Circular agriculture project: How to verify that businesses can get preferential loans?

ESG, legal foundation is key

Starting from July 1, 2025, according to Decree No. 33/2024/ND-CP of the Government, circular agriculture projects can access preferential loans of up to 70% of the total investment without collateral.

This breakthrough financial mechanism not only opens up great opportunities for sustainable agricultural models, but also creates positive pressure forcing the entire financial system to quickly shape criteria, processes and tools to assess "circularity" in a scientific , quantitative and verifiable way.

The important question is: how will banks and credit providers verify that an agricultural project is truly “circular”?

According to ESG and life cycle analysis (LCA) expert Pham Hoai Trung, verifying that a project is truly “circular agriculture” requires two pillars: the ESG (Environment – Society – Governance) principles framework and the current legal system on green growth, circular economy , and environmental protection.

According to experts, verifying whether a project is truly “circular agriculture” needs to be based on the ESG principles framework and the current legal system on green growth, circular economy, and environmental protection.

A circular project must not only reuse by-products, but also demonstrate the ability to reduce greenhouse gas emissions, save energy, conserve natural resources and create economic and social value for the community. This requires businesses to have strong ESG governance capabilities, including life cycle measurement (LCA), material flow management, emissions, energy and water consumption, and real-time data reporting.

Legally, in addition to Decree 33, banks can refer to documents such as Decision 687/QD-TTg (2022) on circular economic development; Decision 1658/QD-TTg (2021) on green growth strategy; and the Law on Environmental Protection 2020 (Article 75). These documents all establish requirements for emission quantification, resource optimization, and the development of measurement systems and environmental databases.

Quantitative by international standards

According to expert Pham Hoai Trung, the assessment of "circularity" needs to be based on indicators such as: product life cycle assessment (LCA), carbon footprint (CFP), water footprint (WFP), product environmental footprint (PEF.)

In addition, Circular 17/2022/TT-NHNN also encourages credit institutions to develop an environmental and social (E&S) risk assessment framework and develop green financial products - creating a foundation for integrating circular criteria into the credit appraisal process.

To ensure transparency, many banks will require projects to provide third-party certifications such as: VietGAP, Organic, GlobalG.AP, Fairtrade; ISO 14001, ISO 14064-1, GHG Protocol (Scope 3 emissions); ESG reporting according to the Global Reporting Initiative (GRI), the European Sustainability Reporting Standards (ESRS) or the Carbon Disclosure Project (CDP).

Businesses may also be required to use digital technologies such as electronic farming diaries, IoT sensors or ERP systems to manage input-output and data retrieval.

On the business side, Mr. Trung said that to access unsecured loans, businesses need to prepare in-depth documents: production and business plans, product life cycle assessments, material and energy flow diagrams, environmental indicators, and a commitment to reinvest in improving ecological and social performance.

“Verifying whether a project is circular or not will no longer rely on feelings or paper reports. Businesses need a strong ESG management system to measure, prove and spread trust to the financial market. At that time, credit capital will no longer be a barrier, but a lever to transform into truly circular agriculture,” Mr. Trung emphasized.

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Source: https://doanhnghiepvn.vn/kinh-te/chinh-sach/du-an-nong-nghiep-tuan-hoan-xac-minh-the-nao-de-doanh-nghiep-duoc-vay-uu-dai-/20250619044841791