Green growth and sustainable development continue to be the main development trend in the world against increasingly stressful issues of environmental pollution and climate change. Recognizing the challenges and requirements for socio -economic development in the new context, the Party and the State have set out the views, orientations and goals of environmental protection, sustainable development of the country in accordance with the country's requirements and conditions for each period and strong international commitments of Vietnam on sustainable development, reducing greenhouse gas emissions.
1. Goals and orientations for green growth of Vietnam
Since 2012, the Prime Minister has issued a National Strategy on Green Growth for the period 2011 - 2020 and vision to 2050 (Strategy 2011 - 2020) along with an Action Plan for this period. At the same time, during this period, Vietnam also actively participated in implementing international commitments such as the 2030 agenda for sustainable development at the United Nations Summit 2015; Paris Agreement on Climate Change (2016).
Selective inheritance of the achieved results of the 2011-2020 strategy, the XIII Congress of the Party determines the task of protecting the environment is an important content in the process of developing the country quickly and sustainably in the coming time. The XIII Congress continues to affirm the viewpoint of economic development always associated with environmental protection in every step and each development policy. The document of the XIII Congress also mentioned environmental protection in some specific areas and content, such as protecting the environment in rural areas; encourage private enterprises to participate in environmental protection, fulfill the social responsibility of the enterprise; Promote education to raise awareness, awareness of environmental protection ...
The Party's viewpoints and orientations, Vietnam's international commitments on reducing greenhouse gas emissions and achievements of the 4.0 technology revolution... have been concretized into goals and solutions in the National Strategy and Action Plan on Green Growth for the period 2021 - 2030, with a vision to 2050. Accordingly, the strategy to orient green growth activities in the new period contributes to promoting economic restructuring associated with growth model innovation; achieving economic prosperity, environmental sustainability, social justice; towards a green, carbon-neutral economy, contributing to limiting global temperature increase according to 04 main goals:
(i) Reducing the intensity of greenhouse gas emissions in GDP
(ii) Greening economic sectors
(iii) Greening lifestyle and promoting sustainable consumption
(iv) Greening the transition process on the principle of equality, inclusion, and improving resilience
Strong orientation for the goal of promoting the restructuring of the economy associated with innovation of green growth model focusing on exploitation and economical use, energy efficiency, resources based on science and technology platforms, digital technology application and digital conversion, green infrastructure development, sustainable, building green lifestyle, ensuring the process of green conversion according to the principle of equality, enhancing the entire power, improving the capacity Direction of development by industry and field.
Along with that, the Action Plan has provided a comprehensive picture of resources, creating a basis for effective mobilization to implement socio-economic development goals in harmony with the environment, reduce greenhouse gas emissions, and improve resilience to climate change. In particular, on November 17, 2020, the National Assembly passed the Law on Environmental Protection, creating a legal corridor for implementation, promoting economic tools for green growth such as green credit and green bonds, laying the foundation for the formation and operation of the carbon market in Vietnam.
2. Green credit solutions and policies for the banking industry
Recently, mobilizing financial resources and investment in green growth has received close attention and guidance from the Government and the Prime Minister, achieving many positive results. In addition to public investment capital, in the context of the newly developed green bond market and the developed carbon market, which is forming, the green credit capital of the banking system has been making an important role in promoting activities to bring environmental benefits, develop sustainable production models, contributing to the transformation of green economy and low emissions. Being aware of this, policies and solutions to promote green credit activities have been implemented by the banking industry in a timely manner. Specifically:
Firstly, on the basis of sticking to the goals of the National Assembly, the direction of the Government, the Prime Minister and the macroeconomic and monetary economic developments at home and abroad, the SBV has managed a reasonable credit policy, meeting the credit capital needs for the economy to support economic growth, credit directions into priority areas and economic growth forces under the government's policy, which supports green economy.
