Green finance critical to realise green growth targets: conference
Green finance critical to realise green growth targets: conference
It is critical to develop solutions to effectively mobilise and allocate green financial sources to realise green growth targets towards sustainable development, a conference held by Economy and Forecast Magazine has heard.
A wind farm in Ninh Thuận Province. The effective mobilisation and allocation of financial resources, from domestic and foreign sources and from different economic sectors needs to meet the capital demand for green growth. — VNA/VNS Photo Công Thử |
The conference, held on Tuesday in Hà Nội, learned that Việt Nam needs huge resources to achieve green growth targets.
The United Nations Development Programme (UNDP) estimates that Việt Nam needs US$330-370 billion to achieve Net Zero by 2050. The Ministry of Natural Resources and Environment said that a sum worth $68.75 billion is needed to reduce emissions in line with the country’s environment commitments
“The effective mobilisation and allocation of financial resources, from domestic and foreign sources and from different economic sectors is pressing to meet the capital demand for green growth,” Đỗ Thị Phương Lan, Editor-in-Chief of the magazine said.
Under the action plan to implement the green growth strategy, financial sources to accelerate green growth include the State budget, the private sector (green credit, green corporate bond, carbon credit and exchange of greenhouse gas emission quotas), international assistance (ODA) and society by way of public-private partnership and funds.
According to Nguyễn Thanh Nga, Deputy Director of the Institute for Financial Strategy and Policy, there are limitations in the green finance policies of Việt Nam.
Specifically, the taxes and fees on activities that cause environmental pollution, as well as punishments, are not severe enough and unable to compensate for the damage caused.
The State budget allocated for green growth remained limited, she said, citing statistics of the Ministry of Planning and Investment that the State budget only met around 25 per cent of the capital demand to cope with climate change and promote green growth.
In addition, the development of a green stock market in Việt Nam was slow compared to other countries in the region such as Indonesia, Thailand and Malaysia. The major motivation of the green stock market had not come from the market demand as the investors had not been aware of or not paid adequate attention to corporate sustainable development and social responsibility.
Nga pointed out that the absence of green taxonomy was also hindering the development of a green stock market, together with the limited participation of professional institutional investors.
The development of green insurance was also lagging the demand for rapid and sustainable economic development.
To renovate its growth model, Việt Nam needed to focus on improving the capacity to raise and use green financial tools effectively, Nga said.
Solutions
A comprehensive review of tax policies should be carried out to expand the tax base for environmental protection tax and offer bigger incentives to green growth and climate change adaptation projects, Nga urged.
Public investment policies should prioritise green growth and create spillover effects to attract resources from other economic sectors, she said.
Solutions to promote the development of green stock markets should be implemented synchronously, including green bonds and green stocks. The legal framework for green insurance must also be improved.
It was also important to improve the legal framework for carbon credit market, including the formation of a carbon credit exchange which would be connected to the regional and world markets, Nga said, stressing that the carbon market was an important tool towards green growth.
The development of green and sustainable financial instruments is a new sector not only in Việt Nam but also in the world and remains challenging, according to Tô Trần Hoà, Deputy Director of the Market Development Department under the State Securities Commission.
Green financial instruments are not only a vital trend, but also an opportunity for Việt Nam to take the pioneering role in sustainable development.
The State Securities Commission will continue to improve policies and develop projects in line with the national strategy on green growth together with the early issuance of an action plan for green growth of the securities market by 2030.
Policies and incentives will be raised to encourage listed and public companies to invest in green projects to create competitive advantage.
According to Cấn Văn Lực, senior economist at BIDV, there are significant opportunities for the development of green finance in Việt Nam, given that the legal framework for green credit, stocks, bonds and investment funds is gradually being formed.
The country’s green growth strategy also requires significant resources from credits and securities, while the commitments at COP26 require the country to heavily invest in renewable energy, waste management, green agriculture, low-emission transportation, water management and climate change adaption.
The readiness of international funding for green growth is also an advantage for Việt Nam. However, it is a pressing issue for Việt Nam to develop green finance products, including green credits and green stocks to capture the opportunities.
Lực said that the Government should early issue green taxonomy which would clarify sectors and industries to be prioritised as well as organisations which are capable of certifying green standards.
Detailed mechanisms, standards and approaches to measure greenhouse gas emissions were also needed to raise appropriate policies for different industries.
Policies should also encourage changes in behaviours towards green production and consumption.
In addition, a green finance ecosystem following 5I models: Instruments – Investors – Issuers – Internal governance culture – Information should be put into consideration for taking shape in Việt Nam.
The formation of the carbon credit market must be accelerated, he stressed.
From the perspective of enterprises, Diệp Kim Hoàn, director of sustainable development at Deep C Industrial Zone, said that companies expected a clear set of criteria to determine whether a project is green or not, together with support policies in terms of interest rates, debt payment extension and credit guarantee with streamlined procedures.
A green investment fund should be set up to provide finance to SME projects, especially in terms of renewable energy, waste management and nature-based infrastructure.
As of the end of June, outstanding green loans were estimated to total nearly VNĐ680 trillion ($27.5 million), or 4.5 per cent of the total outstanding loans in the economy.
From 2019 to June 2024, Việt Nam issued around $1.16 billion worth of green bonds.
