PROSPECT OF THE GREEN BOND MARKET IN VIETNAM Speaker: Department of - - PowerPoint PPT Presentation

FINANCIAL POLICIES FOR GREEN AND SUSTAINABLE DEVELOPMENT -

PROSPECT OF THE GREEN BOND MARKET IN VIETNAM

CONTENT

I

• Financial policies for green and sustainable development

II

• Development prospect of the green bond market

III

• Pilot implementation of the green bond market

IV

• Development orientation for the green bond market

FINANCIAL POLICIES FOR GREEN AND SUSTAINABLE DEVELOPMENT

I.

Strategic policies for green and sustainable economic development

• Dept. of Banking and Financial Institutions-MoF

ü Resolution no.24-NQ/TW dated 3/6/2013 of the Central Committee XI on active in response to climate change, improvement of financial management and environmental protection, in which sets the goal until 2020 is to develop a green and environmental friendly economy, until 2050 is to reach environmental targets equivalent to industrialized countries in the region.

ü In orienting towards a fast, sustainable economic development, and in restructuring and complete the economic institutions towards greening the economic sectors, the Prime Minister promulgated:

• Decision no.1393/QĐ-TTg on approval of the Vietnam Green Growth Strategy;
• Decision no.403/QĐ-TTg on approval of the National Action Plan on green

growth during the period 2014-2020;

• Action Plan to implement Paris Agreement on climate change (Decision no. 2053/QĐ-

Strategic policies for green and sustainable economic development

• Dept. of Banking and Financial Institutions-MoF

ü According to the PM’s Decisions, financial policies for green and sustainable development include the following:

• State budget to implement VGGS; policies in tax, fees to promote the implementation
• f VGGS.
• Green capital market development and green financial products to mobilize investment

ü Ministry of Finance promulgated no.2183/QĐ-BTC dated 20/10/2015 approving the implementation of the National Strategy on Green Growth until 2020 , including the following key elements and mandates:

• Finalization of financial policies relating to the promotion of the implementation of the

• Development and finalization of the financial policy framework for the development of

• Review and finalization of the credit policies and the State’s support

DEVELOPMENT PROSPECT OF THE GREEN BOND MARKET

II.

• 1. Policies on green bond market development
• Dept. of Banking and Financial Institutions-MoF

ü Based on Resolution no.24-NQ/TW and Decisions of the PM, MoF promulgated Decision no.2183/QĐ-BTC dated 20/10/2015 approving the implementation of the National Strategy on Green Growth until 2020 , including the following objectives and tasks:

ü Issuance

• f

government bonds and municipal bonds for green projects/programs/objectives. ü Issuance of corporate green bonds for green projects or green products.

ü Decision no.1191/QĐ-TTG on approval of the bond market development roadmap for period 2017 - 2020 and vision up to 2030;

ü MoF is the leading agency in developing and issuing mechanisms and policies

• n green bond market development.

• 1. Policies on green bond market development (cont.)
• Dept. of Banking and Financial Institutions-MoF

ü MoF is drafting Decree no.90/2011/NĐ-CP on corporate green bonds, which

is expected to include contents of green bond issuance; üResearch, evaluation and complement regulations on government bond issuance, and municipal bond issuance in the revised Decree no. 01/2011/NĐ-CP.

• 2. Identify green projects/programs using proceeds from

green bond issuance

• As a basis for capital mobilization through green bond issuance, there

should be a set of criteria to evaluate and select green projects

• In implementation of the National Action Plan on Green Growth (Decision

no.1393/QĐ-TTg, Decision no.403/QĐ-TTg), line ministries and localities are developing a plan to issue criteria for green projects. Accordingly, green projects areas under consideration include: renewable energy, energy efficiency, land use conversion and management, sustainable forestry, sustainable waste management and green agricluture

• Dept. of Banking and Financial Institutions-MoF

• 3. Current status of the bond market in Vietnam
• Market growth rate during 2011-2016 was 24%/year.
• Dept. of Banking and Financial Institutions-MoF

• 3. Current status of the bond market in Vietnam (cont.)
• Average bond trading volume on the secondary market at the end of 2016 was about

VND 6,285 billion/session, in the first 10 months of 2017 was approximately VND 8,773 billion/session, increasingly sharply comparing to the amount of VND 1,000 - 2,000 billion/session in 2013.