Second, the SBV will develop an action plan for the banking sector to implement the National Strategy on Green Growth for the period 2021 - 2030 (Decision No. 1408/QD-NHNN dated July 26, 2023 of the SBV Governor) with 7 groups of tasks and solutions covering all banking sector activities:
(i) Completing credit mechanisms and policies in line with green growth goals
(ii) International cooperation to promote resource mobilization for green growth
(iii) Promoting digital transformation
(iv) Training, fostering, and developing human resources for green transformation requirements
(v) Information and communication work on the activities of the banking sector contributes to green growth
(vi) Research and establish a common forum on green finance of the banking industry
(vii) Promote green shopping in public procurement activities
Third, the SBV reviews, amends and completes legal regulations on credit granting activities of credit institutions (CIs) to customers to create unity, synchronization and compliance with the trend of green growth and sustainable development:
(i) Issue guidelines on credit granting activities of credit institutions and foreign bank branches for customers according to the Law on Credit Institutions (2024) including: lending activities, letter of credit operations, payment packages, financial leasing activities, including adding new regulations on lending activities by electronic means, creating favorable conditions for businesses and people in general in green production and sustainable consumption
(ii) Issue Circular No. 17/2022/TT-NHNN guiding credit institutions to implement environmental risk management in credit granting activities according to the provisions of the Law on Environmental Protection (2020)
Fourthly, supplementing the tasks and solutions on green credit and green banks to promote environmental -friendly project funding, promoting manufacturing, services and green consumption, clean energy and renewable energy, contributing to promoting green growth and sustainable development in the Green Bank Development Project in Vietnam; promptly update additional tasks and solutions to implement the project in the new context (Decision No. 1604/QD-NHNN dated 7.8.2018 and Decision No. 1663/QD-NHNN dated 6.8.2024), at the Banking Development Strategy to 2025 (Decision No. 986/QD-TTg dated August 8) and in the Scheme on restructuring the system of credit institutions associated with bad debt-handling of bad debt period 202 689/QD-TTg dated 8.6.2022 of the Prime Minister). At the same time, the SBV sets up research and promulgating preferential policies, support mechanisms and encourage credit institutions to promote green credit, green banks, manufacturing and consumption industries with low carbon.
Fifth, to specify the orientations and goals for developing green credit, the SBV has issued documents directing credit institutions to increase credit for environmentally friendly production and business projects and plans, environmental and social risk management (Directive No. 03/CT-NHNN dated March 24, 2015); issued documents guiding credit institutions to determine and compile statistics on credit granting activities for 12 green areas, as a basis for credit institutions to implement green credit activities in the context of not having a common green classification list for economic activities.
Sixth, the SBV directs credit institutions to actively implement credit policies to focus capital on green sectors/areas, agricultural production according to linkage models, high-tech application, policy credit programs to support the poor in housing to avoid climate change... In particular, in 2024, the SBV coordinated with the Ministry of Agriculture and Rural Development, 13 Mekong Delta provinces, directing credit institutions to implement the Project "Sustainable development of one million hectares of high-quality and low-emission rice cultivation associated with green growth in the Mekong Delta by 2030" according to Decision 1490/QD-TTg dated November 27, 2024 of the Prime Minister.
In addition, the SBV has also actively participated as a member of many international financial forums to learn from experience, mobilize resources, improve capacity... in promoting green credit and green banking activities for green and sustainable growth goals; at the same time, based on the actual implementation of Vietnam, it has also contributed many initiatives on green banking, gradually enhancing Vietnam's position at international forums and organizations on banking currency, serving the development of the banking industry, in line with the requirements of international integration.
3. Results achieved
The legal framework for green credit granting and green banking practices is gradually being perfected, from documents regulating general credit granting to detailed documents guiding environmental risk management in credit granting activities in accordance with legal regulations and the practical operation of credit institutions, increasing access to bank credit capital for people and businesses serving production and business, including projects and production and business plans with environmental benefits and environmental protection.
Credit institutions have actively implemented tasks and solutions to achieve the goal of green credit, green banks are quite comprehensive, meeting the regulations of the State Bank, the provisions of environmental laws, close to international standards. The credit institutions actively promulgate and integrate the contents of green growth in business development strategies and plans; Diversify resources (Green deposit products, Green bond issuance, access to capital of funds and international financial institutions) for green growth in addition to traditional mobilized capital; proactively research and develop green credit products, modern products and services, new payment means; establish a system and implement environmental and social risk management in credit activities; Strengthen training to improve the capacity of bank officials on ESG issues, green finance, green banks, sustainable development.
By 31.12.2024, credit balance for environmental protection goals reached over 4.28 million billion dong, accounting for over 27.4% of total outstanding loans in the whole economy. In particular, credit balance for the green areas of the banking system has rapid growth in both the number of credit institutions involved in loans, scale and outstanding rate. From only 15 credit institutions involved in green loans in 2017 with the blue loan balance of only 180 trillion, until December 31, 2024, there were 48 credit institutions for loans with green credit balance reaching nearly 680 trillion VND, up 9.5%compared to the end of 2023, focusing mainly on renewable energy industries, clean energy (accounting for more than 41%) and green agriculture (over 29%); The average growth rate of green credit balance reaches more than 21.2%/year in the period of 2017 - 2024, higher than the credit growth rate of the whole economy. Outstanding loans are assessed for environmental and social risks reached 3.6 million billion dong, up more than 26% compared to the end of 2023.
