Vietnam’s Green Transition: Shaping a Sustainable Future through Policy, Finance, and International Collaboration

Governmental Commitment to Sustainability

Vietnam’s strategic shift towards green growth and sustainable economic development is underscored by a series of governmental guidelines, policies, and development programs aimed at fostering economic prosperity, environmental sustainability, and social justice. The cornerstone of this initiative is the national strategy on green growth, which has seen several iterations, with the most recent being Decision No. 1658/QD-TTg, issued by the Prime Minister on 1 October 2021. This strategy outlines Vietnam’s vision for 2021-2030, extending to 2050, emphasizing the transition to a green, carbon-neutral economy to contribute to global efforts in limiting temperature rise. 

Key goals set forth by this strategy include reducing greenhouse gas emissions relative to GDP, promoting sustainable practices across economic sectors and lifestyles, and ensuring an equitable and resilient transformation process. The State Bank of Vietnam (SBV) plays a pivotal role, tasked with aligning banking and credit institutions with these green growth targets, developing green banking models, and implementing credit policies to support green investments. 

Enhancing Legal Frameworks for Green Finance

Furthering these efforts, Decision No. 882/QD-TTg, promulgated on 22 July 2022, focuses on enhancing the legal framework for green credit and banking. It seeks to address environmental and social risks, alongside climate and natural disaster risks, in credit activities. Policy documents issued since 2020 have progressively incorporated Environmental, Social, and Governance (ESG) criteria into legal regulations, highlighting a clear direction towards financing for sustainable development and ESG integration within the financial and banking sectors. 

2022 marked a significant year for environmental focus in Vietnam’s financial and banking sectors, with the issuance of Circular No. 17/2022/TT-NHNN by the SBV. This circular guides environmental risk management in credit extension activities, complementing initial regulations on green credit and green bonds embedded in the Law on Environmental Protection 2020 and its subsequent decree, Decree No. 80/2022/ND-CP. These efforts are further supported by the Ministry of Natural Resources and Environment, responsible for formulating environmental criteria and certifications for green projects. 

Advancing Sustainable Finance Regionally

At an international level, the Development Strategy of the Vietnam Banking Sector to 2025, with a vision to 2030, aims for alignment with ASEAN and global standards, despite Vietnam not issuing green, social, or sustainability bonds as per ASEAN standards as of early 2023. The Sustainable Banking and Financial Network (SBFN), established in 2012, underscores Vietnam’s commitment to sustainable finance, with SBV and the Ministry of Natural Resources and Environment representing the country in this global network. 

The ASEAN Capital Market Forum (ACMF), the Ministry of Finance, and the State Securities Commission of Vietnam are identified as key players in advancing sustainable finance within the region. Noteworthy partnerships in 2021, such as HDBank’s agreements with international and development finance institutions, and BIDV’s Green Credit Agreement with the French Development Agency (AFD), highlight the growing emphasis on sustainability standards and climate change mitigation in Vietnam’s banking sector. In 2022, VPBank’s syndicated loan agreement with multiple international banks and agencies further illustrates the mobilization of capital towards supporting Vietnamese SMEs and women-owned businesses in alignment with sustainable development goals. 

This multifaceted approach to green growth and sustainable economic development showcases Vietnam’s commitment to environmental sustainability, social equity, and economic prosperity, positioning the country as a proactive participant in the global transition towards a greener future.