• Dept. of Banking and Financial Institutions-MoF

• 3. Current status of the bond market in Vietnam (cont.)
• Financial intermediaries system has been restructured: (i) Re-arrange

and re-structure the securities companies towards quantity reduction and improvement of financial capacity and efficiency; (ii) the system of members bidding for government bonds has gradually developed, promoting its role in both primary and secondary markets.

• Information infrastructure on securities registration, depository, trading

and payment has been invested in by stock exchanges and Vietnam Securities Depository to ensure a safe and fast trading market.

• Dept. of Banking and Financial Institutions-MoF

PILOT IMPLEMENTATION OF THE GREEN BOND MARKET

III.

• 1. International green bond market
• According to the International Capital Market Association (ICMA),

green bonds are any type of bond instrument where the proceeds will be exclusively applied to finance or re-finance, in part or in full, new and/or existing eligible green projects.

• Green bond principles
• Use of proceeds is for green projects, directly beneficial to the

environment

• Specific criteria to identify green projects.
• Proceeds from bond issuance should be accounted for and monitored

separately, information disclosure on disbursement must be transparent

• Issuers should report on the use and disbursement of proceeds from green

bond issuance.

• Dept. of Banking and Financial Institutions-MoF

• 1. International green bond market development (cont.)
• Development trend of the green bond market
• Diversified green bond issuers: In 2007, the first green bonds were issed

by World Bank (WB). Now green bond issuers include EIB, ADB, KfW, Development Bank of Japan, local governments in EU, USA

• Green bond demand is increasing: outstanding volume at the end of 2016

was approximately USD 700 billion by 780 issuers, with the focus on the following sectors: transportation, energy, water, waste treatment, agriculture and forestation

• Dept. of Banking and Financial Institutions-MoF

• 2. Policy on pilot issuance of green bonds
• In implementation of Decision no.403/QĐ-TTg by the PM on National

Green Growth Action Plan and Decision no.2183/QĐ-BTC on green capital market development and green bond issuance

• On the basis of reviewing existing legal framework (Securities Law,

Decree no.01/2011/NĐ-CP, Decree no.90/2011/NĐ-CP) ØGreen bond issuance will be in accordance with the provisions of the bond market; proceeds from bond issuance will be used for green projects and projects relating to environmental protection.

• Dept. of Banking and Financial Institutions-MoF

• 2. Policy on pilot issuance of green bonds (cont.)

In October 2016, leaders of the Ministry of Finance approved the pilot issuance of green bonds. The scheme is as follow:

ØType of bonds: municipal bonds ØIssuing time: 2016-2017 ØTerms: 3 years, 5 years ØIssuance volume: VND 300 – 500 billion ØThe bonds are registered and deposited at the Vietnam Securities Depository and listed on Hanoi Stock Exchange

• Dept. of Banking and Financial Institutions-MoF

• 3. Implementation of the pilot issuance of green bonds
• Within the cooperation framework with GIZ, MoF (with the
• Dept. of Banking and FIs as the focal point), in coordination

with GIZ, implemented the pilot issuance of green bonds in Vietnam.

• Leaders of MoF approved the pilot issuance of green bonds in

2016 for municipal bonds of Hochiminh City (VND 523.5 billion, terms: 15 years), and Ba Ria Vung Tau (VND 80 billion, terms: 5 years).

• Dept. of Banking and Financial Institutions-MoF

• 3. Implementation of the pilot issuance of green bonds

(cont.)

Hochiminh City:

• Issuance volume: VND 523.5 billion (over a total volume of VND 3,000

billion of municipal bonds issued in October 2016)

• Terms: 15 years
• Proceeds from issuance of municipal green bonds were used in 11 green

projects in the sector of sustainable water resources management, climate change adaptation and sustainable infrastructure.

