Hanoi, Vietnam, October 10, 2019—Vietnam
is among 38 emerging market economies to have initiated key banking reforms
to drive development and fight climate change, according to the second
Global Progress Report of the IFC-facilitated
Sustainable Banking Network (SBN). These reforms require banks to assess,
manage, and report on environmental, social and governance (ESG) risks
in their lending operations and put market incentives in place for banks
to lend to green projects.
Of the 38 countries, 22 have adopted national
sustainable finance policies and voluntary principles, seven of which were
launched in 2019 alone. The report also captures the progress made by 14
countries to actively grow their green bond markets; and data shows increasing
innovation by financial institutions to green their lending portfolios.
“SBN members have demonstrated that transforming
financial markets toward sustainability is possible,” said Georgina Baker,
Vice President of IFC, World Bank Group. “Emerging markets are on the
forefront of this shift – and SBN’s tools and guidance have laid the
groundwork for more countries to follow suit.”
In 2018, the State Bank of Vietnam approved
the program on green bank development and an action plan to realize Vietnam’s
sustainable development goals by 2030. To enforce the incorporation of
ESG risks into lending decisions, the regulator has set two targets by
2025—the setting up of an E&S management system in all financial institutions
and integrating environmental and social risk assessment into credit risk
assessment. Further, it is a priority to establish specialized units for
environmental and social risk management and green finance in at least
10 to 12 banks.
A recent survey by the State Bank of Vietnam
in early 2019 revealed that 76 percent of participating banks have had
sustainable finance strategy in place. Seventeen banks had set up E&S
systems to comply with the regulatory requirements and 25 banks had conducted
risk-based E&S due diligence for their corporate and project financing
transactions.
“It is encouraging to see Vietnam’s major
progress among its peers in this report—the most comprehensive benchmark
of regulatory and industry-led initiatives on sustainable finance across
emerging markets,” said Nguyen Quoc Hung, Director at Department of Credit
Policies for Economic Sectors, State Bank of Vietnam. “Vietnamese banks
have shown their readiness in pursuing a sustainable finance agenda, which
is essential for capturing new business opportunities.”
In addition to providing practical resources
for countries undertaking sustainable finance reforms, the SBN report also
highlights the peer-to-peer knowledge sharing of members – a hallmark
approach of the network.
“The report captures the real-world experience
of SBN members to develop sustainable finance,” said Imansyah, Deputy
Commissioner of International and Research, Indonesia Financial Services
Authority (OJK), and a co-Chair of the SBN Measurement Working Group. “Sharing
lessons and knowledge among members has been an important catalyst to drive
finance reforms, particularly as countries embark on these efforts.”
Established in 2012, SBN now represents $43
trillion (86 percent) of banking assets in emerging markets. The report
is based on an innovative results-measurement approach developed by SBN
members as they work to convert sustainable finance policy reforms into
practical implementation and behavior change across the banking sector.
About SBN
Established in 2012, SBN is a voluntary community
of financial sector regulatory agencies and banking associations from emerging
markets committed to advancing sustainable finance. The first global network
of its kind focused on sustainable finance at market level, SBN represents
38 countries and $43 trillion (85 percent) of the total banking assets
in emerging markets. SBN members are committed to moving their financial
sectors towards sustainability, with the twin goals of improved ESG risk
management (including disclosure of climate risks) and increased capital
flows to activities with positive climate, environmental, and social impact.
IFC is Secretariat and technical partner, assisting members to share knowledge
and access capacity building that helps them design and implement national
sustainable finance initiatives. For more information, visit www.ifc.org/sbn
About IFC
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 where they are needed most. In fiscal
year 2019, we delivered more than $19 billion in long-term financing for
developing countries, leveraging the power of the private sector to end
extreme poverty and boost shared prosperity. For more information, visit
www.ifc.org
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