Potential for mobilizing private capital for green development

(PLVN) - The Joint Stock Commercial Bank for Foreign Trade of Vietnam ( Vietcombank ) has just successfully issued VND2,000 billion worth of green bonds to lend to projects in the field of environmental protection and projects that bring environmental benefits. This shows that the demand for green bonds is very large and is a positive signal about the potential in mobilizing capital flows from the private sector for the transition towards net zero emissions in Vietnam.

November 18, 2024 07:13

Water management is one of the priority projects for loans to protect the environment. (Illustration photo/Vneconomy)

(PLVN) - The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) has just successfully issued VND2,000 billion worth of green bonds to lend to projects in the field of environmental protection and projects that bring environmental benefits. This shows that the demand for green bonds is very large and is a positive signal about the potential in mobilizing capital flows from the private sector for the transition towards net zero emissions in Vietnam.

The demand for green bonds is huge.

Ms. Helena McLeod, Acting General Director of the Global Green Growth Institute, said that Vietcombank's successful issuance shows the growing demand and trust from investors for green growth projects, which is a positive signal of the market potential in mobilizing capital flows from the private sector for Vietnam's transition towards net zero emissions.

Vietcombank representative said that Vietcombank's green bond framework was consulted by the international organization Global Green Growth Institute and was highly rated by the prestigious credit rating organization S&P Global with a Medium Green rating (the second highest level in the six-level scale according to S&P Global's rating framework). This affirms the quality, compliance, and high level of transparency in project selection, management of disbursement of funds from issuance, and Vietcombank's governance and reporting regimes.

Vietcombank representative added that this green bond issuance of Vietcombank has received great attention from investors with the issuance rate reaching 100% of the offering volume, showing the great confidence of investors in Vietcombank's reputation and commitment, as well as the attraction of current green financial products.

Mr. Vu Quang Dong - Deputy Director of Capital & Market Division - Vietcombank affirmed that, as a leading commercial bank, Vietcombank always puts sustainable development and environmental protection as the core goals in its development strategy. In recent times, Vietcombank has always focused on giving special priority to capital sources for environmentally friendly projects. In the period of 2020 - 2023, Vietcombank's total green credit balance increased by an average of nearly 4 times, from more than VND 11,765 billion in 2020 to VND 46,100 billion as of December 31, 2023.

“We see an increasing demand for investment in environmentally friendly projects and green bonds are an effective tool to mobilize capital to support these projects at a reasonable cost of capital. The capital raised from issuing green bonds will be disbursed to projects in seven areas including renewable energy, sustainable transport, water management, green buildings, waste management, sustainable agriculture, forestry and fisheries and energy efficiency,” said Mr. Dong.

At the same time, Vietcombank said that in the coming time, it will continue to prioritize resources for green credit, affirming its role as a leading bank in sustainable development. Through the issuance of green bonds, Vietcombank hopes to actively contribute to the sustainable development of Vietnam and promote the Vietnamese green bond market.

Disbursement within 24 months

Vietcombank representative said that the process of evaluating and selecting green projects is carried out simultaneously, integrated with Vietcombank's credit granting process. Vietcombank strictly complies with the credit granting appraisal process, guidelines on environmental risk management in credit granting activities and relevant legal regulations.

Based on the environmental impact assessment, Vietcombank requires customers to develop necessary measures and plans to limit and prevent negative impacts on the environment or commit to comply with measures approved by state management agencies. The results of the environmental risk assessment are recorded in the credit appraisal report according to Vietcombank's credit procedures.

The list of projects with positive impacts on the environment in line with Vietcombank's orientation will be developed in detail and scientifically by Vietcombank, in compliance with Vietnamese law, and at the same time applying widely recognized standards such as the standards of the Climate Bond Initiative, European green bond standards... and taking into account environmental and social risk factors.

Any project deemed eligible under this green bond framework will be considered for disbursement using the proceeds from the green bond issuance. Vietcombank disburses the proceeds from the green bond issuance to eligible projects within 24 months from the date of issuance of the green bond.

Vietcombank representative affirmed that building a green bond framework is a practical action to realize Vietcombank's strong commitment to sustainable development, prioritizing green credit growth, and actively contributing to Vietnam's goal of achieving net zero emissions by 2050.

Vietcombank's green bond framework complies with Vietnamese law and is compatible with the United Nations' sustainable development goals. The green bond framework is built to show Vietcombank's orientation towards green financial transactions.

7 areas disbursed from green bond sources

“We see an increasing demand for investment in environmentally friendly projects and green bonds are an effective tool to mobilize capital to support these projects at a reasonable cost of capital. The capital raised from green bond issuance will be disbursed to projects in 7 areas including renewable energy, sustainable transport, water management, green buildings, waste management, sustainable agriculture, forestry and fisheries and energy efficiency,” said Mr. Vu Quang Dong - Deputy Director of Capital & Markets Division - Vietcombank.

Source: https://baophapluat.vn/tiem-nang-huy-dong-von-tu-nhan-cho-phat-trien-xanh-post532105.html