• Proceeds from green bond issuance have been disbursed for green project.
• Dept. of Banking and Financial Institutions-MoF

• 3. Implementation of the pilot issuance of green bonds

(cont.)

Ba Ria Vung Tau

• Issuance volume: VND 80 billion (over a total volume of VND 500

billion of municipal bonds issued in September 2016)

• Terms: 5 years
• Proceeds from issuance of municipal green bonds is expected to be

used for 1 project in water resources management

• Ba Ria Vung Tau is finalizing the disbursement procedure for the

project using proceeds from issuance of municipal bonds.

• Dept. of Banking and Financial Institutions-MoF

DEVELOPMENT ORIENTATION FOR THE GREEN BOND MARKET

IV.

Objectives

• Promulgate a complete mechanism and policy on issuance, listing,

trading of green bonds

• Establish the green bond market: scale-up, product diversification;

standardize the mechanism of market monitoring, evaluation and surveillance; encourage the participation of green investment funds

• Dept. of Banking and Financial Institutions-MoF

• 1. Completion of the legal framework
• For corporate green bonds:

§ Additional provisions on the purpose of bond issuance for capital mobilization for green projects/programs; § Provide guidelines on reporting mechanism, information disclosure

• n issuance, management of use of proceeds from bonds
• For government bonds and municipal bonds:

§ Provide guidelines on issuing mechanism, management and monitoring the proceeds from green bonds

• Dept. of Banking and Financial Institutions-MoF

• 1. Completion of the legal framework (cont.)
• For provisions on information mechanism:

§ Develop a set of criteria for information disclosure on green projects § Issue the green project catalogue prioritizing to use green credit, green bond capital

• Research on tax mechanism applied for green bonds
• Dept. of Banking and Financial Institutions-MoF

• 2. Solutions to promote the green bond market development
• Implement solutions to promote the green bond market development, increasing

the liquidity of the secondary market following solutions in Decision no.1191 (product diversification, development of the information disclosure system, develop a

network of market makers, review tax and fees provisions,etc.)

• Encourage corporates to issue green bonds to mobilize investment funding for

green projects

• Promote and encourage international investors, investment funds specializing in

green bonds to participate in the market

• Active cooperation with relevant stakeholders, fora, international organizations

to exchange and research on market development

• Dept. of Banking and Financial Institutions-MoF

• 3. Recommendations of tasks for several stakeholders
• Ministry of Finance:

• Ministry of Natural Resources and Environment:

• Localities:

• Dept. of Banking and Financial Institutions-MoF

THANK YOU VERY MUCH!

DEVELOPMENT ORIENTATION OF THE GREEN CAPITAL MARKET AND GREEN FINANCIAL PRODUCTS IN VIETNAM

Main content

ØLegal framework for green growth ØGreen finance activities on the securities market ØOrientation of green finance and green financial products for the securities market

Legal framework for green growth

üDecision no.1393/QĐ-TTg dated 25th September, 2012, the Prime Minister approved the National Green Growth Strategy for the period 2011 – 2020 with vision to 2050 üDecision no.403/QĐ-TTg: dated 20th March, 2014, the Prime Minister approved the National Green Growth Action Plan for the period 2014 – 2020. üDecision no.2183/QĐ-TTg dated 20th October, 2015, the Minister of the Ministry of Finance approved the Action Plan of the finance sector in implementation of the National Strategy on Green Growth for the period 2014 – 2020.

Green finance activities on the securities market

Task assigned in the Action Plan of the finance sector in implementation of the National Strategy on Green Growth until 2020 : “Develop and finalize the financial policy framework for development of green capital market and green financial products”

Green finance activities on the securities market

Circular no.155/2015/TT-BTC issued by the Ministry of Finance includes guidelines on environmental & social disclosure Requirements of public companies to disclose information on sustainable development (Clause 2 Article 8 Circular no.155/2015/TT-BTC). SSC, in coordination with IFC, GRI, and two stock exchanges, implements training programs on capacity building for listing companies on ESG information disclosure.

