Opportunities and challenges of green credit

In Viet Nam, the transition towards a green economy has been defined by the government as one of the pillars of its long-term strategic development. However, realising this strategy requires a proactive and leading role from the financial–banking system to “pump capital” into key sectors such as renewable energy, clean energy, and green agriculture.

A push to unlock long-term capital flows

Once considered a novel concept, green credit is gradually becoming a strategic component in banking operations. More than just a financial tool, green credit is an essential “catalyst” for unlocking long-term capital, driving the shift in growth models, fostering the development of a circular economy, and steering the country towards net-zero emissions by 2050.

According to a recent report from the State Bank of Viet Nam (SBV), as of the end of March 2025, 58 credit institutions had disbursed green credit with total outstanding loans exceeding 704.244 trillion VND, accounting for approximately 4.3% of the total credit of the economy. Between 2017 and 2024, outstanding green credit loans grew at an average annual rate of over 21%, significantly outpacing the overall credit growth rate of the sector.

Notably, over 70% of green credit has been channelled into renewable energy, clean production, waste management, and sustainable resource use. Loans for green industries and green buildings alone account for around 25 trillion VND, or about 3.7% of total green credit. Priority sectors include renewable energy (45%), green agriculture (31%), and sustainable water management.

Dao Minh Tu, Permanent Deputy Governor of SBV, affirmed that SBV has implemented numerous coordinated solutions to direct credit flows towards green, environmentally friendly sectors and low-carbon industries. BIDV has provided over 2 billion USD in loans for wind and solar energy projects in central and Central Highlands provinces. TPBank has launched preferential loan packages for individual customers installing rooftop solar power systems, while HDBank is expanding its access to long-term green capital through partnerships with international financial institutions. Agribank has rolled out a 10 trillion VND loan package for organic agriculture and renewable energy at interest rates from 3.5% per year. ACB has introduced a 2 trillion VND credit package for sectors on the green list. VietinBank has implemented nearly 27 trillion VND worth of green projects since COP26.

Untying the knots

Despite this clear trend, the green credit market in Viet Nam still faces numerous challenges. The foremost issue is the lack of standardisation. Viet Nam has yet to establish a comprehensive legal framework defining the concept and classification criteria for green projects. For example, there is still no decree or specific green taxonomy to determine project eligibility for green credit, resulting in many potential loans being unrecorded or excluded from proper policy support.

Assoc. Prof. Dr. Bui Huu Toan, Chairman of the Banking Academy Council, noted that the absence of clear criteria makes it difficult for businesses to access capital. Experts agree that Viet Nam needs a holistic strategy encompassing institutions, policies, and implementation resources. Lessons from the EU and the Republic of Korea show that a well-defined green taxonomy helps the market distinguish between “genuinely green” and “greenwashed” projects, thereby enhancing transparency and credibility.

To address this legal bottleneck, Nguyen Tuan Quang, Deputy Director General of the Department of Climate Change (Ministry of Agriculture and Environment), revealed that the ministry has recently submitted a proposal to the prime minister for the issuance of environmental criteria and certification for projects eligible for green credit and green bond issuance.

Once issued, the decision will set out clear environmental criteria, forming the basis for projects to access green credit and green bonds, while also supplementing standards for green production projects in line with export market requirements.

It is expected that 45 types of investment projects across 7 sectors will be certified as meeting environmental criteria for green credit and bond issuance. Meanwhile, Dr. Michaela Baur, Country Director of GIZ Viet Nam, emphasised that green taxonomy is a key factor in directing capital flows towards green growth and facilitating Viet Nam’s access to global green finance.

According to Dr. Baur, since 2017 and under the mandate of the German Government, GIZ has supported the SBV in developing the “Green Credit Reporting System”, which is considered an initial version of a green taxonomy specifically for the banking sector, aimed at tracking and promoting green credit activities.

Another significant milestone is the recent launch of the “Environmental and Social Risk Management Manual for Lending Activities,” jointly developed by the SBV and the International Finance Corporation (IFC). The manual is based on international best practices and is designed to help credit institutions apply ESG (environmental, social and governance) standards in lending and promote sustainable finance goals.

According to SBV Deputy Governor Dao Minh Tu, this manual offers highly practical guidance for credit institutions to strengthen risk management in line with the best global standards. Viet Nam is now at a pivotal moment in its transition to a new growth model. If the country remains dependent on the “brown” model — resource-intensive and high-emission — it risks falling behind in the global race.

On the other hand, if Viet Nam recognises and leverages green credit as a strategic financial lever, its economy has the potential to make a breakthrough, not only in terms of GDP growth but also in improving quality of life, enhancing international reputation, and achieving long-term sustainable development. In this context, the banking sector must lead the way, not merely as a lender, but as a driver of mindset transformation in the market. As the financial arteries of the economy, banks determine where capital flows, what it nurtures, and which development model will shape the future.

However, the banking sector’s efforts alone are insufficient. According to Ha Thu Giang, Director of the Department of Economic Sectors (SBV), unlocking green credit requires coordination among ministries and sectors to improve policy, build a roadmap for supporting green industries (in terms of tax, capital, and technology), and develop markets for green bonds and carbon credits. Credit institutions also need to access international capital sources to offer long-term loans at preferential interest rates.

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