Public and private sector join hands to accelerate green growth

Sustainable finance will be a huge step towards meeting Vietnam's development challenges

The advancement of sustainable finance in Vietnam will take a significant step forward with an important forum in Ho Chi Minh City held on May 28, 2019, bringing together decisionmakers from financial institutions to position the sector to play a leading role in supporting the country to meet national development challenges.

The Sustainable Finance Forum organised by the Vietnam Banks Association (VNBA) in partnership with the Global Reporting Initiative (GRI) and the International Finance Corporation (IFC) and sponsored by the government of Australia, Japan, and Switzerland, will provide a venue for participants to examine how regulatory and market developments can help promote financial returns and sustainable finance.

“While banks have a pivotal role to play in helping unlock opportunities to link investment to sustainable projects in Vietnam, many still have significant scope to adopt international sustainability practices to better manage environmental, social, and corporate governance risks within their portfolios and develop customised financial products for this market,” said VNBA general secretary Nguyen Toan Thang.

A key feature of the forum will be focusing on green growth strategies and Vietnam’s progress in attracting climate finance, given the scale of the climate challenge facing the country.

According to a recent IFC assessment, the climate-smart business investment potential in Vietnam alone is an estimated $753 billion, with the majority ($571 billion) in meeting the country’s low-carbon transportation infrastructure needs by 2030. Potential investment in renewable energy totals $59 billion, with over half of this ($31 billion) in solar PV and another $19 billion for small hydropower projects and new green buildings represent an almost $80 billion investment opportunity.

“Sustainability reporting has emerged as an essential tool to enable financial flows into developing countries like Vietnam as it helps businesses demonstrate their commitment to advance sustainable development as well as draw sustainability into their core business strategy for right decision making," GRl’s board member Dr Roberto de Ocampo, the former finance secretary of the Philippines and current chairman of the Philippine Veterans Bank, pointed out in his keynote speech to the forum.

While Vietnam must increase the effectiveness of climate finance and diversify funding sources, the lack of effective domestic funding for targeted investments inhibits the leveraging of external funds. As such, building an enabling policy environment will be critical to accessing green growth finance from private investors.

“We are working with both regulators and financial institutions to help create a market for climate business in Vietnam and across the East Asian region through a combination of innovative investment and advisory products,” said Kyle Kelhofer, IFC country manager for Vietnam, Cambodia, and Lao PDR.

The forum will bring together a range of stakeholders and participants, including representatives from the Ministry of Planning and Investment, the State Bank of Vietnam, the State Securities Commission, local banks, and the private sector, including Ayala Energy, Dragon Capital, and MSCI.