Green finance activities on the securities market

Ø The Sustainability Report Award was presented in the Annual Report voting ØBidding of government bonds investing in green projects ØHanoi Stock Exchanges, in cooperation with GIZ provides technical assistance for localities such as HCM City and Ba Ria – Vung Tau Province to issue pilot green municipal bonds ØHCM Stock Exchange: Launching

• f

the Sustainability Index (VNSI) on 24th July 2017

Policy orientation for green capital market development

Ø Continue to study and complete the sustainability report, with the requirement to separate it into an independent report and to better comply with GRI’s criteria Ø Conduct research to integrate concepts of green investment, green securities (including green stocks, green bonds) into legal regulations such as revised Securities Law Ø Conduct research to develop criteria for offering, listing, supervision of green - labeled products

Policy orientation for green capital market development

Encourage enterprises to

• ffer,

mobilize investment capital for green growth through capital market of green enterprises, green projects and green products such as listing and issuance of green shares, green bonds, investment certificates for green projects/programs

Development of products for green capital market

ØGreen bonds include green corporate bonds, issued for

green projects or green products; ØGovernment bonds and municipal bonds for green targets, green programs, and green projects. ØGreen index ØGreen investment certificates issued by investment funds for green projects, programs and sectors. ØFutures based on green index and green securities

Policy orientation for green capital market development

ØConduct research to develop guidelines on ESR management, improve CSR of listing companies and public companies. ØSSC is focusing on research to finalize the policy framework for modern bond market development in line with international standards; prioritizing the green bond market development.

Conference “Development of the Green Capital Market in Vietnam”

Content

• 1. Why Green Finance matters to us
• 2. Green Finance @ GIZ
• 4. Conclusion

• 3. 10 Green Finance “Action Areas”

Content

• 1. Why Green Finance matters to us
• 2. Green Finance @ GIZ
• 4. Conclusion

• 3. 10 Green Finance “Action Areas”

Two major challenges in Green Finance Transforming existing financial flows (Greening the financial sector)

1

Two major challenges in Green Finance Leverage public funding in the most efficient way

2

Content

• 2. Green Finance @ GIZ
• 4. Conclusion

• 3. 10 Green Finance “Action Areas”

Green Finance at GIZ

• Green banking regulation
• Green listing and reporting requirements (ESG criteria)
• Support financing components of national green strategies (e.g. NDCs)

• FIs: Green product development, e.g. loans for RE/ EE in SMEs
• Identifying, quantifying and managing ecological risks/ ESRM Systems
• Incorporate natural capital risk management in investment and lending

• Green bond market development
• Identifying green investment opportunities
• Due Diligence of Financial Institutions (NAMA Facility, GCF)

• Weather and agricultural risk insurance
• Sovereign risk transfer solutions, e.g. for natural disasters

Green Finance at GIZ

Green Finance at GIZ

Content

• 2. Green Finance @ GIZ
• 4. Conclusion

• 3. 10 Green Finance “Action Areas”

10 Action Areas in Financial Systems Development for Environmental and Climate-related Investments

• Develop investment- and credit guarantee-funds
• Develop rating agencies for environmental and sustainability aspects
• Promote ESG principles in established rating agencies
• Develop Energy Service Companies to bundle small investments in energy efficiency

• Capacity building in risk management, transparency and reporting
• Expanding of product portfolio with regards to green investment products
• Refinancing through strengthening the equity and liquidity basis of financial institution
• Raise awareness for future markets and investment opportunities

• National and regional development banks
• Specialized banks
• Environmental banks

• Local banks
• Insurances
• Credit & guarantee institutions
• Leasing and investment

• Energy efficiency
• Renewable energy

• Innovative technologies

• structured financial products
• mezzanine financing
• venture capital
• guarantees
• green bonds
• greening SME- and

• Develop and standardize products in order to distribute them profitably
• Capacity-building and training of staff

