VIETNAM – ECONOMY: USAID supports Vietnam’s environmental transition

United States Agency for International Development (USAID) Green Invest Asia, along with USAID and Australia’s Mekong Conservation Programs, recently organized a joint workshop on sustainable finance in Hanoi, entitled “Promoting Manufacturing and Green Enterprises”, in collaboration with Vietnam’s Ministry of Planning and Investment. For a more sustainable economy in Vietnam”, on 8 December. With more than 60 participants, mainly from the Vietnamese banking sector, experts shared their experiences in connecting green businesses and investors, as well as best practices in supporting sustainable business models across the region.

The International Finance Corporation (IFC) estimates the size of the climate market in Vietnam to be over $750 billion by 2030. This was stated by Trevor Hublin, Deputy Director of USAID’s Office of Management and Economic Growth in Vietnam.

“Global warming creates increasing investment opportunities for banks around the world in green energy, and Vietnam is no exception. Vietnamese banks can get a share of this growing market while helping to stop greenhouse gas emissions that threaten global climate change targets… I applaud the Vietnamese government for going above and beyond expectations in terms of renewable green energy.”

A member of IFC’s Sustainable Banking Network, Vietnam is one of 38 developing economies around the world that are undertaking banking reforms to help mitigate the effects of climate change. The State Bank of Vietnam approved an action plan in 2018 that requires banks nationwide to assess, manage and report environmental and social risks in their lending operations, and created business incentives for banks to increase their lending to green projects.

Vietnam’s Prime Minister recently approved the “2022-2025 Program to Support Private Enterprises in Sustainable Trade” to protect natural resources and the environment and develop an ecosystem to support businesses.

John McGinley of Mekong Strategic Capital and strategic advisor for USAID Green Invest Asia said that despite agriculture, deforestation and other factors contributing up to 40% of greenhouse gases, less than 5% of global trade finance goes towards sustainable land use. is being Gas emissions in Southeast Asia.

USAID Green Invest Asia has contracted four of Vietnam’s largest banks to provide specific technical assistance to improve ESG systems, including developing relevant policies, defining credit criteria, and creating management capacity/environmental and social (E&S) risk reporting.

Building on its work supporting banks in other Southeast Asian countries with sustainable finance, USAID Green Invest Asia has developed a Sustainable Banking Toolkit, which includes exclusion list templates, risk classification tools, risk review checklists, and climate change, gender equality, and other policies. it can be adapted to any bank that requires assistance in complying with national regulations on sustainable finance.

Trinh Thi Huong, deputy director general of the Enterprise Development Agency of the Ministry of Planning and Investment, told participants that “international trends are clear, and if Vietnamese companies do not take advantage of these financial opportunities, there is a risk of being left behind in the market.”

During the period 2017-2021, the amount of “green loans” granted to Vietnam increased by an average of more than 25% per year. As of June 30, 2022, total loans offered for green projects in Vietnam reached VND 474 trillion (US$20 billion), or about 4% of total outstanding loans, an increase of 7% compared to the previous year. quoted by the media and Trinh of the Ministry of Planning and Investment. These more than 1.1 million loans were mainly directed to renewable energy (47%) and green agriculture (32%).

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