By Michele Wee, CEO, Standard Chartered Bank Vietnam –
At COP26, November 2020, His Excellency Prime Minister Pham Minh Chinh on the world stage made the bold commitment for Vietnam to achieve Net Zero carbon emissions by 2050. This is a huge challenge, but at the same time an opportunity for Vietnam to implement strong reforms, restructure the economy towards green and sustainable growth, gradually increase the proportion of clean energy and renewable energy in economic development, and at the same time ensuring ESG is delivered concurrently.
In this process, the companionship and sharing of international organizations, financial institutions, and foreign banks is important not only in the perspective of policy advice and experience sharing for state management agencies, but also in supporting financial resources and direct capital for green project investors for sustainable development. The Just Energy Transition Partnership (JETP) and the detailed blueprint of the Resource Mobilisation Plan recently announced at COP28 by his Excellency Prime Minister Pham Minh Chinh, under the stewardship of the steering committee, will ensure the transition of RMP to tangible investment opportunities and adhere to ESG perimeters therefore, delivering real impact to the economy of Vietnam.
Let me share my perspectives on what we need to achieve the goals of ESG, green and sustainable development.
Shaping of a Green Society
Vietnam’s journey to Net Zero is an opportunity for regulators to shape the kinds of society that we want to live in; restructuring of the economy in conjunction with renewing the growth model; raising the competitive capabilities; and the ability to withstand external shocks.
Vietnam’s National Green Growth Strategy Decision No. 1658/QD-TTg approving the National Green Growth Strategy for 2021-2030 period, and its vision to 2050, is all part of this plan to green production, reduce the intensity of green-house gas emissions (GHG), stimulate green lifestyles and promote sustainable consumption.
To ensure the successful implementation and strengthen the approach to ESG standards, there are some points that I would like to highlight that are important in this transition:
- A Supportive National Policy Environment
There is a strong foundation dating back to December 2011 where the Vietnam National Climate Change Strategy was approved. The strategy outlines overall objectives, prioritized projects to be implemented in 2011-2015, and plans for 2016-2025 as well as a vision to 2100. It considers a low carbon economy and green growth as principles in achieving sustainable development, with greenhouse gas emission reduction in social and economic development.
- Strategic Framework and Strategy Development
The design of the framework will include the leaders and experts from relevant sectorial ministries (e.g. finance, MOIT, MONRE, MPI, Agriculture and Rural development, Transportation, Science and Technology and Construction) and Strategic Alliances e.g. IPG and GFANZ. Greening the financial sector, spurring green growth projects across sectors and ensuring transparent and predictable processes for energy projects must be a priority.
For this to happen, it is vital that Vietnam designs and implements global, transparent and standardized policies, reforms and governance to attract both public and private sector financing.
At the recent COP28 in December 2023, His Excellency Prime Minister Chinh unveiled the detailed blueprint of Vietnam’s Resource Mobilisation Plan (RMP) that can lead to a dynamic and just green economy.
- Implementation and Governance
Outlining of key processes and actions to take place in the coming years and decades. Implementation requires coordination across a wide variety of ministries and sectors. Governance on the management and monitoring of the implementation process that delivers climate change and its associated impacts.
This will also serve to mitigate greenwashing risk.
- Challenge and Review
Ensure this process with a 2nd line committee with deep expertise drawn from Sustainable Finance, Environmental and Social Risk Management (ESRM), audit, compliance, legal, reputational and sustainability risk, finance and regulatory affairs.
Our Approach to Impact
I am sure you have heard of Standard Chartered Bank brand promise “Here for Good”. It is our desire to be a catalyst for socio-economic development and this sits at the heart of our business strategy.
Through our loan portfolio, Standard Chartered supports local employment, wages, profits and tax payments in many different value chains – all of which contribute to economic growth via creating jobs, strengthening trading ties and broadening access to financial services. In previous years, we have published country reports on Indonesia, Ghana, and Bangladesh, and regional reports on Sub-Saharan some of the world’s most environmentally vulnerable regions – but many also have great opportunities to grow.
With this knowledge and promise, investing in the community is a key part in our operations in Vietnam, benefitting millions of young Vietnamese through our projects across financial education, life skills, leadership and entrepreneurship.
And being part of the Net Zero impact.
Safeguarding Our Future
To conclude: The opportunities and challenges for Vietnam to achieve Net Zero is significant. The importance of the task cannot be underestimated – climate change is perhaps the most urgent challenge facing the world today.
Together, we must continue to develop and complete specific legal frameworks on green credit as well as business investment projects with environmental impacts, set standards on green credit, produce a list of green industries and fields. Commercial banks can use these standards for general application to evaluate when granting green credit. We will also need technology transfer and technical implementation on this journey.
We all have a role to play to ensure harmonization and organisation on various levels to achieve Net Zero and deliver a just transition: As transitioning to net-zero will play a key role in safeguarding our environmental future.
Michele Wee, CEO, Standard Chartered Bank Vietnam
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