• Internal project tracking and evaluation
• Commission and publish research in relevant areas
• Facilitate dialogue between different actors (industries, governments, local organizations)

• f private capital

• r climate effect

Content

• 1. Why Green Finance matters to us
• 2. Green Finance @ GIZ

• 3. 10 Green Finance “Action Areas”

Conlusion

• Investment needs are high (but sufficient capital exists)
• Green finance / climate finance is high on the political agenda – and there to

• Growing GIZ portfolio to enable green transformation in partner countries
• Challenges both on the financing side and the investment side (pipeline of

• Strong, innovative partnerships between public and private sector are key
• The green transformation is as much about financing as it is about adopting

Thank you for your attention!

Back-up Slides

How much funding is still missing to reach SDGs?

(Green) Investments: what do investors look for???

Green Finance at GIZ

• Improve partnerships, knowledge

• Communication of EMSD

• Organisation of trainings for second
• pinion providers
• Development of a common

Green Finance at GIZ

• Conducting workshops with relevant

• Follow-up workshops and risk-

• Introduction of a community of

• Identify and implement preventive

• Support the Govt. of Ghana in the

• Assuring access to and promotion of

Green Finance at GIZ

• Identify policy areas with impact on

• Improve conditions for the

• Capacity development and

• Promotion of sustainable, climate-

• Technical support to prepare projects

• Technical support for financing

Green Finance at GIZ

• Improve the conditions for financing

• Improve the information available to

• n the advantages of and financing
• ptions for SE investments
• Increase the range of services

• Development of green financial

• Drafting green economic guideline to

• Implement effective sustainability standards for the financial sector
• Development of an appropriate supply of sustainable products and

• Enabling environment for MSME finance and inclusive business

• Design, negotiation and implementation of policy concepts and specific measures
• Increasing understanding and capacities of climate policy makers

• Credit-, refinancing-, fiscal- and

• Green tax incentives
• Green investment guidelines
• Directives of central bank to

• Fees policies for green securities
• To support channeling funds into the

• In cooperation with World Bank, IFC,

• Develop investment- and credit guarantee-funds
• Develop rating agencies for environmental and sustainability aspects
• Promote ESG principles in established rating agencies
• Develop Energy Service Companies to bundle small investments in energy efficiency

• Capacity building in risk management, transparency and reporting
• Expanding of product portfolio with regards to green investment products
• Refinancing through strengthening the equity and liquidity basis of financial institution
• Raise awareness for future markets and investment opportunities

• National and regional development banks
• Specialized banks
• Environmental banks

• Local banks
• Insurances
• Credit & guarantee institutions
• Leasing and investment

• Energy efficiency
• Renewable energy

• Innovative technologies

• structured financial products
• mezzanine financing
• venture capital
• guarantees
• green bonds
• greening SME- and

• Develop and standardize products in order to distribute them profitably
• Capacity-building and training of staff

• government
• communities
• companies
• households
• individuals

• Develop public-private-partnerships
• Connect international insurers to governments and markets in developing countries

• drought insurance
• extreme weather risk

• agricultural insurance

• Political risks
• Exchange rate risks
• Other risks

• Mobilizing local savings through financial institutions
• Refinancing development banks
• Develop market infrastructure, support emitting sustainable bonds, such as “Green Bonds”
• Integrating sustainability values into thematic funds (impact investing)

• Diversification
• Reduce costs
• Broaden impact

• Equity contribution in

• First-loss tranches
• Provision of long-term

• Principle of subsidiarity à only act where markets cannot perform
• Acceptable when there is no business case or where market barriers can be addressed
• Subsidy always to crowd in, not crowd out. Should provide ADDITIONAL private finance
• Smart incentives: overcoming small obstacles in order to make investments profitable
• Harness leverage factor of public capital

• Provide consultancy services to introduce new credit products related to green finance

• credit
• equity
• mixed

• long-term
• low cost

• government money
• KfW capital market
• mixed

• BMZ requirements for Environment and Climate Assessment,
• UN PRI for ESG criteria
• ISO 14000, Equator Principles for Banks, Ecological Fiscal Reforms
• Green Bond Principles

