The World Bank has just announced its first “green loan” to Vietnam which will be used for businesses dealing with environmental problems in the country that has one of the world’s highest emissions rates relative to its economy.
The loan package of US$212.5 million to Vietnam Prosperity Joint Stock Commercial Bank (VPBank) was announced this month under the Green Loan Principles, a voluntary set of international guidelines to make loans for eco-friendly projects, such as to promote solar power or biodiversity, according to VOA.
| Vietnam is seeking for green financing |
The World Bank’s International Finance Corporation (IFC) said the reason it packaged the loan is that Vietnam is the most “carbon intensive” nation in the Asia Pacific region, after China and Mongolia.
Vietnam’s economy costs a lot of greenhouse gas, and the IFC hopes loans like this one can help reduce the pollutants.
This meets a “strategic objective of increasing financing for climate-smart initiatives to boost environmentally sustainable development in emerging markets with high potential of greenhouse gas emissions reduction such as Vietnam,” said Rosy Khanna, the IFC financial institutions group director for Asia Pacific.
She said there is “high interest” among investors to provide a “source of capital while helping the country tackle climate change at the same time.”
Climate problems mean Vietnam has a business opportunity that the IFC values at US$753 billion for investors looking to tackle them.
VPBank said it would use the loan to invest in alternatives, adding that this is an opportunity to help the bank make positive contributions to national objectives by providing financial solutions to the segment of corporate customers investing in eco-friendly projects, such as renewable energy, national energy security, energy efficiency, green buildings, green transport, [and] waste treatment, the bank said in a press release.
VPBank has committed to setting up a management system to ensure accountability for the green loan, allowing it to record and monitor the types of green projects the loan finances, as well as allowing for third party verification.
The IFC said the loans in Vietnam would likely be used for green infrastructure, in addition to energy projects, particularly involving small or medium size businesses.
Vietnam has attained remarkable economic achievements after nearly 30 years of innovation and opening policies. However, it is urgent that environmental issues and environmental management are addressed within the context of industry.
