Apr 15, 2021 / 21:42

Vietnam stock market watchdog launches manual on sustainable bonds

Sustainable bonds are considered as an effective capital mobilization channel from the private sector for environmental and social projects.

The State Securities Commission of Vietnam (SSC) has launched a manual providing instruction on green, social and sustainability bonds.

 Green bonds would help accelerate sustainable development in Vietnam. Source: World Bank/jamesteoh

The manual came from the cooperation among the SSC, Climate Bond Initiative (CBI), and Swiss State Secretariat for Economic Affairs (SECO), with the aim of providing guidelines for issuers and market participants to adopt regional, international and Vietnamese standards on green, social and sustainability bonds – or sustainable bonds, collectively.

“Those sustainable bonds are considered an effective capital mobilization channel from the private sector for environmental and social projects, which in turn support the realization of sustainable development goals and the 2015 Paris Climate Accord,” stated the SSC.

“As a member of the ASEAN Capital Markets Forum (ACMF), the SSC has been actively involving in the promotion of the ASEAN Green Bond Standards (AGBS), ASEAN Sustainability Bond Standards (ASUS), which are based on the International Capital Market Association (ICMA)’s Green Bond Principles, Social Bond Principles, and Sustainability Bond Guidelines, with an aim to form sustainable assets in Vietnam,” added the stock market watchdog.

SSC’s Vice Chairman Pham Hong Son expected the manual to help local investors better understand international practices on the issuance and management of capital for green projects, as well as disclosing information on the social and environmental aspects of each enterprises.

“Such step is important to promote sustainable development in each enterprise and contribute to support long-term growth of the stock market via the development of green products,” he added.

IFC Regional Manager for Vietnam, Cambodia, and Laos Kyle Kelhofer added the agency is looking for opportunity to join Vietnam’s potential green bond market in the coming time.

Kelhofer added the IFC expects green bond would open up opportunities for further fund raising for infrastructure and renewable projects, which are finding it hard to raise funds via traditional financial instruments.

The issuance of green bonds would help accelerate Vietnam’s efforts towards green and sustainable development, said Kelhofer.

A study from Moody’s suggests global issuance of sustainable bonds will hit a record $650 billion in 2021, a 32% increase over the $491 billion issued in 2020. Of the total, US$375 billion would come from green bonds, US$150 billion from social bonds and US$125 billion of sustainability bonds.

Sustainability-linked bonds have strong growth potential, as they allow issuers to maintain the flexibility of general corporate purposes borrowing while potentially still appealing to sustainability-minded investors.

Meanwhile, governmental policy will further support sustainable debt market growth and development in the year ahead, as governments around the world heighten their focus on climate change and link economic recovery plans with sustainable development goals, stated the rating agency.