In the context of the trend of sustainable development spreading strongly globally, businesses in Vietnam will increasingly face greater pressure from many sides - including increasingly strict legal regulations of the State, strict requirements from international investors (in contributing capital or lending), and from customers and partners in the value chain ( Suppliers, distributors, buyers) on environmental and social responsibility.
Green transformation meets the above environmental and social responsibility requirements, businesses, especially SME businesses, are currently facing some major barriers, including high initial investment costs due to limited access to long-term capital with preferential interest rates.
In this context, the green finance is designed with the orientation as a tool to support businesses to access financial resources to gradually change the ESG production and business model. In particular, the bank plays a central role in the green financial ecosystem - not only a direct capital supplier, but also a guide, guiding, connecting partners and promoting the green conversion journey of the business. With the pioneering role in this field, BIDV is proud to be the leading bank in the Green Financial Market in Vietnam, owning a rich product portfolio - from green loans, green bonds, green deposits to green trade sponsorship - with the scale of green credit balance as of 31.12.2024 reaching nearly 81 trillion VND, accounting for about 12% of the green credit market share of the banking industry.
We would like to share: BIDV's ESG strategy, focusing on the sustainable financial solutions that BIDV has been implementing to support businesses in accessing sustainable capital, thereby aiming for the national's sustainable development goals.
BIDV's green credit promotion strategy
Recognizing the role and significance of green growth, right from the time of developing a business strategy for the period 2021-2025 with a vision to 2030, BIDV has established the goal of "creating sustainable value" as a consistent goal in the bank's operations, focusing on green transformation, financing and seeking, increasing capital sources to finance green and sustainable projects in building an overall green strategy for BIDV. By 2030, BIDV will continue to promote green finance, while converting its operations to become a green bank.
Since 2018, BIDV has restricted credit in the fields of fossil energy (thermal power, coal power ...), large hydroelectric projects, and greenhouse emissions projects. By 2035, BIDV will have no outstanding loans for thermoelectric and coal projects. In 2022, BIDV established a sustainable financial project management board for (i) to study, consult, advise, build and deploy sustainable finance at BIDV; (ii) ESG risk management in credit activities; and (iii) BIDV orientation to become Net-Zero Bank in business activities according to domestic and international green and international standards. In 2023, BIDV strengthened the establishment of the Steering Committee to develop and implement the sustainable development strategy and practice the overall ESG to replace the sustainable Financial PMU. This is an important mark and affirms the determination of the entire BIDV system in practicing ESG.
We have built green financial frameworks in all areas of operation to ensure the organization, operation and governance of banks in accordance with the set sustainable development strategy, specifically including:
Environmental - social risk management framework applied to international loan sources (ESMS) in 2019: BIDV is the first bank to issue an ESMS Framework in Vietnam to ensure compliance with green criteria in the lending process and post- lending management, built with the consultancy of the Asian Development Bank (ADB). The ESMS framework applies to loans from ADB's entrusted capital as a basis for BIDV to manage environmental and social risks for credit granting activities from other commercial capital sources, as well as continue to research and perfect the application for all credit granting activities of BIDV.
Sustainable loan framework: developed and issued by BIDV in 2023 with the consultancy of the UK Government and the carbon Trust and rated by Moody's at SQS2 (very good - very good). BIDV is the first bank to issue a Sustainable Loan Framework, as a basis for classifying sustainable projects with conventional commercial projects, thereby helping the bank build specific policies and promote sustainable credit granting activities for customers.
Green bond and sustainable bond framework: In 2023 and 2024, with the technical support of the World Bank, BIDV has completed and issued a Green and Sustainable Bond framework according to the principles/instructions of the International Capital Market Association (ICMA) to mobilize capital for NH's ESG financing activities. Both ESG bond frameworks of BIDV are highly appreciated by Moody's Credit Rating Organization for their compliance with international principles as well as management measures and capital use reporting with the SQS2 score (very good - very good).
Following the issued financial frameworks, BIDV has also implemented sustainable financial solutions to advise, guide, and support businesses in implementing projects that meet green criteria, thereby contributing to promoting the development of the sustainable financial market in Vietnam.
Practical implementation of sustainable financial solutions at BIDV
First of all, BIDV has built a rich portfolio of green finance products, suitable for the actual needs of businesses. We build and provide preferential loans for green projects that meet sustainability criteria, including green credit, sustainable linkage loans (SLL) with interest rates associated with specific ESG KPI targets, as well as ESG bond issuance consulting services.
Specifically, BIDV will deploy credit packages with technical assistance services and incentive policies to address the practical difficulties that many businesses face in meeting ESG criteria. We combine capital provision with in-depth technical consulting, helping businesses prepare sustainability reports, inventory greenhouse gas emissions and complete green certificates. BIDV's preferential credit policies and packages are also applied to key industries that need green transformation such as textiles, green works, and clean water, with a scale of up to about 20,000 billion VND. We also reduce service fees for transactions applying environmental and social risk assessments.
In addition, BIDV has cooperated closely with international financial institutions such as ADB, AFD and many other partners to implement preferential loan programs. At the same time, we provide comprehensive consulting services to help businesses access international funding sources and implement sustainable financial strategies, thereby creating favorable conditions for businesses to participate in international financial markets.
In addition, BIDV actively connects businesses with the ESG service ecosystem through a network of reputable partners. We provide a list of international standard ESG consulting and auditing partners, supporting connections with ESG confirmation and rating service providers; at the same time, proactively building a platform to connect businesses and experts in the ESG field, helping businesses prepare to participate in sustainable financial opportunities.
Along with that, BIDV provides consulting and support services with full information on green finance and ESG. We organize in-depth seminars, provide updated documents on policies, regulations and market trends, and guide businesses to build green transformation roadmaps, assess ESG risks and prepare green loan applications, helping businesses prepare to participate in sustainable financial opportunities.
Finally, BIDV also cooperates with technology partners to deploy green and digital technology solutions in ESG management for corporate customers. We support businesses in accessing green technologies to reduce carbon and optimize energy and resources. In addition, we connect businesses with ESG measurement and reporting platforms, including ESG data tracking tools and greenhouse gas inventories, supporting businesses to report sustainable development effectively.
All of the above solutions aim to build a comprehensive ecosystem that fully meets all needs of businesses in the green transformation journey, from access to information, raising thinking, awareness, to grasping standards, criteria, conditions, solutions on technology, digitalization, measurement, ESG reporting, etc., including an important step of successfully accessing preferential green financial products and packages.
With a clear strategic orientation and a system of practical solutions being implemented synchronously, BIDV identifies green finance as both a development goal and a method to realize its commitment to accompany businesses in the green transformation journey.
Effective use of green financial instruments not only helps businesses save costs, but also increases awareness and good practices, meeting ESG requirements, thereby enhancing the capacity to expand international cooperation and competition opportunities.
In the coming time, BIDV is committed to continuing to expand its portfolio of green/sustainable financial products to serve customers, while promoting the integration of ESG elements in all banking activities. We will continue to accompany and support businesses in accessing appropriate financial resources, improving their implementation capacity and working towards the goal of sustainable, inclusive and prosperous development.
