Mobilizing large financial resources for the green credit transition process

On the morning of December 4, in Hanoi , Dau Tu Newspaper organized a workshop on "Leveraging large capital sources for green credit". The workshop was attended by leaders of foreign financial institutions, the State Bank, and experts in this field... At the COP26 Conference in November 2021, Vietnam committed to achieving net zero emissions by 2050. During the 2-year period from COP26 to COP28 (taking place in Dubai in November 2023), Vietnam has planned to implement its commitments and one of the important tasks is to mobilize financial resources for the transition process. The World Bank's National Climate and Development Report for Vietnam estimates that Vietnam needs to invest an additional 368 billion USD by 2040, equivalent to 6.8% of GDP/year to adapt to climate change. Of this, investment in resilience is about 254 billion USD and 114 billion USD for the decarbonization journey as committed to the international community. This requires Vietnam to need a huge investment in the next 30 years.

Workshop "Leading large capital sources for green credit" organized by Investment Newspaper.

In fact, the transformation journey has been strongly participated by many banks and brought about positive initial results. However, in addition to the role of banks, the participation and close cooperation of international financial institutions with a commitment to support development are needed.

It is necessary to mobilize large financial resources for the green credit conversion process :

At the workshop "Leveraging large capital sources for green credit", leaders of management agencies, domestic and international experts highlighted the need for green credit capital, the ability to disburse into specific projects of enterprises, as well as issues of concern in expanding green credit in particular and green finance in general.

Editor-in-Chief of Investment Newspaper Le Trong Minh delivered the opening speech at the conference.

According to Mr. Nguyen Ba Hung, Chief Economist of the Asian Development Bank (ADB) in Vietnam: “ Vietnam's demand for green credit capital is very clear, but it must also be said that this demand also depends on the attractiveness of green credit. As a developing country with rapid urbanization, increasing energy demand, and facing great pressure from natural disasters, environmental pollution (air, water resources) and climate change, Vietnam needs a large amount of capital to invest in green fields, such as: renewable energy, energy conversion, waste treatment... Recent estimates by IFC suggest that investment in activities related to climate change in Vietnam could reach 757 billion USD by 2030. In which, green credit capital from international organizations plays a role in creating momentum for market development.”

Ms. Pham Thi Thanh Tung, Deputy Director of the Department of Credit and Credit Institutions, State Bank of Vietnam

Discussing at the workshop, Ms. Pham Thi Thanh Tung , Deputy Director of the Department of Credit for Industrial Enterprises, State Bank said: “ In the period of 2017-2022, the outstanding credit balance of the system for green sectors has an average growth rate of more than 23%/year. By September 30, 2023, the outstanding green credit balance will reach more than 564 trillion VND, accounting for about 4.4% of the total outstanding balance of the whole economy. Among the 12 green sectors that the State Bank has guided credit institutions to lend, outstanding balance is mainly focused on renewable energy, clean energy (accounting for nearly 45%) and green agriculture (more than 30%). Credit institutions have strengthened the assessment of environmental and social risks in credit granting activities with outstanding balance assessed for environmental and social risks reaching nearly 2.67 trillion VND, accounting for more than 21% of the total outstanding loans of the economy.” “In addition to the achieved results, for green credit to develop, it is necessary to continue to improve the legal corridor to: first, have guidelines on the Green List and criteria for determining green projects suitable for Vietnam's economic sub-sectors as a basis for credit institutions to have a basis for appraisal, evaluation and monitoring when granting green credit; second, build a roadmap to implement policy mechanisms to support green industries (taxes, fees, capital, technology, market, planning, development strategy...) of each industry/field in a synchronous manner to attract and promote the effectiveness of green credit capital sources; third, research and develop mechanisms and policies to support the development of the capital market, green bond market, creating a capital mobilization channel for investors to have more resources to implement green projects.”

Ms. Phung Thi Binh, Deputy General Director of Agribank, spoke at the workshop.

Sharing about the demand and ability to provide capital for businesses, Ms. Phung Thi Binh, Deputy General Director of the Bank for Agriculture and Rural Development of Vietnam ( Agribank ) said: "From the funding source of Agribank, many large-scale agricultural production models, applying high technology have been and are being formed in all regions of the country, such as flower growing model (Lam Dong), large-scale fields (Can Tho), tra fish (An Giang), pig farming (Ha Nam), sugarcane (Khanh Hoa), corn (Son La) ..., creating high consensus between businesses and people. Up to now, Agribank's clean agricultural and high-tech agricultural loan turnover has reached over 30,000 billion VND, accounting for 50% of the total investment capital for this field, outstanding loans have reached 2,000 billion VND with more than 300 customers (of which, more than 98% of customers are individuals, farm owners, cooperatives ...). “Agribank is coordinating with the Ministry of Agriculture and Rural Development to implement Decision No. 1490/QD-TTg of the Prime Minister signed on November 27, 2023 to achieve the goal of forming 1 million hectares of specialized areas for high-quality and low-emission rice by 2030, associated with reorganizing the production system according to the value chain, applying sustainable farming processes to increase value, sustainable development of the rice industry, improve production and business efficiency, income and life of rice growers, protect the environment, adapt to climate change and reduce greenhouse gas emissions, contributing to the implementation of Vietnam's international commitments.” Also at the workshop, experts and business leaders shared practical experiences in building loan plans for sustainable development projects, the ability to mobilize international and domestic capital for these projects, risks to avoid and many international experiences suitable for Vietnam that can be referred to.