Green finance meets implementing issues

Rising demand for green financing is exposing a widening gap between capital availability and businesses' capacity to absorb as well as deploy it effectively.

- By Kaitlyn Le

Banks have been proactive in building dedicated ESG lending programmes

(Photo: Shutterstock)

Green credit is emerging as a pillar of the banking sector's development strategy, but further progress will depend on completing support mechanisms and removing bottlenecks related to capital, technology, and environmental data.

According to Pham Thi Thanh Tung, deputy director general of the Department of Credit for Economic Sectors at the State Bank of Vietnam, this shift is being reinforced by external pressures. Amid persistent volatility and upward movement in energy prices, businesses are facing a dual challenge: rising input costs alongside increasingly stringent green standards in export markets.

"Green transition and green growth are no longer new concepts, but the requirements defining what is green are becoming more demanding and more clearly specified at each stage of global economic development. In the current context, sustainable development has become both an urgent requirement and a strategic direction for most countries," Tung said at a green transition seminar held on March 27 in Hanoi.

The scale of financing required is therefore becoming increasingly apparent. Meeting the capital needs of green growth will depend on more coordinated mobilisation across funding channels, supported by targeted incentives and clearer policy signals from the state, Tung added.

While green growth has long been embedded in policy thinking, its practical requirements are becoming more exacting and more closely aligned with global standards. Vietnam set this direction early through an official green growth strategy for 2011-2020, with subsequent refinement for 2021-2030 and a longer-term vision to 2050.