The International Finance Corporation (IFC) – a member of the World Bank Group – announced on May 11 that it will support Vietnam to transit to a low-carbon economic growth model.
According to an IFC statement, “As Vietnam transitions to a low-carbon green economy and meets its net-zero targets by 2050, the IFC is stepping up its support to promote sustainable finance, spur private sector participation, and reach the country's climate goals to drive sustainable growth.”
The latest IFC support comes in the wake of new MoUs with the Ministry of Natural Resources and Environment (MoNRE) and the State Bank of Vietnam to leverage private sector innovation and finance in the country's transition to a green, resilient, and low-carbon economy.
The MoUs were exchanged between signatories in Washington DC in the presence of Prime Minister Pham Minh Chinh, who is in town to attend the US-ASEAN Special Summit.
As a driving force behind Vietnam's COP26 agenda, the MoNRE will partner with the IFC to create a conducive environment for private sector climate investment.
Building on its ongoing support for the ministry to develop green project criteria, the IFC will also help develop and implement a policy and regulatory framework with an initial focus on key areas including green procurement, green taxonomy, and waste management – especially plastic recycling and e-waste.
"I highly appreciate the MoU signing, which brings our bilateral cooperation to a new level," said Tran Hong Ha, Minister of Natural Resources and Environment.
"The strengthened cooperation between us will greatly contribute to the implementation of Vietnam's commitments in COP26 and other issues related to environmental protection and sustainable development," Ha added.
To facilitate green financial flows and align the banking sector with the country's climate goals, over the next five years the IFC will also scale up its support for the national sustainable finance agenda led by the State Bank of Vietnam.
Nguyen Thi Hong, Governor of the State Bank of Vietnam stated, "Banks have a big role to support Vietnam's transition to a climate-resilient and low-carbon economy, helping to mobilise and allocate green capital."
"The IFC's continued efforts to improve the environmental, social, and governance (ESG) practices in the country's financial institutions will be of great help in greening the banking sector, scaling up green finance to its full potential to support sustainable economic growth," said Hong.
|EDGE – which stands for excellence in design for greater efficiencies – is a standard that focuses on testing the resource efficiency in buildings and is granted by the IFC. |
The IFC, in partnership with the Swiss State Secretariat for Economic Affairs, will further help the central bank strengthen its sustainable finance framework in a range of areas, including ESG risks and climate risk management, while continuing to help commercial banks build capacity in line with global sustainability and governance practices.
"Private sector investment is critical to achieving our climate change goals," said Stephanie von Friedeburg, IFC's senior vice president of operations.
"For Vietnam, which aims to become both a high-income and carbon-neutral economy in the next 30 years, private sector investment is doubly important. The IFC will continue to work closely with the government to ensure that the right policies and incentives are in place to help unlock this finance," Friedeburg added.
As one of the most vulnerable countries to climate change and natural disasters and one of the most carbon-intensive economies in Asia, the government of Vietnam aims to decarbonise the economy and achieve carbon-neutral status by 2050. This will require huge investments over the next 30 years with state resources meeting only part of the financial need.