4. Difficulties and problems
In addition to the positive results achieved, the operation of the banking system serving the goal of green growth and responding to climate change still faces some difficulties as follows:
- The National Green Classification List, Green Economic Sub-System with environmental determination and qualitative criteria have not been issued, as a basis for determining and classifying economic activities, causing difficulties for the banking system in implementing and fully compiling credit resources for green growth and environmental protection goals.
- Institutions and policies to support investment in green growth have not been issued synchronously, especially policies to promote the green bond market and the carbon market to create a favorable environment to mobilize, attract and receive resources for green growth. Lack of policy mechanisms to support green transformation (taxes, fees, capital, techniques, markets, planning, development strategies, etc.) of each industry/sector to effectively attract and promote green credit capital and green bonds.
- Mobilizing investment capital for green projects/sectors still faces many difficulties: (i) Mobilizing international resources facing challenges due to the impact of economic and political instability affecting the ability to mobilize capital from abroad; USD interest rates have been maintained at a high level in recent times, exchange rate risks; (ii) Domestic mobilized capital sources face the term difference between the mobilized capital of credit institutions and the payback period of projects.
- The awareness of businesses and investors about the benefits and importance of the green financial market is not uniform, leading to the level of interest of customers in mobilization products and green financial credit products not being high, and the fear of using new banking products/service.
- The information system on customers' compliance with environmental protection is still limited and difficult to access with credit institutions, leading to difficulties in the process of exploiting, collecting and processing information to serve environmental risk assessment, as well as in the process of auditing and monitoring.
- Investing in green projects requires large capital sources and the ability to assess specialized environmental technical factors, so credit institutions will incur additional investment costs to build a governance system in line with the goals of green growth, green transformation of the economy, and improve the capacity of banking staff in green banking and sustainable finance.
5. Orienting the credit policy of the banking industry for green growth goals
In the coming time, on the basis of closely following the goals on socio -economic development, the National Strategy for Green growth and the assigned tasks in the Scheme, Strategy, Action Plan on Green growth, anti -climate change, the Prime Minister's Directive on promoting the implementation of the National Strategy on Green growth, the State Bank continues to deploy the National Banking and Green Banking Groups on the National Banking Plan on the National Bank of Banking and Green Bank. 2021 - 2030 and the Scheme on the tasks and solutions to implement the results of the 26th Conference of the parties participating in the United Nations Framework Convention on Climate Change. The national strategy for green growth, focusing on key solutions:
- Continue to operate monetary policy proactively, flexibly, promptly and effectively, coordinate synchronously, harmoniously and closely with fiscal policy and other macroeconomic policies, contributing to promoting economic growth, stabilizing the macro economy, controlling inflation;
- Continue to review and improve the legal framework on green credit and green banking; support credit institutions in implementing environmental and social risk management policies, increase the mobilization of international resources to finance green projects, including proposing amendments and supplements to mechanisms and preferential credit policies to encourage the development of high-tech agriculture, organic agriculture, and agriculture according to the circular economy model.
- Guiding credit institutions to provide credit for projects with environmental benefits and environmental protection after the National Green List is issued.
- Actively negotiate and seek funding sources from domestic and foreign organizations to receive financial support and technical assistance to implement green finance and green banking activities, especially improving the capacity of banking staff on green banking and credit, climate change.
- Strengthen information and propaganda work in the banking industry to raise awareness and understanding for bank staff and customers about green growth, sustainable production and consumption.
6. Proposals and recommendations
Based on the above practical requirements, to expand, unlock and effectively use green credit capital of the banking system, it requires coordination and cooperation from ministries, branches and competent authorities in perfecting the legal corridor and support mechanisms, creating motivation to mobilize all resources from economic regions, specifically:
- Synchronize investment mechanisms and policies to create a favorable investment environment; develop a roadmap to implement policies and mechanisms to support green sectors (taxes, fees, capital, engineering, markets, to planning, development strategies...) of each sector/sector in a synchronous manner to attract and promote the effectiveness of green credit sources.
- The National Green Classification List will be issued soon; complete the legal framework for green financial instruments such as green bonds, develop markets for exchanging emission rights; complete tax tools for activities with carbon emissions.
- Develop and implement solutions to support credit institutions in accessing and mobilizing financial resources from institutions, finance, funds and international private investors, financial funds to facilitate the provision of long-term credit and preferential interest rates for green sectors/sectors.
