On August 7, 2018, the Governor of the State Bank of Vietnam (SBV) issued Decision No.1640/QD-NHNN approving the Scheme on the green bank development in Vietnam.
The overall goal of the Scheme is to accelerate the awareness and corporate responsibility of the banking sector about the environmental protection, the climate change response, directing credit resources into eco-friendly projects/programs, boosting green production, services, as well as clean and renewable energy, in order to contribute to the promotion of the green and sustainable growth.
The Scheme sets out the specific objectives and criteria as follows:
Firstly, gradually increasing the ratio of lendings to priority green industries and sectors as defined by the SBV in the Green Projects Portfolio.
Secondly, accelerating the application of new technologies in combination with the development of environmentally-friendly practices and habits among the banks’ clients within the framework of banking operations; promoting strongly the e–transaction channels, the new services and payment instruments on the basis of modern technologies.
Thirdly, striving to make sure that by 2025: 100% of the banks will have developed their internal regulations on environmental and social risk management in their lending activities; 100% of the banks will have conducted the assessment of social and environmental risks in their lending activities; the environmental standards will have been applied for all projects receiving loans from the banks; the environmental risk assessment will be integrated as part of the banks’ credit risk assessment; at least 10 to 12 banks will have established specialised units/agencies for the social and environmental risk management; at least 60% of the banks will have got access to the green capital resources, and will have provided green credits.
In order to realise the above targets, the Scheme identifies clearly the following tasks of the SBV and the credit institutions (CIs):
(1) For the SBV:
- Formulate and issue instructions on the directions of green bank development to be circulated to the credit institutions;
- Formulate and issue incentive policies and preferential mechanisms to support the credit institutions in the green bank development;
- Promote the training and communication activities on green banking;
- Study and implement the measures to increase the economic benefits (combined with administrative incentives) in order to encourage non-cash payments based on the application of Technology 4.0 with a view to greening the banking operations.
(2) For the credit institutions:
- Focus on formulating their strategy frameworks on green bank development
- Formulate and operate a comprehensive system of social and environmental risk management, which should include: the internal instructions on social and environmental risk management applied in the lending operations; the organization structure for the management and the assessment of the social and environmental risks; delegate and authorize, allocate and utilize the resources to implement the green bank system; create a reporting mechanism on the social and environmental risk management; conduct programs to improve the banks’ institutional capacity in social and environmental risk management.
- Follow the instructions of the SBV on the social and environmental risk assessment; integrate the social and environmental risk assessment as part of the banks’ credit risk assessment; include the social and environmental assessment into the instructions for the internal audits and the banks’ general reporting systems; develop the social and environmental risk management plans after having evaluated and supervised the approved projects and the loans that have been provided.
- Study and set up specialised units/agencies responsible for the social and environmental risk management, and the supervision of green banking and green credit performance.
- Gradually transform the procedures of internal governance, modernize the banking and the information technology infrastructure towards developing a better supportive system to minimize the negative impacts on the environment; provide credits and payment services for eco-friendly sectors; be proactive in formulating the internal instructions on green working environments, aiming at implementing effectively such measures as: efficient use of water, print paper, electricity, fuels,… in each and every branch and transaction office within the banks’ systems.
- Formulate clear and specific green credit policies for the environmentally sensitive sectors such as agriculture, hide and leather, renewable energy, apparel; strictly supervise and take measures to reduce the lendings to those projects that may harm the environment.
- Collaborate with the functional units of the SBV to formulate, implement, evaluate and report on the implementation progress of the green bank strategies and action plans on green bank and green credit development.
- Organize the training courses in order to increase the staff’s awareness of sustainable development, green growth, green bank, and to understand the importance of the social and environmental risk management; conduct effective communication and organize events to help customers better understand about the green bank products and services; introduce the customers with eco-friendly services and products.
- Closely collaborate with the functional units of the SBV and the environment authorities to develop and set up a database on the compliance and violations of the legal regulations and requirements for environmental protection of the customers and enterprises in order to be used by the commercial banks as a basis for the loan appraisal and identification of environmental risks during their evaluation of the creditors, and thereby minimize/reduce the credits for non-environmentally friendly activities.
In the context that Vietnam has to face with numerous environmental issues such as the climate change impacts, natural disasters, droughts, floods and environmental pollution, Vietnam has set up the economic growth targets for at least the next two decades not focusing on high growth rates like in the past, but more on green and sustainable growth, heading towards a green economy.
MH