Solving difficulties for green finance

Not only promoting green credit, banks are also actively mobilizing capital flows from green deposits, green bonds...

HSBC Vietnam recently signed an agreement to finance the first green credit in the seafood sector for Vinh Hoan Joint Stock Company. Meanwhile, the Joint Stock Commercial Bank for Foreign Trade of Vietnam ( Vietcombank ) has just successfully mobilized VND2,000 billion in green bonds for the first time to lend to projects that protect the environment or bring environmental benefits.

Green capital flow is vibrant

Capital raised from green bond issuance will be disbursed by Vietcombank for projects in seven areas: renewable energy, sustainable transport, water management, green buildings, waste management, sustainable agriculture, forestry and fisheries, and energy efficiency.

According to Vietcombank, the issuance of green bonds for the first time is an important milestone for the bank in its ESG strategy (environmental, social and corporate governance - PV) and voluntary compliance with the green bond principles of the International Capital Market Association (ICMA). "The demand for investment in environmentally friendly projects is increasing and green bonds are an effective tool to mobilize support capital at reasonable costs" - Vietcombank said.

Ms. Helena McLeod, Acting General Director of the Global Green Growth Institute (GGGI), commented that Vietcombank's successful green bond issuance shows the growing demand and trust from investors for green projects. This is a positive signal in mobilizing capital flows from the private sector to serve Vietnam's carbon neutrality goals.

FiinGroup statistics show that since the beginning of the year, there have been 4 green bond lots issued under ICMA's principles with a total value of VND6,900 billion (about USD394 million), accounting for about 2% of the total issuance value during the period.

In addition to green bonds, some commercial banks are also promoting the attraction of green deposits. In August 2024, the Bank for Investment and Development of Vietnam ( BIDV ) successfully mobilized more than VND 5,000 billion from the Green Deposit product. The Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) also mobilized capital through the Green Deposit product; allocating VND 5,000 billion in the Green UP green finance program to fund projects and plans that benefit the community and society.

On the business side, Ms. Nguyen Ngo Vi Tam, General Director of Vinh Hoan Joint Stock Company, said that pursuing the circular economy model in aquaculture production and farming for many years has helped the company optimize the value chain, minimize waste and create value from by-products. "Vinh Hoan Joint Stock Company has achieved international certifications from the Aquaculture Stewardship Council and the Best Aquaculture Practices Standards. These are the main factors that help businesses receive green commercial loans," Ms. Tam informed.

Products of Vinh Hoan Joint Stock Company - a seafood enterprise that has just received green credit from HSBC Bank Vietnam. Photo: NGOC ANH

Waiting for green classification list

Mr. Ha Huy Cuong, Deputy General Director of Nam A Commercial Joint Stock Bank (Nam A Bank), said that he is coordinating with partners who are international financial organizations to build a green portfolio with specific criteria based on each industry. Industries that are granted green credit will be given priority in terms of capital sources, loan interest rates, and priority in processing documents...

Notably, Nam A Bank has accompanied businesses on their green journey. For example, the bank consulted from the beginning to build a green credit framework, digitization... for a business in Long An province to invest in a cold storage worth 100 million USD. Or with a green tourism project in Da Lat city, Lam Dong province, the bank also coordinated with an international organization to issue green building material certificates.

However, banks still face difficulties due to the lack of a green classification list as a basis for granting credit. Mr. Pham Hong Hai, General Director of Orient Commercial Joint Stock Bank (OCB), analyzed that the lack of a legal framework, policy framework for green projects, and the lack of green concepts and categories lead to difficulties in project evaluation. "Many businesses are concerned that green projects may not bring immediate profits or may be high-risk, especially when the initial investment costs are high. Finding additional resources to implement the project can be a barrier that makes businesses hesitate to invest in sustainable projects, even though they may bring economic benefits in the long term," said Mr. Hai.

According to State Bank Governor Nguyen Thi Hong, if in 2017 there were only 5 credit institutions participating in green credit, now there are 50 units generating a total green debt of about 650,000 billion VND. However, relevant ministries and branches need to have guidance on green classification categories so that credit institutions have a basis for providing capital. "Investing in the green sector requires large capital and long terms while the mobilized capital of the banking system is very short-term" - Governor Nguyen Thi Hong added.

There is still room

According to Mr. Nguyen Ba Hung - expert, Chief Economist in Vietnam of the Asian Development Bank (ADB), our country's green finance growth is quite positive but still low, when green credit only reaches 4.5% of the total outstanding loans of the banking system. However, this is also an opportunity and room for green credit growth in the coming time. "Vietnamese enterprises need to start implementing green and sustainable development reports, discuss with banks about the green loans that banks have. Large enterprises can issue green and sustainable bonds" - Mr. Hung suggested.

L. Thuy

Source: https://nld.com.vn/go-kho-cho-tai-chinh-xanh-19624120819023949.htm