The bank is a pioneer in implementing ESG.

NDO - In recent times, the banking sector has been a pioneer in applying ESG (environmental, social, and governance) standards. Credit institutions have strengthened the management of environmental and social risks in lending activities, with outstanding loans assessed for environmental and social risks reaching VND 3.28 trillion, accounting for over 22.33% of the total outstanding loans in the economy , an increase of 15.62% compared to the end of 2023.

In his opening remarks at the seminar “ESG in the Banking Industry: Implementation to Lead,” organized by Investment Newspaper on November 19th in Hanoi , Editor-in-Chief of Investment Newspaper Le Trong Minh affirmed that green finance in Vietnam is becoming increasingly important, and the banking sector, as the main source of capital for the economy, can play a pioneering role in promoting comprehensive efforts towards sustainable development.

"By implementing policies in their lending activities, banks play a crucial role in the implementation of ESG," Mr. Le Trong Minh emphasized.

Promoting green credit

According to Le Trong Minh, Editor-in-Chief of Investment Newspaper, at the COP26 conference in November 2021, Prime Minister Pham Minh Chinh announced Vietnam's commitment to achieving net-zero emissions by 2050. This is a huge challenge but also an opportunity for Vietnam to implement strong reforms, restructure the economy towards green and sustainable growth, and ensure compliance with ESG (environment-social-governance) standards.

For the Vietnamese banking sector, which plays a vital role in the economy, pioneering the implementation of ESG will create a significant impetus for businesses that are bank clients in establishing new standards for sustainable development.

Le Trong Minh, Editor-in-Chief of Investment Newspaper, delivered the opening remarks at the workshop.

In fact, the implementation of ESG in the banking sector has recently made significant progress. Speaking at the workshop, Deputy Governor of the State Bank of Vietnam, Dao Minh Tu, stated that strengthening the application of ESG requires credit institutions to continuously implement, comply with, and update changes in regulations and policies to demonstrate their responsibility to the environment and society. On the other hand, practicing ESG standards will help enhance the reputation and brand of credit institutions through the disclosure and transparency of issues related to governance, environment, and society.

“Practicing ESG will help credit institutions improve risk management efficiency, thereby enhancing operational quality and profitability. At the same time, by applying ESG, credit institutions have the opportunity to expand their markets, receive investment capital and technical support from international financial institutions, and develop credit products,” Deputy Governor Dao Minh Tu emphasized.

Deputy Governor of the State Bank of Vietnam, Dao Minh Tu.

Citing data presented at the seminar, Ms. Ha Thu Giang, Director of the Department of Credit for Economic Sectors (State Bank of Vietnam), provided further information: As of September 30, 2024, 50 credit institutions had generated green credit outstanding with a total outstanding balance of over VND 665,000 billion, an increase of 7.11% compared to the end of 2023, accounting for more than 4.5% of the total outstanding loans in the entire economy. This is mainly concentrated in the renewable energy and clean energy sectors (accounting for over 43%) and green agriculture (over 30%). Credit institutions have strengthened environmental and social risk management in their lending activities; the outstanding loans assessed for environmental and social risks reached VND 3.28 million billion, accounting for more than 22.33% of the total outstanding loans in the economy, an increase of 15.62% compared to the end of 2023.

“These results show that the solutions implemented by the banking sector in recent times have contributed to promoting the practice of ESG, greening banking operations, and promptly meeting the capital needs for implementing green and sustainable projects for the benefit of the community; at the same time, raising awareness and capacity to enforce regulations on environmental protection and social responsibility of businesses using resources from the banking system, thereby adjusting behavior towards practicing ESG standards, greening the production and business activities of enterprises, towards the sustainable development goals of the economy,” Ms. Ha Thu Giang affirmed.

