Thuy Truong