Hanoi, Vietnam, February 26, 2018—Emerging
markets have become a major force in driving development and fighting climate
change as 34 countries, including Vietnam, have initiated banking reforms
to expand sustainable lending, according to the first comprehensive Global
Progress Report of the Sustainable Banking Network (SBN), an IFC-supported
organization of banking regulators and associations.
Those 34 countries account for $42.6 trillion in bank assets—more than
85 percent of total bank assets in emerging markets. Some are wealthier
than others, but all of them have made progress in advancing sustainable
finance. Vietnam, together with other seven countries—Bangladesh, Brazil,
China, Colombia, Indonesia, Mongolia, and Nigeria —have reached an advanced
stage, having implemented large-scale reforms and put in place systems
for results measurement. These reforms require banks to assess and report
on environmental and social (E&S) risks in their lending operations
and put market incentives in place for banks to lend to green projects.
“This progress is an important step toward achieving the Sustainable Development
Goals by 2030,” said Ethiopis Tafara, IFC’s Vice President for Legal,
Compliance Risk and Sustainability. “It shows that both middle and low-income
countries can adopt sustainable finance reforms. The SBN has demonstrated
in a short time how much can be achieved when regulators, policymakers,
trade associations and development institutions collaborate to advance
The report provides practical indicators and tools for countries to apply
to their own domestic markets, regardless of their size or stage of development.
This is important because it facilitates learning by all members and accelerates
the pace of change. It is based on an innovative results-measurement approach
that has been agreed by all 34 member countries—a remarkable achievement
that is breaking new ground for measuring progress at the global level.
The report recognizes the comprehensive nature of the efforts of the State
Bank of Vietnam (SBV), including the Directive on Promoting Green Credit
Growth and Environmental and Social Risks Management in Credit Granting
Activities, released in 2015. The Directive seeks to promote the green
economy and encourages all credit institutions to incorporate E&S risks
into their transactions. The report notes that the Directive also includes
a reporting template that requires credit institutions to report quantitative
data quarterly to SBV. This reporting covers both E&S risk evaluations
of credits, other financial
products, and green finance flows.
The Directive covers the banking sector,
but could be extended to other financial industry activities, such as insurance
and asset management.
In addition, SBV’s efforts including training
programs on sector-specific E&S checklists have provided specific guidance
to banks in managing E&S risks in ten high risk sectors. To further
stimulate green lending, SBV has released a
Green Project Catalogue which defines green sectors, and plans to publish
guidelines on reporting green finance flows. Additional financial incentives,
such as a grant program, are under consideration to increase green lending.
“For the first time, the report provides a concrete picture of what Vietnam
has been doing in the area of sustainable finance reform,” said Ha Thu
Giang, Deputy Director, SBV’s Department of Credit Policies for Economic
Sectors. “We appreciate that the report also identifies areas of further
focus for Vietnam to continue to promote growth of finance for green projects.”
IFC—a sister organization of the World Bank and member of the World Bank
Group—is the largest global development institution focused on the private
sector in emerging markets. We work with more than 2,000 businesses worldwide,
using our capital, expertise, and influence to create markets and opportunities
in the toughest areas of the world. In FY17, we delivered a record $19.3
billion in long-term financing for developing countries, leveraging the
power of the private sector to help end poverty and boost shared prosperity.
For more information, visit www.ifc.org.
The Sustainable Banking Network (SBN) is a knowledge and capacity-building
platform of financial regulators, banking associations, and environmental
regulators from emerging markets committed to developing sustainable finance
frameworks based on national contexts and priorities, as well as international
good practices. IFC acts as the Secretariat of the Network, playing the
role of facilitator and technical adviser to SBN. For more information
on the Sustainable Banking Network, visit www.ifc.org/sbn.