Pioneering the implementation of ESG

Deputy Governor Dao Minh Tu also stated that, with the guidance and direction of the State Bank of Vietnam, the implementation of ESG has seen significant changes from awareness to action. Commercial banks have proactively integrated environmental and social factors into their development strategies and operating models; improved their organizational models; managed environmental and social risks in lending activities; undergone digital transformation and capacity building; and proactively cooperated with, sought, and received support in terms of resources and technology from international organizations…

Dr. Nguyen Thi Thu Ha - Director of Agribank's Cadre Training School, Deputy Head of Agribank's ESG Steering Committee

The practical experience of implementing ESG at Agribank also proves this point. Sharing at the workshop, Dr. Nguyen Thi Thu Ha, Director of the Agribank Training School and Deputy Head of the Agribank ESG Steering Committee (Agribank), stated that, as a leading provider of capital and financial services to the agricultural and rural sectors, Agribank has been actively implementing policies to promote green banking, with many initiatives and commitments to applying ESG standards and integrating them into its business strategy. It has also implemented environmental risk management in its lending activities and organized many practical activities contributing to the greening of banking operations, environmental protection, and community support.

“Green credit is considered an effective financial solution to address environmental and social issues. However, it can be affirmed that ESG is not just about green credit; banks need to implement all three pillars of ESG simultaneously to achieve comprehensive sustainable development goals,” Ms. Nguyen Thi Thu Ha stated.

Ms. Nguyen Thi Tuyet Hanh, Director of the International Project Management Department (SHB Bank).

Sharing the same viewpoint, Ms. Nguyen Thi Tuyet Hanh, Director of the International Project Management Board (SHB Bank), also stated that, as a channel for capital flow into the economy, SHB always directs credit capital towards industries, businesses, and projects that promote green economic development and environmental protection. Currently, the proportion of outstanding loans granted to the green sector by SHB accounts for nearly 10% of its total outstanding loans.

In addition, SHB applies transparent and responsible corporate governance measures in accordance with best standards and practices, to ensure sustainability in all of the bank's operations.

The greening process is also being strongly implemented in all internal operations of the bank. Accordingly, SHB has been implementing measures to reduce energy and resource consumption at branches and transaction offices such as using renewable energy, saving electricity and water, minimizing waste, and digitizing internal processes to reduce carbon emissions and enhance work efficiency.

At the same time, SHB continuously implements training and communication programs to raise employees' awareness of environmental protection, applying the 5S principles to maintain a civilized and clean working environment, and prioritizing the use of recycled and environmentally friendly materials in daily business operations…

At the workshop, many delegates also argued that, in addition to the banking sector's efforts to promote ESG practices and direct credit flows towards financing environmentally friendly projects, expanding and facilitating credit access for green sectors requires coordination and collaboration from many ministries, sectors, and relevant units. Specifically, it is necessary to build a database system on the environmental and social aspects of investment projects that is up-to-date and easily accessible, serving as a basis for credit institutions to access information for environmental and social assessments.

Ms. Ha Thu Giang, Director of the Department of Credit for Economic Sectors (State Bank of Vietnam), presented her paper at the workshop.

Representing the State Bank of Vietnam, Ms. Ha Thu Giang also suggested supporting training and capacity building for businesses in implementing ESG, gradually approaching international standards. She proposed developing a roadmap for implementing policies and mechanisms to support green industries (taxes, fees, capital, technology, markets, planning, development strategies, etc.) in a synchronized manner, promoting ESG practices, and attracting and effectively utilizing green credit capital.

At the same time, the Ministry of Natural Resources and Environment will soon submit to the Prime Minister a Decision on environmental criteria for investment projects eligible for green credit and green bond issuance, as a basis for credit institutions to select, appraise, evaluate, and monitor when granting green credit.

In reality, the implementation of ESG in some credit institutions still faces many difficulties and challenges, requiring feasible solutions, appropriate steps, and especially the attention and support of the Government and ministries to successfully implement ESG…

Source: https://nhandan.vn/ngan-hang-tien-phong-di-dau-trong-thuc-thi-esg-post845745.html