Legal framework needed for green finance

Green credit balance increased by 8.35% and needs to be promoted

Speaking at the International Conference with the theme "Opening the international green capital market - Promoting sustainable development and financial inclusion in Vietnam" organized by Nam A Bank on September 5, 2025 in Da Lat, Dr. Nguyen Quoc Hung, General Secretary of the Vietnam Banks Association, said that in Vietnam, the Government has committed to achieving the Net zero target by 2050 in parallel with the strategy of promoting financial inclusion and developing the private economy. This is both a challenge and an opportunity for Vietnam to become an attractive destination for global green capital flows.

To achieve the set goal, the Government has approved the National Strategy on Green Growth for the period 2011 - 2030 and vision to 2050, focusing on 3 strategic tasks including: reducing the intensity of greenhouse gas emissions and promoting the use of clean energy and renewable energy; greening production; greening lifestyles and promoting sustainable consumption.

Accordingly, the Government and ministries, including the State Bank, have issued many policy mechanisms that both create a legal corridor and encourage the achievement of green growth and sustainable development goals. Recently, on July 4, 2025, the Prime Minister issued Decision No. 21/2025/QD-TTg stipulating environmental criteria and confirming investment projects in the green classification list.

However, according to Mr. Hung, the development of the green financial market in Vietnam still faces many barriers that need to be removed, focusing on the following contents.

Firstly, it is the mobilization of financial resources for the goal of net zero emissions by 2050. According to the World Bank (WB) report, Vietnam needs an investment of about 6.8% of GDP per year, equivalent to 368 billion USD until 2040.

This requires mechanisms and policies to mobilize domestic and foreign capital, promote the development of the green financial market, and encourage private capital flows to invest in green economic sectors.

Secondly, from 2017 to present, the green credit and green bond market has grown at a rate of more than 20% per year, much higher than the general credit growth rate of the economy.

Regarding the green credit market, by June 30, 2025, 63 credit institutions had generated green credit outstanding balances with outstanding balances reaching over VND 736 trillion, an increase of 8.35% compared to the end of 2024, accounting for 4.3% of the total outstanding balances of the entire economy, focusing mainly on renewable energy, clean energy (accounting for more than 39%) and green agriculture (over 26%).

Regarding the assessment of social and environmental risks in credit granting activities of credit institutions: Outstanding credit balances assessed for environmental and social risks reached VND 4.72 million billion, an increase of 31% compared to the end of 2024. Of which, outstanding credit balances managed for environmental risks according to Circular 17 reached over VND 1.2 million billion.

For the green bond market, green bonds play an important role in promoting sustainable development through capital mobilization for environmentally friendly projects and activities.

Although the market is still in its infancy, Vietnamese enterprises are increasingly interested in and actively participating in green bond issuance. If there were only 4 issuances in the 2021-2023 period, in 2024 alone, there were 6 issuances of green and sustainable bonds with a total value of more than 10,000 billion VND, nearly 4 times higher than in 2023. Of which, credit institutions alone issued more than 8,000 billion VND, accounting for more than 80% of the volume of green and sustainable bonds issued in 2024.

However, the scale of green and sustainable bonds in Vietnam is still very small in the total corporate bond market. As of mid-April 2025, the outstanding debt of this market reached more than VND30 trillion, accounting for 2% of the total size of the Vietnamese corporate bond market.

Enterprises mobilizing resources from international organizations to improve capacity, governance, and technology investment to meet ESG standards are still modest. This shows that the proportion of outstanding green credit, accounting for less than 4.5% of total outstanding debt and in the past 5 years, only 1.16 billion USD of green bonds were issued, is still very modest compared to the capital demand of about 20 billion USD on average per year to implement green transformation goals and green projects.

Thirdly, in the context of the whole country strongly transforming with the goal of developing a digital economy, data is a powerful support tool for digital transformation, green transformation, a "new resource, a type of strategic asset" - clearly established in Resolution 57-NQ/TW.

VNBA News