Expanding, unblocking and effectively using green credit capital

Permanent Deputy Governor of the State Bank of Vietnam Dao Minh Tu speaks at the Workshop

According to the National Strategy on Green Growth for the 2021-2030 period, with a vision to 2050 (Decision No. 1658/QD-TTg), the development of unified policies and criteria on green credit is an urgent requirement to develop a sustainable financial market, promote businesses to apply ESG practices and effectively mobilize resources from the whole society. The workshop was organized to create a space for connecting managers, experts, credit institutions and businesses, and also a place where all parties can exchange frankly, share practical initiatives, thereby proposing solutions to gradually improve mechanisms and policies to promote green credit development more effectively.

In his opening speech, Mr. Nguyen Ngoc Hien, Member of the Presidium of the Vietnam General Confederation of Labor and Editor-in-Chief of Lao Dong Newspaper, said that green credit plays an important role in the strategy of sustainable financial development. This is not only a capital flow to promote environmentally friendly projects, but also a catalyst to help businesses innovate their production models and adapt to the increasingly clear green transformation trend.

Sharing this view, Deputy Governor Dao Minh Tu affirmed that green credit and ESG implementation are inevitable trends for sustainable development, one of the important resources to realize the national green growth target, a solution to help credit institutions reorient their business activities towards sustainability, approaching international standards, thereby affirming their position, enhancing competitiveness, expanding cooperation and business opportunities; at the same time, for businesses, green credit is a resource to support businesses to improve and innovate technology, and transform green production.

With that role, the green credit period in Vietnam has many favorable conditions and opportunities for development, thanks to very clear orientations and regulations. Based on these policy frameworks, the banking sector has taken drastic and proactive actions, implementing solutions to promote green credit activities and has achieved many positive results in terms of awareness, the number of credit institutions participating in financing green sectors, the scale and growth rate of green credit outstanding balance.

“From only 15 credit institutions participating in 2017, up to now, 50 units have generated outstanding loans, the average growth rate of outstanding green credit in the period 2017-2024 reached over 22%/year, higher than the growth rate of outstanding credit in general for the economy,” Deputy Governor Dao Minh Tu informed.

However, in practice, the Deputy Governor shared that banks and businesses have encountered many difficulties in implementing this content, such as the lack of a national green classification list, common regulations on ESG for businesses to practice, meeting increasingly strict sustainable development requirements; limited risk assessment tools, long payback periods, unclear financial efficiency; higher requirements on governance, quality of banking human resources in the fields of environment, society, climate to identify, assess, manage, monitor credit grants as well as advise and support customers to meet new international criteria on emissions... Those "bottlenecks" require a new, more comprehensive, more flexible and more synchronous approach between policy - market - legal corridor.

Overview of the Workshop

In addition, according to some experts, the awareness of businesses and investors about the benefits and importance of the green financial market is not uniform, leading to a low level of customer interest in mobilization products and green financial credit products, and a reluctance to use new banking products/services. Investing in green projects requires large capital sources and the ability to assess specialized technical and environmental factors, so credit institutions will incur additional investment costs to build a management system suitable for the green growth and green transformation goals of the economy, and to improve the capacity of bank staff in green banking and sustainable finance.

Based on the above practical requirements, Ms. Ha Thu Giang, Director of the Department of Credit for Economic Sectors (SBV), said that in order to expand, unblock and effectively use green credit capital sources of the banking system, it requires coordination and combination from ministries, sectors and functional agencies in perfecting the legal corridor, support mechanisms, and creating motivation to mobilize all resources from economic sectors.

In addition, it is necessary to synchronously complete investment mechanisms and policies to create a favorable investment environment; develop a roadmap for implementing policies and mechanisms to support green industries in each industry/sector in a synchronous manner to attract and promote the effectiveness of green credit capital. Develop and implement solutions to support credit institutions to access and mobilize financial resources from institutions, financial institutions, funds and international private investors, and financial funds to have conditions to provide long-term credits and preferential interest rates for green industries/sectors. In particular, the national green classification list will be issued soon.

Sharing this view, Mr. Lai Van Manh, Head of the Department of Natural Resources and Environment Economics, Institute of Agricultural and Environmental Policy and Strategy (Ministry of Agriculture and Environment) said that the establishment of a green classification based on international standards helps to clearly identify important criteria and factors in assessing the sustainability of projects. International investors and organizations are increasingly interested in green and sustainable projects. By applying international standards in classifying projects, Vietnam will create transparency and trust for the international community. This helps attract international investment and funding, contributing to promoting domestic economic and technological development.

Source: https://thoibaonganhang.vn/mo-rong-khoi-thong-va-su-dung-hieu-qua-von-tin-dung-xanh-163366.html