Many banks have established green transition steering committees, embedded the ESG criteria in their business strategies, and expanded funding for environmentally-friendly sectors.

Green growth is no longer a choice but a pressing necessity, particularly for developing nations like Vietnam, according to Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu.

Amid growing climate challenges and the global shift towards sustainable development, green credit has emerged as a key pillar of Vietnam’s financial system.

Clear regulations, bankable projects, the pooling of concessional and commercial capital, and climate capacity are four keys that can unlock the climate finance market, a forum heard in Ho Chi Minh City on September 19.

The recent amendment of the plan on green banking development in Vietnam is expected to create conditions for credit institutions to effectively promote green credit.

The promotion of green and sustainable financial development has created both new opportunities and challenges for the financial system in Vietnam, according to experts.

Vietnam needs a clear regulatory framework and solutions to promote the green finance market and encourage private capital flows into green fields, experts have said.

Among the 12 green fields that the State Bank of Vietnam guides credit institutions to lend, outstanding loans focus mainly on renewable energy, clean energy (accounting for 45%), and green agriculture (31%).

Experts have shared a view that green credit and green growth play an important role in implementing the National Green Growth Strategy in the 2021-2030 period with a vision until 2050 as they create resources for environmentally-friendly projects and programmes.

Vietnam’s green credit balance accounted for about 4.2% of the economy’s total credit balance by June 30, 2023, according to the State Bank of Vietnam (SBV).

Commercial banks in Vietnam have been actively offering loans for green projects and expanding green credit through mobilising capital from international credit institutions.

In efforts to develop a green and circular economy, Vietnam is taking steps to boost green credit, the Lao dong (Labour) daily reported.

Green credit growth in Vietnam has remained limited due to the lack of a clear legal framework, according to industry insiders.

As a rapidly growing economy, Vietnam is facing many difficulties in ensuring energy security, green and sustainable development, insiders have said.

Permanent Vice Governor of the State Bank of Vietnam (SBV) Dao Minh Tu has stated that green credit is an important financial source of the economy.

The International Finance Corporation (IFC) has provided a 100 million USD long-term loan for the Orient Commercial Joint Stock Bank (OCB) to increase the private sector’s contributions to green and sustainable growth in Vietnam.

Green credit is a trend in the global banking and finance industry and more Vietnamese banks are following suit.

The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and the Japan Bank for International Cooperation (JBIC) have signed a 200 million USD credit contract to finance renewable energy projects in Vietnam.

In recent years, Vietnamese banking sector has adjusted its strategies and practices to meet green growth targets. However, the outcomes still fall short of expectation.

Incentives are needed to encourage small- and medium–sized enterprises (SMEs) to join green growth projects, said Hoang Thi Hong, Director of the SMEDF under the Ministry of Planning and Investment.