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May 12, 2022 / 10:45

IFC aids Vietnam’s transition to low-carbon economic growth model

The IFC has signed cooperation agreements with Vietnam’s Government agencies in helping the country achieve its climate goals.

IFC is stepping up its support to the government of Vietnam to promote sustainable finance and spur private sector participation, supporting the country’s climate goals and driving sustainable growth.

 MoU signing between IFC representative (l) and Minister of Natural Resources and Environment Tran Hong Ha (r) in the presence of Prime Minister Pham Minh Chinh. 

The latest IFC support comes in the wake of new Memoranda of Understanding (MoUs) with the Ministry of Natural Resources and Environment and the State Bank of Vietnam to leverage private sector innovation and finance in the country’s transition to a green, resilient, and low-carbon economy.

The MoUs were exchanged between signatories in Washington in the presence of Vietnam’s Prime Minister Pham Minh Chinh, who is in the US to attend the US-ASEAN Special Summit.

As a driving force behind Vietnam’s COP26 agenda, the Ministry of Natural Resources and Environment will partner with IFC to create a conducive environment for private sector climate investment.

Building on its ongoing support to the ministry to develop green project criteria, IFC will also help develop and implement a policy and regulatory framework with an initial focus on key areas, including green procurement, green taxonomy, and waste management, especially plastic recycling and e-waste, among others.

"I highly appreciate the MOU signing between the Ministry of Natural Resources and Environment and IFC, which brings our bilateral cooperation to a new level," said Tran Hong Ha, Minister of Natural Resources and Environment.

“The strengthened cooperation between us will greatly contribute to the implementation of Vietnam's commitments in COP26 and other issues related to environmental protection and sustainable development," he added.

 MoU signing between IFC and SBV's Governor Nguyen Thi Hong (r). 

To facilitate green financial flows and align the banking sector with the country’s climate goals, over the next five years, IFC will also scale up its support to the national sustainable finance agenda led by the State Bank of Vietnam.

Nguyen Thi Hong, the Governor of the State Bank of Vietnam, said banks have a big role to support Vietnam’s transition to a climate-resilient and low-carbon economy, helping mobilize and allocate green capital.

“IFC’s continued efforts to improve the environmental, social, and governance (ESG) practices in the country’s financial institutions will be of great help in greening the banking sector, scaling up green finance to its full potential to support sustainable economic growth,” she said.

IFC, in partnership with the Swiss State Secretariat for Economic Affairs (SECO), will further help the central bank strengthen its sustainable finance framework in a range of areas, including ESG risks, climate risk management, and others, while continuing to help commercial banks build capacity in line with global sustainability and governance practices.

“Private sector investment is critical to achieving our climate change goals,” said Stephanie von Friedeburg, IFC’s Senior Vice President, Operations. “For Vietnam, which aims to become both a high-income and carbon-neutral economy in the next 30 years, private sector investment is doubly important. IFC will continue to work closely with the Government to ensure that the right policies and incentives are in place to help unlock this finance.”

One of the most vulnerable countries to climate change and natural disasters and 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.