Green credit is considered an effective solution to mitigate damage caused by climate change, contributing to sustainable economic development...

In Vietnam, from 2017 until now, the green credit and green bond market has grown at a growth rate of more than 20% a year, much higher than the overall credit growth rate of the economy.

The Government approved the "National Strategy for Green Growth 2021 - 2030, Vision of 2050" in October 2021 with the overall goal of green growth; heading towards a green, carbon-neutral economy and contributing to the goal of limiting global temperature rise.

The strategy sets the goal of reducing the intensity of greenhouse gas emissions per GDP; Strive to reduce greenhouse gas emissions per GDP by 2030 by at least 15% compared to 2014; By 2050, the intensity of greenhouse gas emissions per GDP will decrease by at least 30% compared to 2014.

The strategy sets the goal of reducing the intensity of greenhouse gas emissions per GDP: strive to reduce greenhouse gas emissions per GDP by 2030 by at least 15% compared to 2014; by 2050, the intensity of greenhouse gas emissions per GDP will decrease by at least 30% compared to 2014.

Along with that, the Government issued many strategies and plans related to green transformation such as: National strategy on climate change (Climate change) for the period up to 2050, National action plan on green growth, Sustainable forestry development program, Power planning VIII, etc.

Vietnam has been active and responsible in participating with the international community in combating climate change such as: Committing at COP26 to net zero emissions by 2050; Political Declaration establishing the Just Energy Transition Partnership (JETP)...

According to the 2022 World Bank Report, to pursue a development roadmap that combines resilience and net zero emissions, Vietnam needs an investment equivalent to 6.8% of GDP per year, about 368 billion USD until 2040. In the context of climate change, it has a great impact on the natural environment, causing heavy economic losses.

Many solutions are being implemented to mitigate damage caused by climate change. In particular, financial solutions, including green credit, are considered effective, thereby contributing to sustainable economic development...

In Vietnam, according to the State Bank's report, in the period 2017-2022, the outstanding credit balance of the banking system for green fields has an average outstanding loan growth of more than 23%/year. By the end of March 2024, there were 47 banks lending, with outstanding debt of about VND 637,000 billion, growing 2.6% compared to 2023, accounting for 4.5% of the total outstanding debt of the economy.

Projects that commercial banks focus on investing in are: renewable electric energy, circular economy in the textile and garment sector, environmental protection factors of wood processing products, projects to combat climate change in Mekong Delta region... With the efforts of banks, green credit has become an important financial pillar to help businesses invest in technology, reduce costs, and create environmentally friendly products and services, contributing to the sustainable development of the country.

According to Dr. Le Duy Binh, CEO of Economica Vietnam, the proportion of outstanding green credit debt only reached over 4.5% of the total outstanding debt of the economy, a modest number compared to the actual needs of businesses to develop green projects. The difficulty in lending for green projects today is classifying and setting criteria for green projects. In fact, many businesses are not really interested in accessing green capital.

Regarding the criteria for classifying projects granted green credit and issuing green bonds in Decree 08/2022/ND-CP, it is stipulated that the Ministry of Natural Resources and Environment presides and coordinates with ministries and horizontal agencies; relevant ministries develop and submit to the Prime Minister for promulgating environmental criteria and confirming projects granted green credit and issuance of green bonds.

These projects include: investments in the field of environmental protection, investment projects that bring environmental benefits specified in Clause 1, Article 149 or Clause 2, Article 150 of the Law on Environmental Protection and granted green credit and issue green bonds according to the provisions of Decree.

The confirmation of a project belonging to the green classification list as prescribed in Clause 2 is carried out at the request of the investment project owner or green bond issuer who wishes to confirm in order to acquire preferential policies, state incentives and support for green credit and green bonds according to regulations.

Criteria for classifying projects eligible for green credit and issuance of green bonds already exist, however to access this source of capital, businesses need to proactively seek information and identify investment projects. Mr. Nguyen Ba Hung, ADB Chief Economist in Vietnam, recommended: It is necessary to determine specific quantitative goals in accordance with Vietnam's international commitments, creating motivation for green finance development.

At the same time, proactively access international capital sources through bilateral cooperation and international financial organizations to attract capital; Accelerate the implementation of carbon certificate confirmation, form a domestic carbon market and connect with the international ones.

According to the Ministry of Finance, in the period 2019 - 2023, Vietnam issued about 1.16 billion USD in green bonds, which is still very modest compared to the average capital need of about 20 billion USD/year to implement green transformation goals and green projects. Dr. Le Duy Binh proposed: It is necessary to improve the legal framework related to green credit in the direction of increasing its mandatory nature to achieve green growth goals.

At the same time, it is necessary to diversify capital sources for green credit in Vietnam, consider prioritizing access to international capital sources through bilateral cooperation and international financial organizations, create favorable conditions for developing green bonds and raise business awareness of sustainable development.

Kylie Nguyen