Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) officially issued the “Sustainable Loan Framework” developed in consultation with the Carbon Trust. BIDV is the first Vietnamese commercial bank to announce the “Sustainable Loan Framework” for customers, creating conditions for the bank to develop and introduce to customers sustainable financial products according to international standards.
Sustainable development is an inevitable trend in the long-term development process of all countries, stemming from the fact that climate change is increasingly affecting globally. Against this backdrop, organizations and individuals are working together to find ways to mitigate the effects of climate change and improve operations towards sustainability. Financial resources will be critical to driving sustainability initiatives at the speed and scale needed to address the issues involved. Therefore, in this process, financial institutions play an essential role in providing green and sustainable financial resources, empowering customers to pursue the path of sustainable development.
Recognizing the importance of the bank in supporting the economy in achieving long-term sustainable development goals, BIDV has made sustainable growth and promoting green growth a goal in its business strategy period 2021 – 2025 and vision to 2030. BIDV has implemented many specific action programs to realize this goal. By the end of 2022, BIDV will lead the market in green finance with more than 1,386 customers and projects with a total committed capital of more than 2.68 billion USD. Therefore, the development of the “Sustainable Loan Framework” is the next step that allows BIDV to introduce sustainable financial products to the domestic market.
Mr. Le Ngoc Lam – General Director of BIDV – said: “BIDV has defined a clear vision and strategy for green credit development, always prioritizing credit capital to finance green projects and has achieved very positive results. The development and issuance of the Sustainable Loan Framework will help BIDV provide sustainable financial products of international standards to domestic enterprises, and at the same time serve as a basis for BIDV to strengthen cooperation with international organizations in the field of sustainable development in Vietnam”.
“BIDV Sustainable Loan Framework” was developed with the active advice of Carbon Trust based on the principles of Loan Market Association (LMA), Loan Syndications and Trading Association (LSTA) and the Asia Pacific Loan Market Association (APLMA) co-issued, including Green Loan Principles (GLP); Social Loan Principles (SLP) and Sustainable Linked Loan Principles (SLLP).
The need for sustainable finance as a link to Vietnam’s climate transition is more urgent than ever, said Chris Stephens, director of the Asia-Africa region at Carbon Trust. BIDV’s Sustainable Loan Framework is an important step forward in mobilizing the capital needed for sustainable solutions that deliver meaningful results and positive impacts on society.
BIDV’s Sustainable Loan Framework is designed to provide the most popular sustainability lending products in today’s global market including theme loans and sustainability-linked loans. Thematic loans, such as green loans and social loans, are designed specifically for projects that have a positive impact on the environment and society. In addition, sustainability-linked loans refer to loans designed to incentivize borrowers to achieve pre-established sustainability performance targets and measured through the performance evaluation indicators have been identified.
The issuance of the Sustainable Loan Framework helps position BIDV as a reputable bank that plays an active role in the implementation of the Government’s Sustainable Development Strategy. Previously, in May 2022, BIDV signed a Memorandum of Understanding on promoting sustainable green financial development, environmental protection and responding to climate change with the Ministry of Natural Resources and Environment. These achievements show BIDV’s efforts in realizing the Government’s commitment at COP26 to achieve net zero (net-zero) emissions by 2050. Besides, following international practices, BIDV will also seek a third party to provide an independent assessment and perform External Validation (SPO) for the bank’s Sustainable Lending Framework.
The cooperation between BIDV and Carbon Trust is carried out within the framework of the £15 million ASEAN Low Carbon Energy Program (LCEP) funded by the UK Government. The British Embassy’s Climate Counselor in Hanoi, Mr. Ronald Bohlander, said: “The UK is committed to supporting Vietnam in its green and energy transition. We are delighted that BIDV’s participation has contributed to an increase in the number of forward-thinking financial institutions around the world that are demonstrating their commitment to closing the financial gap for the green economy transition. The UK wants to encourage Vietnamese banks and stakeholders to consider following in BIDV’s footsteps and becoming part of a growing coalition to realize Vietnam’s net-zero transformation goals.”