Within the framework of the Cooperation Agreement between the State Bank of Vietnam (SBV) and the International Finance Corporation (IFC) in the area of environmental and social risk management in credit extension activities, on November 29th, 2018 in Hanoi, the SBV and the IFC co-organized a Seminar titled "Introducing Green Bond Products through Commercial Banks”. Attending the Seminar were representatives from the SBV's Departments, the Senior Financial Officers from the IFC, the World Bank (WB) and representatives from several commercial banks, together with national and foreign economic experts.
At the Seminar, the topics covered included: (i) Green Bond – the business case of green bond issuance for Commercial banks; (ii) Overview of the green bond standards and the role of regulators in enabling the green bond market development; (iii) Green Bond for Commercial banks: Preparation, process, opportunities and challenges; (iv) External review – Second party opinions, impact reporting and environmental & social (E&S) risk considerations.
Speaking at the Seminar, the representative from the SBV’s International Cooperation Department emphasized that green bond is considered a type of fixed income securities in order to attract capital for projects with environmental benefits. As a result, proceeds from the issuance of this bond will be committed to investments in programs to enhance the climate change adaptation and mitigation, including clean energy projects, energy efficiency, public transport and clean water. Green bond may be issued by the Government, commercial banks, international financial institutions or enterprises.
Although green bonds now account for only a small part of the global bond market, it still attracts much attention, in the context of the targets of emission cuts require an investment capital of up to trillions of US dollars from both public and private sectors. According to a report by the non-profit Climate Bonds Initiative (CBI, with headquarters in the United Kingdom), green bond issuances worldwide in 2017 hit a record high of 155.5 billion USD, up by 78% compared to 2016. In 2017, the United States, China and France made up to 56% of the total value of green bond issuances and the CBI forecasts that the issuance volume in 2018 will be valued at 250-300 billion USD.
Mr. Oualid Ammar – Senior Financial Officer, IFC’s Asia Pacific Treasury Client Solutions – speaks at the Seminar
In Vietnam, in order to restructure the economy in the direction of efficiency and sustainability, the Government has developed and issued many policies and action plans to integrate and implement the strategic goals for green growth and sustainable development. In the action plans of the Government and the SBV, the commercial banks are considered an important component to mobilize investments for the fields of environmentally friendly production, reducing the risks and aiming for sustainable development.
At the Seminar, the IFC financial specialists introduced, exchanged and discussed with Vietnamese banks on the characteristics of this financial product; thus helping the banks to understand the opportunities and challenges when participating in the implementation process, in line with the development trend of the financial and banking markets in the world. Particularly, the SBV hopes that through the contents shared at the Seminar, the banks will have new opportunities to attract capital for clean energy and climate change response projects, contributing to the attainment of the mission of the Vietnamese banking sector in implementing the Paris Agreement on climate change.
VA