• Support development and assessment of climate and environmental criteria
• Better coordination of financial and environmental instruments

• Prevent green washing

• f investment

• Internal project tracking and evaluation
• Commission and publish research in relevant areas
• Facilitate dialogue between different actors (industries, governments, local organizations)

• f private capital

• r climate effect

Green Bond Market Development in China Emerging Market Sustainability Dialogues – Sustainable Finance

Agenda

• environment, climate, natural resources and agriculture
• sustainable urban development, energy and transport
• rule of law, sustainable finance, and quality infrastructure
• economic and social development (including vocational training)

About

• GIZ is a public-benefit federal enterprise that supports the German

• GIZ works with its partners in a wide variety of areas, including economic

• GIZ has offices in 130 countries with 18,000 employees. Headquarters are

EMSD – Vision

Objective

Emerging Markets Dialogue on Finance

The Strategic Alliance (STA) on Green Bonds: Partners

Stakeholders & Services

• pportunities
• ffered by green

The STA’s Support to Green Bonds Market Development in China

• Green Finance & Green Bond Conference in April 2016
• First workshops for regulators/banks and local second opinion

• Second workshops for regulators, issuers, investors,

• Third workshop with special focus on domestic external

• Contribution to Green Finance & Green Bond publication by

• "Research on banks and enterprises’ issuance of green bonds, and encourage securitization of green

• Issuing green financial bonds in Interbank Bond Market
• For the financial bonds, it stipulated provisions and requirements for being a green bond, and classified

• Mainly referring to the central bank "Green Bond Endorsed Project Catalogue”, stipulated the relevant

• Stipulated the provisions and requirements on issuers of green corporate bonds, funds allocation,

Green Bonds Market Development in China Top-Down Policy Promotion

• f China Society For Finance And Banking;

• r standards for project determination, the environmental performance objectives, the intended

Chinese Green Bond Market in 2016

Chinese Green Bond Market in 2016

China's Green-labelled Bonds Market - 2017

Next Step for China's Green-labelled Bonds

Nest Step: Issues to be Addressed

• Harmonization of domestic standards for green bonds: PBoC vs. NDRC

• How to normalize third-party verification & certification

• Further improve the disclosure of environmental information concerning green

• Promote the green investment concept and green investor group in China

Thank you for your kind attention.

Drought Stress Testing

• Support the ERA working group activities (publication& Workshop)

• Support the initiative and publication on Greening Chinese Overseas

Sustainable Securities Market

• 1. Sustainable securities market and the role of Hochiminh Stock

Exchange (HOSE)

• 2. Sustainable development in Vietnam and Sustainability Index -

VNSI

CONTENT

• 1. Sustainable securities market and the role of HOSE

Vietnam Green Growth Strategy (VGGS)

GIZ MOF

SSC, SEs, VSD

• Green indices
• Green bonds

• 1. Sustainable securities market and the role of HOSE

• 1. Sustainable securities market and the role of HOSE

• 2. Sustainable development in Vietnam by international comparison

• Provide information supporting:
• Policy development
• Investment decisions
• Operational improvement
• Risk sharing
• Regulate the green capital flow
• 2. Sustainability Index- VNSI

Sustainability Index

• 1. The role and objectives of sustainable development
• 2. Development methodology of Sustainability Index
• 3. Performance results

CONTENT

• 1. The role and objectives of sustainable development

Listing companies

• perational

• 1. The role and objectives of sustainable development

Investors

• 1. The role and objectives of sustainable development

• 1. The role and objectives of sustainable development

• 1. The role and objectives of sustainable development

• 1. The role and objectives of sustainable development

• 1. The role and objectives of sustainable development

2. DEVELOPMENT METHODOLOGY OF SUSTAINABILITY INDEX 2.1. Main features of Sustainability Index 2.2. Development Methodology of Sustainability Index

