Enterprises face difficulties in green transformation costs
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.
Speaking at the Workshop "Unblocking green credit flows" organized by Lao Dong Newspaper in coordination with the State Bank of Vietnam on the afternoon of April 25, Mr. Vuong Thanh Long - Deputy Head of Capital and currency Business, Vietnam Joint Stock Commercial Bank for Investment and Development (BIDV) - said that businesses, especially SME businesses, are currently facing some major barriers in the green transformation process. In particular, there are high initial investment costs because the ability to access long-term capital with preferential interest rates is still limited.
In that context, Mr. Vuong Thanh Long said that green finance is designed with the orientation of being a tool to support businesses in accessing financial resources to gradually transform the increasingly improved ESG production and business model. In particular, the bank plays a central role in the green financial ecosystem - not only as a direct capital provider, but also as a unit that guides, guides, connects partners and promotes the green transformation journey of businesses.
"As a pioneer in this field, BIDV is proud to be the leading bank in the green finance market in Vietnam. BIDV owns a rich product portfolio - from green loans, green bonds, green deposits to green trade finance - with the scale of outstanding green credit as of December 31, 2024 reaching nearly VND81 trillion, accounting for about 12% of the green credit market share of the entire banking industry" - Mr. Long informed.
BIDV's green credit promotion strategy
Speaking at the workshop, Mr. Vuong Thanh Long said that, 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.
In particular, early focus on green transformation, sponsorship and searching, increasing capital sources to finance green, 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.
Mr. Vuong Thanh Long said that since 2018, BIDV has limited credit granting for fossil energy fields (geothermal power, coal power, etc.), large hydropower projects, and greenhouse gas emission projects. By 2035, BIDV will no longer have outstanding loans for thermal power and coal power projects.
In 2022, BIDV established a Sustainable Finance Project Management Board to research, consult, advise, build and implement sustainable finance at BIDV; ESG risk management in credit activities; and Orientation for BIDV to become a Net-zero Bank in business operations according to green/sustainable standards domestically and internationally.
In 2023, BIDV has completed the establishment of the Steering Committee for the Development and Implementation of Sustainable Development Strategy and Overall ESG Practice to replace the Sustainable Finance Project Management Board. This is an important milestone 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" - Mr. Vuong Thanh Long informed.
BIDV leaders informed that the environmental and 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: BIDV was developed and issued in 2023 with the consultancy of the UK Government and the carbon Trust and was 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.
