At the workshop "ESG in the banking industry: Implementation to lead" organized by Investment Newspaper, talking to reporters, Mr. Le Hoai An, CFA Founder IFSS, banking operations training and consulting expert, Integrated Financial Solutions Joint Stock Company said: "The lack of a specific set of criteria for classifying and evaluating ESG specifically has limited the implementation of ESG practice standards as a target for businesses".
The transition to green credit and bonds is challenging, largely due to the lack of a clear set of criteria that is the reality in many developing countries.
In Vietnam, the domestic green bond market has only reached about 1 billion USD, while the green credit scale of the banking system has only reached about 500,000 billion VND.
Green loans in Vietnam currently focus mainly on renewable energy projects, instead of being based on international practices, and assessment criteria still depend on individual standards.
According to experts, the global green finance market has only developed since 2012, and ESG has recently become the focus. However, there is still no comprehensive legal framework on ESG in the world.
Mr. Nguyen Ba Hung, Chief Economist of the Asian Development Bank (ADB), stated: "International financial organizations such as ASEAN have regulations on green bonds and sustainable bonds, but the application of ESG criteria will depend on each country."
Measuring ESG criteria in credit granting is a new challenge. "Careful preparation is needed to adapt to regulatory changes, not only in Vietnam but also in the world," Mr. Hung added.
Previously, banks only cared about the financial capacity of borrowers, but the green finance trend has promoted attention to non-financial factors such as ESG.
Without clear standards, each bank can develop its own criteria, leading to inconsistency and misunderstanding for investors. A common green classification standard will help all financial institutions have a common approach and consistent funding decisions, contributing to reducing inadequacies and controversies about the greenness of projects. A set of criteria with specific quantitative criteria will be more meaningful than simply testing or evaluating.
In emerging markets like Vietnam, adding a green classification is urgent. "There is currently a lack of information to assess ESG of businesses," Mr. To Quoc Hung, Country Director of the Association of Certified Public Accountants (ACCA) Vietnam, emphasized.
In developed countries, having a green portfolio is not a top priority because they have available tools and data for assessment. However, in Vietnam, the financial system is heavily dependent on green classification policies from the Government to support banks in identifying and financing projects that meet ESG criteria.