Index name VN Sustainability Index - VNSI

• 2. Development methodology of Sustainability Index

2.1 Main features

Exclusion criteria Calculation of sustainability score Belongs to VNSI Belongs to VN100

• Depraved cultural products/materials.
• Alcoholic drinks (e.g. alcohol)
• …
• Meet the basic requirements on liquidity,

• 20 stocks with highest

• Sustainability score is calculated based on 3

• Meet the basic requirements on liquidity,

• 2. Development methodology of Sustainability Index

2.1 Main features

• 2. Development methodology of Sustainability Index

2.2 Evaluation based on enviromental, social and governance-related aspects

Environ- ment

Companies’ policy and commitments Management Performance indicators

• 2. Development methodology of Sustainability Index

2.2 Evaluation based on enviromental, social and governance-related aspects

Social

Companies’ policy/commitments Management Performance indicators

• 2. Development methodology of Sustainability Index

2.2 Evaluation based on enviromental, social and governance-related aspects

Corporate governance

Shareholders’ rights Equal treatment to shareholders Responsibility to stakeholders Information disclosure and transparency Role and responsibility of the Board of Directors

• 2. Development methodology of Sustainability Index

2.2 Evaluation based on enviromental, social and governance-related aspects

Calculation of sustainability score

• 2. Development methodology of Sustainability Index

2.2 Evaluation based on enviromental, social and governance-related aspects

• 3. Performance results

• 3. Performance results

• 3. Kết quả vận hành

• 3. Performance results

INTRODUCTION: GREEN PROJECT CATALOGUE

CONTENT

• 1. BACKGROUNDS

Ø International and domestic backgrounds Ø Main tasks of the State Bank of Vietnam

• 2. GREEN PROJECT CATALOGUE

Ø Concept, definition Ø Approach Ø Structure of the Catalogue Ø Scope of application Ø Preliminary evaluation

• 3. CATALOGUE EXPANSION ROADMAP

• 1. BACKGROUNDS

1.1 International and domestic backgrounds

Ø Climate change is having a global impact Ø Increasing trend

• f

green credit growth, “greening” investment capital flow in the world Ø The Paris Agreement on climate change signed in 2015 at COP21 is an important step for the realization of each country’s agreement Ø Vietnam is facing severe impacts of climate change Ø Vietnam’s current economic growth rate will make the country become one of the main sources of greenhouse gas emission Ø The Government has issued many policies and action plans to implement strategic objectives of green growth and sustainable development

1.2 Main tasks of the State Bank of Vietnam

2012

• Decision no.1393/QĐ-TTg on National Green Growth Strategy for the

• State Bank of Vietnam was assigned to develop the Action Plan to

2014

• Decision no.403/QĐ-TTg on National Green Growth Action Plan for the

• State Bank of Vietnam was assigned to be in charge of task no.37:

2016

• Vietnam INDC commitment and Decision no.2053/QĐ-TTg on the

• State Bank of Vietnam was assigned to collaborate with line-ministries

• 1. BACKGROUNDS

1.3. Policies of the State Bank of Vietnam

• Directive no.03/CT-NHNN dated 24th March, 2015 on

promoting green credit growth and environmental & social risk management in credit activities

• Decision no.1552/QĐ-NHNN dated 06th August, 2016
• n the Action Plan of banking sector in accordance

with the National Strategy on green growth until 2020

1.4. Obstacles in implementing green credit in Vietnam

• No specific regulations on green sectors and green

projects that need priority support

• Limited awareness of credit institutions in green credit

and ESR

• Lacked of trained and specialized staff in

environmental risk assessment

• Limited and undiversified green finance products

• 2. GREEN PROJECT CATALOGUE

2.1. Introduction

• 2. GREEN PROJECT CATALOGUE

2.2. Approach

Ø Refer to international experiences Ø Refer to Vietnam’s existing regulations

• f

environment and (prioritized or restricted) sectors & areas Ø Step-by-step: in the 1st phase

• nly

selected categories are covered => then expanding to all green sectors & set higher green standards; approaching international standards

