The banking industry is currently playing an essential role in the journey of transforming the “brown” economy into a “green” one. In this trend, Vietcombank continues to demonstrate its role as a leading bank in sustainable development, arranging credit for green projects.
Green finance flows spread globally
At the Vietnam Development Bridge Forum 2024 in April 2024, Deputy Prime Minister Tran Hong Ha affirmed : Green economy is an irreversible task and trend, an inevitable choice that we must transform to preserve the earth.
As the lifeblood of the economy, the banking sector actively supports the economic transition towards green and sustainable growth through mechanisms for mobilizing and providing capital for environmental protection projects.
Vietcombank signs $300 million credit contract with JBIC to support green energy and environmental protection projects in Vietnam
In the world, according to the Paris Agreement on Climate Change in 2015, one of the three agreed goals is "Adjusting financial flows in line with the low-emission and climate-resilient development roadmap". In fact, up to now, a series of countries in the world have deployed green credit, through green banks in other countries or green development funds, targeting two customer groups: individual customers and corporate customers.
In the context of increasing activities with negative impacts on the environment and the difficulties of the post-COVID-19 economy, green credit activities of banks will significantly contribute to changes in investment and business activities of enterprises. These changes will contribute to green economic growth, environmental protection and climate change response.
"Greening" capital flows
According to World Bank estimates, from now until 2040, Vietnam needs to invest an additional 368 billion USD, equivalent to about 6.8% of GDP per year, for its climate change response roadmap and net zero emissions roadmap.
Vietcombank organizes workshop "Green credit trends and orientation for Vietcombank's business activities"
Contributing to the country's major goals, the State Bank of Vietnam (SBV) has issued many directives and policies to "unblock" green capital flows. Despite many difficulties such as the lack of a green classification list, limitations on green bonds, and the lack of a legal framework and policies, the entire financial and banking sector has joined in and made efforts to "green" capital flows.
By December 31, 2023, 47 credit institutions (CIs) had green credit outstanding balances of VND 620,984 billion, up 24% compared to the end of 2022, accounting for about 4.5% of the total outstanding balance of the whole economy. Outstanding balances assessed for environmental and social risks reached VND 2.84 million billion, accounting for more than 20% of the total outstanding loans of the economy, up more than 20% compared to the end of 2022. Banks have continuously launched preferential credit programs for corporate and individual customers borrowing capital to implement green projects such as Agribank, Vietcombank, Sacombank, VPBank, ACB... Although the ratio of green credit to the total credit structure in Vietnam is still modest, many experts predict that this capital flow will continue to increase strongly in the future.
Pioneering green imprint of leading credit institution
At the workshop "Green credit trends and orientation for Vietcombank's business activities" held at the end of March 2024, Ms. Tran Thi Thuy Ngoc, Permanent Deputy General Director of Deloitte Vietnam shared that sustainable development according to environmental, social, and governance (ESG) criteria is a big trend in the world and Vietnam has agreed to join the game. The question will no longer be whether to do it or not, but how to do it and how to manage risks so that the benefits are better than the costs?
"In Vietnam, commercial banks play an extremely important role in this trend, especially state-owned commercial banks and especially Vietcombank," said the Permanent Deputy General Director of Deloitte Vietnam.
As a leading credit institution in Vietnam, Vietcombank identifies growth associated with sustainability, as well as providing credit for green projects as one of the bank's key tasks. For many years, Vietcombank has always played the role of the main capital funding channel for key national projects and spearhead economic sectors such as oil and gas, electricity, aviation, etc. The Bank has been entrusted by the Ministry of Finance to serve over 300 ODA counterpart loan projects with a total value of nearly 30 billion USD, including key projects that are the driving force for the country's socio-economic development, in all fields such as infrastructure, transportation, health, agriculture, etc.
Recently, Vietcombank has focused on expanding green credit for the economy, especially for renewable energy, green agriculture and environmental treatment projects. By the end of the first quarter of 2024, outstanding green credit at Vietcombank continued to increase and reached VND 47,700 billion; reaching 3.7% of the Bank's total outstanding loans. Specifically, capital financing for renewable energy and clean energy projects accounted for 84.1%; sustainable water management in urban and rural areas accounted for 10.4%; waste treatment and pollution prevention and control accounted for 2%; recycling and reuse of resources accounted for 1%.
Regarding programs funded by green capital, in 2023, Vietcombank actively implemented a program to re-lend green projects from loans from the Japan Bank for International Cooperation (JBIC) to finance green and renewable energy projects to protect the environment with a total capital of 300 million USD. This is the second time the two banks have signed a credit contract to finance renewable energy projects after a "handshake" worth 200 million USD in 2019.
In March 2024, Vietcombank and the Vietnam Oil and Gas Group ( PVN) signed a framework contract to arrange credit for the Block B gas project chain. Accordingly, Vietcombank is the focal bank to arrange medium- and long-term credit in foreign currency for PVN's projects based on the value of capital arrangement, interest rates, and competitive loan terms. The implementation of this project ensures energy security, bringing great efficiency to the economy. Previously, Vietcombank actively accompanied the Ministry of Finance through its role as a re-borrower of the Ministry of Finance for the renewable energy development project with World Bank loans and the Industrial Energy Saving project with World Bank loans.
Vietcombank and PVN signed a Framework Contract for Credit Arrangement for Block B Gas Project Chain
2023 is the first year that Vietcombank has entered the Top 20 enterprises with the best sustainable development index (VNSI) in the stock market in 2023. This is a recognition of Vietcombank's continuous efforts in its commitments to join the Vietnamese Government in implementing a sustainable development strategy, promoting transparency, responsibility and creating common values for the community.
In addition to directly devoting resources to green credit, in 2022, Vietcombank Securities Company also successfully advised on the issuance of VND 1,725 billion in green bonds for EVNFinance Power Finance Joint Stock Company. This is the first corporate bond identified as a green bond according to international standards in the Vietnamese market.
In addition to business activities, Vietcombank actively organizes seminars and connection programs to update policies, knowledge and practical experience on green credit trends, thereby helping banks seek business opportunities and solutions in the new trend.
With the orientation to maintain the No. 1 position in Vietnam by 2030, standing in the 200 largest banking and financial groups in the world, 700 largest listed enterprises globally and making great contributions to the sustainable development of Vietnam, Vietcombank aims to be the leader in ESG through the Environmental and Social Management System (ESMS) and the Environmental and Social Risk Management System according to the orientation of sustainable development indicators in Vietnam of the VNSI Standards, gradually moving towards ESG sustainable development goals according to international standards GRI, TCFD.
Source: https://baochinhphu.vn/vietcombank-ngan-hang-tien-phong-dan-von-trong-cuoc-cach-mang-xanh-102240715155603012.htm
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