A new Memorandum of Understanding (MoU) with the State Securities Commission of Vietnam (SSC) will support government efforts to leverage the capital market to tackle climate change through green and sustainable finance. With IFC’s assistance, SSC will promote the adoption of environmental, social and governance (ESG) standards and practices—as well as enforce ESG requirements—among market players. This will help strengthen the sustainable finance framework, encouraging innovative financial products such as green bonds, transition bonds, and sustainability-linked bonds to attract international investors, who are looking for sustainable assets.
“Capital markets have a big role to play in Vietnam’s transition to a climate-resilient and low-carbon economy, helping mobilize green capital,” said Nguyen Duc Chi, Deputy Minister of Finance.
“Promoting green and sustainable finance is a long-term priority for the SSC. IFC’s continued efforts to encourage the adoption of ESG standards and practices among public companies will help scale up green finance, creating a sustainable capital market in Vietnam,” said Pham Hong Son, Vice Chairman of the State Securities Commission of Vietnam.
These efforts are part of a new initiative between IFC and SECO—the Integrated ESG Program—to help regulators, investors, companies and partners in Vietnam manage ESG risks and bottlenecks by promoting effective decision-making, and environmental and social (E&S) risk management.
"Strengthening ESG capacity is critical to achieving the climate commitments and the Sustainable Development Goals (SDGs)," said Werner Gruber, Head of the Swiss Cooperation Office in Vietnam. "Failure to consider ESG risks can lead to poor and unsustainable investment decisions. Our work with IFC aims to improve ESG standards and practices in Vietnam to guide financial flows towards sustainable investments for a more inclusive and sustainable economic development.”
Using IFC’s ESG standards – its Performance Standards and Corporate Governance Methodology, the integrated ESG approach addresses critical ESG topics, including effective environmental and social risk management and systems, disclosure and transparency, climate risk and mitigation and gender.
“Greening the capital markets with a focus on improved ESG standards is a priority as Vietnam aims to unlock private investment to achieve its twin goals of becoming a high-income and carbon-neutral economy by 2050,” said Kim-See Lim, IFC Regional Director for East Asia and Pacific. “IFC is excited to deepen its partnership with SSC and SECO to help spur a conducive environment for private sector climate investment, which is vital for supporting sustainable and resilient growth in Vietnam.”
One of the most vulnerable countries to climate change and natural disasters and also one of the most carbon-intensive economies in Asia, the government of Vietnam aims to decarbonize the economy and achieve carbon-neutral status by 2050 as committed at the 2021 United Nations Climate Change Conference (COP 26). This will require huge investments over the next 30 years with state resources meeting only part of the financial need.
The State Secretariat for Economic Affairs (SECO) is the Swiss government’s center of expertise for core issues relating to economic policy. It is also responsible for the implementation of Switzerland’s economic development cooperation program in developing countries. In Vietnam, the cooperation focusses on improving public finance management, strengthening the financial sector, enhancing private sector competitiveness, and facilitating its access to international markets, and the strengthening of urban development and urban climate resilience.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit IFC