Recently, the concept of "green credit" is gradually becoming popular and receiving much attention from people, businesses and banks.
At the same time, the State Bank of Vietnam (SBV) has also implemented many solutions to facilitate credit institutions to increase lending for green projects, contributing to the effective implementation of the national strategy on green growth.
However, in the process of green lending, banks also encounter many difficulties due to the lack of a complete legal framework and a set of green criteria for specific assessment.
Green credit ratio is still modest
According to data from the State Bank of Vietnam, as of June 2023, outstanding green credit balance reached nearly VND 528,300 billion, accounting for about 4.2% of total outstanding debt of the entire economy.
At the seminar “Green Credit: Gold Mine for Sustainable Development of Banks” on the morning of October 2, Mr. Nguyen Van Nguyen - Deputy Head of Internal Control Department of the State Bank of Vietnam, Ho Chi Minh City Branch said that Vietnam is in the early stages of growth and development of green credit, so awareness and action are not as expected.
Mr. Nguyen said that the above figure is reasonable with reality but the annual growth is steady, higher than the general growth rate of the economy.
Regarding the legal corridor, Mr. Nguyen said that the State Bank has issued many documents, for example, it has advised the issuance of Decision 1604 on approving the green development project in Vietnam, as well as Decision 986 approving the development of the banking industry from 2025-2030, which also has contents related to green growth.
Mr. Nguyen Van Nguyen - Deputy Head of Internal Control Department, State Bank of Vietnam, Ho Chi Minh City branch.
Most recently, the State Bank of Vietnam continued to issue Decision 1408 on the green credit development banking plan for the 2021-2030 period. This shows that the banking industry is very interested in this area because it is a trend that not only the world but everyone must pay attention to.
From an economic expert's perspective, Dr. Nguyen Huu Huan - Lecturer at Ho Chi Minh City University of Economics said that the concept of green credit is still quite new in Vietnam. Previously, Vietnam's economy focused on growth rather than sustainable growth, or "brown" economy - which is often seen in developing countries.
However, nowadays, sustainable development has become an urgent need in countries, even developing countries. China has recently changed its economic structure towards greening, because people see it as an urgent need, as well as seeing the high price to pay for the "brown" economy - that is an unsustainable future.
"Therefore, in recent years, green economy, green growth, and green credit have received more attention in many countries, including Vietnam. The ratio of green credit to the total credit structure in Vietnam is still modest, but I believe it will increase in the future," said Mr. Huan.
In the context that environmental, social and governance (ESG) standards are gradually becoming important criteria in lending and investment decisions of international financial institutions, Mr. Huan realized that green credit and ESG are inevitable trends, and gradually, companies will have to report on ESG.
Therefore, the need for capital for businesses to restructure sustainably and be responsible to the environment and society is an urgent need in the coming time.
Dr. Nguyen Huu Huan - Lecturer at Ho Chi Minh City University of Economics.
Mr. Huan believes that when banks provide capital for businesses to shift towards green and sustainable development, it will bring economic benefits to the business. For businesses exporting to demanding markets such as Europe and the US, products must have green and sustainable elements.
In recent times, Vietnamese garments have encountered some problems in export due to slow model transformation. While Bangladesh has transformed and taken advantage of opportunities abroad, many Vietnamese enterprises have not paid attention.
"That is a lesson for Vietnam, it needs to transform, green, meet the needs and strict standards in importing countries. The fact that banks support this transformation process will create momentum for businesses in the coming time, promoting Vietnam's export strategy," said Mr. Huan.
Developing the carbon credit trading market
From the perspective of private banks, Mr. Tran Hoai Phuong - Director of Corporate Banking of HDBank said that to access green credit, banks and businesses must meet in terms of taste and risk.
When granting green credit, environmental and social risks will be assessed. HDBank has standards consulted by the State Bank and foreign institutions. HDBank tries to promote and advise businesses. However, some businesses say they do not need to follow the bank's recommendations.
Ms. Van Thanh Khanh Linh - Deputy General Director of BVBank said that to go green, there needs to be coordination from 3 sides: the State Bank, banks and businesses. "The current trend is that green awareness has been ignited most in the young business sector and I hope to do it," Ms. Linh said.
Ms. Van Thanh Khanh Linh - Deputy General Director of BVBank.
Regarding solutions to promote green credit, Dr. Nguyen Huu Huan said that we cannot rely solely on the State Bank and the Government, but need other parties to participate, especially capital from socialization.
He also gave an example of green bonds, which are currently quite new in Vietnam, but in the coming time, solutions are needed to promote this market to attract capital from both domestic residents and foreign investors, thereby becoming a medium- and long-term source of capital for green investment projects.
Green credit and green finance products in Vietnam are quite primitive and new. Currently, many foreign organizations and investment funds are interested in the Vietnamese market. The expert believes that our country should take advantage of their knowledge and experience to deploy products in Vietnam, especially green bonds and derivative products from green bonds. Furthermore, in the coming time, the carbon credit trading market should be developed, which is expected to be extremely vibrant.
To do this, Mr. Huan said, many parties need to participate and research. Currently, the Government has assigned ministries and branches to consider building this market. Banks need to research this market to have a strategy for the coming time, how to invest, how to support the purchase and sale of carbon credits appropriately, thereby helping to promote green credit and green development .
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