Essential environmental financing standards needed to attain zero carbon emissions target
Vietnam Needs Clear Green Finance Criteria to Unlock Capital for Sustainable Growth
HÀ NỘI — As green finance becomes crucial for fostering green growth, Vietnam is urged to establish a set of green finance criteria to channel capital towards sustainable initiatives, experts said at a conference in Hà Nội.
Associate Professor Dr Bùi Hũu Toán, Party Committee Secretary and Chairman of the Banking Academy, highlighted the international context, stating that Vietnam ranks among the leading countries aiming to achieve a net-zero emission target by 2050 and participates in the global cooling initiative with more than 60 other countries. However, transitioning to a green economy is not an easy feat, as achieving the net-zero goal by 2050 requires a massive investment of around US$360 billion, he explained.
To meet commitments pledged in international agreements, finance plays a significant role in funding the country's transition towards sustainable development. Toán pointed out that the domestic banking sector has made positive strides in promoting green finance, but challenges remain in perfecting green finance mechanisms and defining criteria for green businesses.
Nguyẽn Tuấn Quang, Deputy Director of the Ministry of Agriculture and Environment's Department of Climate Change, underscored the importance of converting to clean energy and energy efficiency, suggesting that without such measures, Vietnam would struggle to compete in the global market, particularly for export products.
A view of the conference. VNS Photo
To achieve this transformation, one of the essential solutions is to convert energy from 'brown' to 'green'. However, the transition process is complex and requires time, technology, and finance. Vietnam faces the need to develop a set of green standards and criteria to ensure businesses can access green finance. Without clear guidelines, it becomes challenging for banks to lend to businesses not able to prove their green nature.
"The solution to promote green finance is to improve the legal system," Quang said, noting that the green finance concepts remain unclear and not comprehensively mentioned in current laws, necessitating improvements to the legal corridor.
Recently, the Ministry of Natural Resources and Environment proposed a set of green finance criteria, including seven areas considered for green finance. Additionally, the Government is considering piloting the carbon market in 2025, which could control about 20% of global emissions, Quang added.
Domestic banks have made efforts to implement green finance programs, but their green credit remains modest. International financial institutions could provide more green financing to help Vietnam achieve its net-zero goal by 2050.
Associate Professor Dr Bùi Hữu Toàn, Party Committee Secretary and Chairman of the Banking Academy of our website speaks at the conference. VNS Photo
According to a BIZHUB/VNS report, the Vietnamese capital market has limitations in the green financing sector. Organizations managed to raise only VND 8 trillion in green bonds in 2024, accounting for only about one percent of the country's total bond value. Compared to developed markets, there is a need for clearer regulation and incentives for green finance in Vietnam to unlock more investments and cater to the demand for sustainable projects.
In conclusion, while Vietnam faces challenges in developing green finance criteria and raising capital for sustainable growth, potential solutions such as strengthening legal frameworks, global cooperation, promoting ESG standards, and public-private partnerships offer ways to accelerate the transition to a green economy.
[Sources: VNS, BIZHUB]
- The government is urged to establish a set of green finance criteria to channel capital towards sustainable initiatives, as green finance becomes crucial for fostering green growth.
- associate Professor Dr Bùi Hũu Toán stated that Vietnam ranks among the leading countries aiming for a net-zero emission target by 2050 and participates in the global cooling initiative.
- To meet commitments pledged in international agreements, finance plays a significant role in funding the country's transition towards sustainable development.
- One of the essential solutions for converting to clean energy and energy efficiency is to develop a set of green standards and criteria to ensure businesses can access green finance.
- The solution to promote green finance is to improve the legal system, as the green finance concepts remain unclear and not comprehensively mentioned in current laws.
- The Ministry of Natural Resources and Environment proposed a set of green finance criteria, including seven areas considered for green finance, and the Government is considering piloting the carbon market in 2025.
- Domestic banks' green credit remains modest, and international financial institutions could provide more green financing to help Vietnam achieve its net-zero goal by 2050.
- In conclusion, potential solutions such as strengthening legal frameworks, global cooperation, promoting ESG standards, and public-private partnerships offer ways to accelerate the transition to a green economy in Vietnam.
