Climate funds begin to make waves with domestic entities

February 07, 2024 | 21:53
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The increasing focus on sustainable and eco-friendly initiatives in Vietnam is evident, with major financial institutions and cities launching substantial green investment funds.
Climate funds begin to make waves with domestic entities
VietinBank’s new GREEN UP package is specifically aimed at supporting eco-friendly schemes, photo Le Toan

VietinBank in late January unveiled the GREEN UP finance package, dedicating approximately $211 million to support eco-friendly initiatives. This includes projects in energy production, green exports, and sustainable construction.

The package offers attractive interest rates, starting from 5.8 per cent per annum for short-term loans and 6.2 per cent per annum for medium to long-term loans. It targets businesses that adhere to well-established global sustainability standards.

“VietinBank is committed to bolstering green projects through this package, aiming to benefit the community and support businesses focused on sustainable development,” the bank stated.

A few months previously, VinaCapital launched the VinaCarbon impact fund. According to CEO and founding partner Don Lam, VinaCarbon invests in entities and projects that generate carbon credits, with each credit representing a reduction of one ton of greenhouse gas emissions.

“While this investment model is prevalent in developed countries, it’s a first for Vietnam,” Lam said.

VinaCapital has already made significant strides in the solar energy sector through a partnership with EDF Renewables, managing over 100MW of clean energy across Vietnam. It also stands out as one of Vietnam’s first private organisations to publish a dedicated environmental, social, and governance report.

Last year, Mekong Capital announced its intention of establishing a climate fund, targeting a corpus of up to $200 million. This fund will concentrate on strategic investments that promote forest regeneration in the Mekong region, signifying a growing trend of environmentally conscious investments in Vietnam.

On a broader scale, in late January, Ho Chi Minh City announced it was seeking investments for 28 key projects, valued at over $6.71 billion.

“We are focusing on projects that align with our commitment to green growth,” said Phan Van Mai, Chairman of Ho Chi Minh City People’s Committee. The city is also seeking investments for four wastewater treatment plants and various infrastructural upgrades, including canal renovations and the construction of new bridges, roads, and apartment complexes.

Highlighting the urgency, Mai emphasised two critical projects: Thu Duc’s flood management and a low-carbon programme.

“These are not just large-scale projects, but also a foundation for future expansion in our fight against climate change,” Mai said. “The first phase of the flood management project alone comprises multiple components, including a flood information system and a substantial wastewater treatment facility.”

He noted the city’s vulnerability to climate change, with over 60 million tonnes of CO2 emissions annually. “Industrial activities, transportation, and residential sectors are the main contributors to these emissions,” Mai added.

Paul Ong, partner at venture debt firm Innoven Capital, said, “We have an optimistic investment outlook for the clean tech and energy sector in the upcoming years. The region’s vulnerability to climate change has intensified awareness and concerns regarding the immediate and long-term impacts of global warming. As the region grapples with environmental challenges, there has been a notable emphasis on addressing climate issues and risks.”

Meanwhile, early-growth fund Aera VC successfully raised $50 million in November, underscoring the growing investor interest in environmental sustainability.

In the same month, Eversource Capital, a joint venture between private equity firm Everstone Capital and Lightsource BP, was reportedly contemplating the launch of its second fund to amplify investments in the climate sector.

According to DealStreetAsia, Eversource Capital is targeting a substantial fund size, with ambitions for a corpus exceeding $700 million for the new investment vehicle.

Although these investments have not yet been directly linked to Vietnam, the burgeoning climate startup scene in the country could soon find itself on the radar of these investors.

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By Le Luu

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