The Vietnam finance should play its role in helping the transformation of the domestic economy into low-carbon one through investment in green projects considering environmental and social risks.
“Only when the banking – finance sector says no to projects causing negative impact on the environment and society, will the sustainable economy be built”.
Climate change has not been new to governments and people all over the world. It is also easy to see its impact on the economy, culture and daily life. According to a study of the United Nations, climate change costs the world economy by US$300 billion every year and Vietnam is considered one of the countries most severely affected by climate change. Extreme weather, cold and heavy snow in the Northern region, droughts and salinity intrusion in the South Central region and Mekong Delta have affected seriously production and daily activities of millions of habitants.
Facing this global challenge, 180 countries in the whole world signed the Paris Agreement in 2016, accordingly, each countries committed to cutting greenhouse gas emissions which are one of the main causes of climate change. Vietnam signed the Paris Agreement and aimed at cutting by 8% of greenhouse gas emissions by 2030 and 25% in case of international support.
Mr. Nguyen Quang Vinh, General Secretary of VCCI cum Deputy Chairman of VBCSD said that: “Vietnam and other countries in the region would not comply with the Paris Agreement and the 2030 Agenda for Sustainable Development of the United Nations if the banking – finance sector did not play its role. Only when the banking – finance sector says no to projects causing negative impact on the environment and society, will the sustainable economy be built.”
Sustainable finance is a global trend that banks and financial institutions all over the world is pursuing. In 2003, Equator Principles, which are a credit risk management framework for identifying, assessing, and managing environmental and social risks in applicable project finance transactions, were passed by financial institutions. By January 2018, 92 financial institutions in 37 countries officially adopted these principles. Some large financial institutions and banks have applied these principles are HSBC Holdings plc, Standard Chartered PLC, Citigroup, Westpac Banking Corporation,...
Vietnam is able to abide by the Paris Agreement thanks to its policies and strategies such as the Decision No. 1393/QD-TTg dated September 25, 2012 of the Prime Minister approving the national strategy on green growth. Accordingly, the low-carbon economy is one of three general objectives. In addition, the banking – finance sector has made progress in terms of policies with a view to catching up with international ones. The State Bank of Vietnam has cooperated with IFC in developing the handbook on environmental and social risk assessment for 10 economic sectors serving credit operations of commercial banks.
According to Mr. Benjamin Rawson, Conservation and Program Development Director at WWF-Vietnam, climate change has had an impact on every aspect of life so assessment of environmental and social risks of a project is very important. This will mitigate risks of bad debts or incapacity of investment recovery. “This also means that the banking – finance sectors plays an important role in deciding whether a project is carried out or not. And if it only invests in projects causing no harm to the environment, ecosystem and social security, then it is sustainable finance”, said Mr. Benjamin Rawson.
“Vietnam has already promulgated policies and legal provisions in order to promote the sustainable finance but such policies have not been implemented well yet. In the future, WWF will cooperate with banks, associations and other partners in stimulating the sustainable finance in Vietnam through capacity building, development of tools and guidelines on environmental and social risk assessment in baking operations”, pledged Mr. Benjamin.
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