IFC, in partnership with the Swiss State Secretariat for Economic Affairs (SECO), on Friday signed a new memorandum of understanding (MoU) with the State Securities Commission of Viet Nam to support government efforts to leverage the capital market and 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 and enforce ESG requirements among market players.
This will help strengthen the sustainable finance framework and encourage innovative financial products such as green bonds, transition bonds, and sustainability-linked bonds to attract international investors looking for sustainable assets.
"Capital markets have a big role to play in Viet Nam's transition to a climate-resilient and low-carbon economy, helping mobilise 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 Viet Nam," said Pham Hong Son, Vice Chairman of the State Securities Commission of Viet Nam.
As Viet Nam aims for a low-carbon growth model and to achieve carbon neutrality by 2050, these efforts are part of a new initiative between IFC and SECO, the Integrated ESG Programme, to help regulators, investors, companies and partners in Viet Nam 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 Viet Nam.
"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 Viet Nam 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 Viet Nam 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 Viet Nam." — VNS