Environmentally friendly projects near the Swan Lake Park in Ecopark urban area in Hung Yen province. Vietnam is in need of huge supportive resources to adapt to climate change as well as realise the country's sustainable development goals. (Photo: tinnhanhchungkhoan.vn) Green credits and green bonds have widely flourished in developed countries. Areport by CBI (Climate Bonds Initiative) showed that the total amount of greenbonds issued globally reached 290 billion USD in 2021. The value in 2022 isestimated to reach 450 billion USD and can hit the trillion-dollar mark by2023.
Vietnam is in need of huge supportive resources to adapt to climate change aswell as realise the country's sustainable development goals. After the end ofthe COP26 Conference in Glasgow, the Prime Minister issued the National ActionPlan on Green Growth for the 2021 - 2030 period, the national strategy onclimate change to 2050, and at the same time, introduced an overall roadmap torealise the committed climate goals by creating a legal basis, promoting andsupporting the business community, sectors and localities with a sharedresponsibility to reduce net emissions.
According to Pham Thi Thanh Tung, Deputy Director of the Credit Department ofEconomic Sectors, State Bank of Vietnam, in the 2017-2021 period, Vietnam’soutstanding green credit growth averaged 25% per year. As of June 30, 2022,outstanding loans for green projects reached more than 474 trillion VND,accounting for 4.1% of the total outstanding loans of the whole economy. Thisnumber has increased by 7.08% compared to 2021, focusing mainly on renewableenergy, clean energy (47%) and green agriculture (32%).
However, according to her, there are still some limitations in green creditdevelopment. For example, there is still no regulation on criteria and list ofgreen projects to serve as a basis for credit institutions to determine greencredit for the subsequent period.
The granting of green credit also faces difficulties in monitoring and managingrisks due to the lack of criteria and standards for tools to measureenvironmental impacts. In addition, investing in the green fields, especiallyin the fields of renewable energy and green buildings, often requires a longpayback period and large investments, while the loan capital of creditinstitutions is often short-term capital. This makes it difficult for creditinstitutions to balance capital.
Nguyen Quang Thuan, General Director of FiinRatings said that the issuance ofgreen bonds is now a big trend in the global capital market, estimated to havedoubled in the past three years. Currently, a number of Vietnamese enterpriseshave started participating in international green bond programmes.
Thuan said that Vietnam’s economic growth target is very ambitious, so thedemand for capital in many industries and businesses is very large. The processof green transformation is an opportunity for businesses to access differentsources of capital, for example, through bank credit, bonds and domestic andforeign financial institutions, and especially foreign capital.
Currently, the scale of global sustainable bonds, including green bonds, totalsmore than 3 trillion USD. According to the International Climate CreditOrganisation's targets, by 2025 the annual issuance value will reach about 5trillion VND.
Thuan hopes that Vietnamese businesses can take advantage of about 1% of this,or about 50 billion USD, along with the Government having support mechanisms interms of interest rates, taxes and fees, to participate and realise theircommitment to reduce emissions to zero.
Tung said that this period is also an opportunity for businesses.Enterprises should orient their production and business activities according tothe sustainable development model, and invest in green economic sectors in thetransition of the economy./.
VNA
