Pioneering bank in ESG implementation

NDO - In recent times, the banking industry has been a pioneer in applying ESG (environmental, social and governance) standards. Credit institutions have strengthened the management of environmental and social risks in credit granting activities, with outstanding loans assessed for environmental and social risks reaching VND 3.28 million billion, accounting for more than 22.33% of the total outstanding loans of the economy, up 15.62% compared to the end of 2023.

Speaking at the opening ceremony of the workshop “ESG in the banking industry: Implementing to lead” organized by Dau Tu Newspaper on November 19 in Hanoi, Editor-in-Chief of Dau Tu Newspaper Le Trong Minh affirmed that green finance in Vietnam is becoming increasingly important and the banking industry, as the main source of capital for the economy, can play a pioneering role in promoting comprehensive efforts towards sustainable development.

“By applying policies in credit provision activities, banks play an important role in implementing ESG,” Mr. Le Trong Minh emphasized.

Promoting green credit

According to Investment Newspaper Editor-in-Chief Le Trong Minh, at the COP26 Conference in November 2021, Prime Minister Pham Minh Chinh announced that Vietnam is committed to achieving net zero emissions by 2050. This is a huge challenge but at the same time an opportunity for Vietnam to carry out strong reforms, restructure the economy towards green and sustainable growth, ensuring the implementation of ESG standards (environment-social-governance).

For the Vietnamese banking industry, a sector that plays a vital role in the economy, being a pioneer in implementing ESG will create a great boost for businesses that are customers of the bank in establishing new standards for sustainable development.

Editor-in-Chief of Investment Newspaper Le Trong Minh delivered the opening speech at the workshop.

In fact, ESG implementation in the banking sector has recently made significant progress. Speaking at the workshop, Deputy Governor of the State Bank of Vietnam Dao Minh Tu stated that the increased application of ESG requires credit institutions to implement, comply with and continuously update changes in regulations and policies to demonstrate good responsibility towards the environment and society. On the other hand, practicing ESG standards will help enhance the reputation and brand of credit institutions through the disclosure and transparency of issues related to governance, environment and society.

“The practice of ESG will help credit institutions improve risk management efficiency, thereby improving the quality of operations and profits. At the same time, when applying ESG, credit institutions have the opportunity to expand the market, receive investment capital flows, technical support from international financial institutions, and develop credit products,” Deputy Governor Dao Minh Tu emphasized.

Permanent Deputy Governor of the State Bank Dao Minh Tu.

Citing data from the Workshop, Ms. Ha Thu Giang - Director of the Department of Credit for Economic Sectors (State Bank) added: By September 30, 2024, 50 credit institutions had generated green credit balances with outstanding loans reaching more than VND 665,000 billion, an increase of 7.11% compared to the end of 2023, accounting for more than 4.5% of the total outstanding loans of the whole economy, focusing mainly on renewable energy, clean energy (accounting for more than 43%) and green agriculture (over 30%). Credit institutions have strengthened the management of environmental and social risks in credit granting activities, outstanding credit balance assessed for environmental and social risks reached VND 3.28 million billion, accounting for more than 22.33% of the total outstanding loans of the economy, an increase of 15.62% compared to the end of 2023.

“The above results show that the solutions implemented by the banking industry in recent times have contributed to promoting the process of ESG practice, greening banking operations, promptly meeting the demand for capital to implement green, sustainable projects for the benefit of the community; at the same time, raising awareness as well as the capacity to implement regulations on environmental protection and social responsibility of enterprises using resources from the banking system, thereby adjusting behavior towards practicing ESG standards, greening production and business activities of enterprises, towards the sustainable development goals of the economy”, Ms. Ha Thu Giang affirmed.

Pioneering ESG implementation

Deputy Governor Dao Minh Tu also said that with the orientation and direction of the State Bank, ESG implementation has had clear changes from awareness to action. Commercial banks have proactively integrated environmental and social factors into their development strategies and operating models; perfected their organizational models; managed environmental and social risks in credit granting activities; transformed digitally, improved capacity; proactively cooperated, sought and received support in terms of resources and techniques from international organizations, etc.

Dr. Nguyen Thi Thu Ha - Director of Agribank Staff Training School, Deputy Head of Agribank ESG Steering Committee

The actual experience of implementing ESG at Agribank also proves the above. Sharing at the Workshop, Dr. Nguyen Thi Thu Ha, Director of Agribank Staff Training School, Deputy Head of Agribank ESG Steering Committee (Agribank) said that, with the key role in providing capital and financial services to the agricultural and rural areas, Agribank has been actively implementing policies and guidelines on promoting green banking, with many initiatives, commitments to apply ESG standards and integrate them into Agribank's business strategy, implementing environmental risk management in credit granting activities, organizing many practical activities contributing to greening banking activities, protecting the environment, and supporting the community.

“Green credit is considered an effective financial solution to solve environmental and social problems. However, it can be affirmed that ESG is not just green credit, banks need to synchronously deploy all three ESG pillars to achieve the goal of comprehensive sustainable development,” Ms. Nguyen Thi Thu Ha stated.

Ms. Nguyen Thi Tuyet Hanh, Director of International Project Management Board (SHB Bank).

Sharing the same view, Ms. Nguyen Thi Tuyet Hanh, Director of International Project Management Board (SHB Bank) also said that, as a capital channel for the economy, SHB always directs credit capital to industries, businesses, green economic development projects, and environmental protection. Currently, the proportion of outstanding credit for the green sector of SHB accounts for nearly 10% of total outstanding loans.

In addition, SHB applies transparent and responsible corporate governance measures according to best standards and practices to ensure sustainability in all bank operations.

The greening process is also strongly implemented in all internal activities of the bank. Accordingly, SHB has been implementing measures to reduce energy and resource consumption at branches and transaction offices such as using renewable energy, saving electricity, water and minimizing waste, digitizing internal processes to reduce carbon emissions and increase work efficiency.

At the same time, SHB continuously implements training and communication chains to raise employees' awareness of environmental protection, applying the 5S rule to maintain a civilized and clean working environment, prioritizing the use of recycled and environmentally friendly materials in daily business activities...

At the workshop, many delegates also said that, in addition to the efforts of the banking industry in promoting ESG practices, directing credit capital to finance environmentally friendly projects, expanding and unblocking credit capital for green sectors requires coordination and combination from many ministries, branches and related units. Specifically, it is necessary to build a database system on the environment and society of investment projects in an updated and easily accessible manner, as a basis for credit institutions to look up information to assess the environment and society.

Director of the Department of Credit for Economic Sectors (State Bank) Ha Thu Giang presented a paper at the workshop.

Representing the State Bank, Ms. Ha Thu Giang also recommended supporting training and capacity building for businesses in implementing ESG, gradually approaching international standards. Building a roadmap for implementing policy mechanisms to support green industries (taxes, fees, capital, technology, market, planning, development strategies, etc.) for each industry/sector in a synchronous manner, promoting ESG practices, while attracting and promoting the effectiveness of green credit capital.

At the same time, the Ministry of Natural Resources and Environment shall promptly submit to the Prime Minister a Decision on environmental criteria for investment projects granted green credit and issuing green bonds as a basis for credit institutions to select, appraise, evaluate and monitor when granting green credit.

In fact, the ESG implementation process at some credit institutions still faces many difficulties and challenges, requiring feasible solutions, appropriate steps and especially the attention and support of the Government and ministries and branches to successfully implement ESG...

Source: https://nhandan.vn/ngan-hang-tien-phong-di-dau-trong-thuc-thi-esg-post845745.html