Page 348 - Ebook HTKH 2024

BIDV does not have a dedicated department for project appraisal and environmental and
social risk assessment. In Vietnam, units providing green credit certification services

have not been formed yet.
Large capital required for green projects
Vietnamese commercial banks, in general, and BIDV, in particular, when
participating in green banking activities, must ensure sufficient capital for economic
development while ensuring the economy's green growth and sustainable development.
However, green projects accessing green credit from commercial banks require large
capital, with medium to long-term capital recovery periods. These projects' mobilized
funds are used to integrate clean energy sources into the system. Besides the large capital

demand, green projects also require high investment costs and face numerous market
risks.
Additionally, the financial resources for green credit in Vietnam are largely
sourced from internationally funded programs and projects, such as the Green Credit
Trust Fund (GCTF) of the Swiss Government, the International Finance Corporation
(IFC), and the Asian Development Bank (ADB). These sources have played a significant

role in the early stages of green credit implementation in Vietnam. However, in the long
term, commercial banks need to assert their role in providing green financing to
businesses, for example, through the green bond market.
Intellectual property rights in Vietnam are currently unclear, leading to potential
risks. The existing domestic tools are inadequate, creating barriers to the development
of green investment capital in Vietnam.
Banks have not fully recognized the pollution risks that projects might cause.

Green projects are undertaken to pursue sustainable development trends, and
projects that are not environmentally friendly face significant pressures. This could lead
to boycotts or suspensions, resulting in businesses facing bankruptcy. Consequently,
non-performing loans could emerge at commercial banks, damaging their reputation and
credibility, especially if there are legal disputes from citizens related to these projects.
Lacks of awareness regarding corporate governance according to the ESG

(Environmental, Social, and Governance) model.
In Vietnam, awareness of ESG-based corporate governance is still limited. Many
companies do not prioritize sustainable development, resulting in a lack of disclosure of
their sustainability practices. However, this is one of the criteria for receiving green
credit from commercial banks, which limits the number of businesses able to access
green financing for their projects.
Legal framework issues also pose challenges.
While Vietnam has issued several legal documents related to green credit, these

regulations remain incomplete. For instance, while green credit provisions are included
in the Environmental Protection Law of 2020, they are not yet specified in the Law on
Credit Institutions or related implementation guidelines. The current Vietnamese legal
system lacks a comprehensive legal foundation for green credit activities, such as

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