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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 sustainable finance.”
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.”
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 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
.
About SBN
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
.
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