• 2. GREEN PROJECT CATALOGUE

2.2.1. Approach: International context

• Pillar 1: Green categories determination
• Pillar 2: Project evaluation and selection process based on eligibility

• PBoC: 06 level I green category, 31 level II category – the most used
• ne in China
• Others (CBRC: 12 Categories; CSRC; CDRC): rather general / verbal

• 2. GREEN PROJECT CATALOGUE

2.2.2. Approach – by SBV

• Sectorial strategies / plans / programs
• Sectorial decrees / circulars (MonRE, MoIT, MoST)
• National (technical, environmental) standards and norms

• Expansion of green sectors
• Higher standard requirements than existing benchmarks
• Approach international green standards

• 2. GREEN PROJECT CATALOGUE

2.3. Structure of the Catalogue

Includes scope of green project categorization and reference benchmark regulations for 6 categories (21 sectors and 44 sub-sectors): Ø Renewable energy Ø Energy saving and energy efficiency Ø Land use conversion and management Ø Sustainable forestry Ø Sustainable waste management Ø Green agriculture

2.3. Structure of the Catalogue

• 1. Renewable energy

2.3 Structure of the Catalogue (Example)

2.3. Structure of the Catalogue

• 2. Energy saving and

2.3. Structure of the Catalogue

• 3. Land use conversion

2.3. Structure of the Catalogue

• 4. Sustainable forestry

2.3. Structure of the Catalogue

• 5. Sustainable waste

2.3. Structure of the Catalogue

• 6. Green agriculture

• 2. GREEN PROJECT CATALOGUE

2.4. Scope of application

Ø Basis for credit institutions to refer and integrate environmental criteria in credit appraisal process; Ø Basis for identifying projects participating in green credit programs, green bonds, green investment funds at a later stage; Ø Reference for identifying green credit projects and green investment areas for reporting to SBV and relevant agencies Ø Towards the use for reference in green bonds issuance

• 2. GREEN PROJECT CATALOGUE

2.5. Preliminary evaluation

Ø The pilot implementation of the Green Project Catalogue as a reference for credit institutions participating in SMEFP Project has initially helped CIs pay attention to green sectors/areas during credit appraisal process; Ø For the SBV, the Green Project Catalogue is being used as a reference in the process of developing green credit project proposals to attract international funding; as well as the process of drafting guidelines and reporting requirements for green sectors lending of the SBV.

• 3. CATALOGUE EXPANSION ROADMAP
• Develop a basic

• Pilot application

• Complete the

Stage 1

• Research for expansion
• f green sectors which

• Expanding the

• Evaluate the feasibility

Stage 2

• Research for

• Application for the

Giai đoạn 3

THANK YOU VERY MUCH!

Green Bond Issuance Scheme

Content

1. Urgency and development trend of green bonds 2. Green bonds classification and issuance mechanism 3. Green bond issuance scheme

• 1. Urgency and development trend of green bonds

Urgency

Development trend

• Global investors are urging actions from governments to expand green bond

• Insurers commit to increase their investment into green financial instruments by

• Green bonds were originally issued by multilateral development banks (EIB,

• The investment needs in green infrastructure development cannot depend only on

• Public sector’s participation in green bond market (welfare funds, pension funds,

• 2. Green bond classification and issuance mechanism

Government bonds, government - guaranteed bonds

• 1. Issuance of green

• 2. Issuance of green

Municipal bonds

• 1. Issuance of green

• 2. . Issuance of green

Corporate bonds

• 1. Corporates can actively issue

• 2. Issuing green bonds to invest

• 3. Green corporate bonds may

• f IFC’s project and Green

• 3. Green bond Issuance Scheme

Content of the pilot issuance scheme(1)

• Dept. of Banking and FIs, Ministry of Finance (This Department is the responsible

Content of the pilot issuance scheme(2)

Content of the pilot issuance scheme (3)

• Proceeds from bond issuance are mostly mixed into state budget.

• According to existing regulators, municipal can issue bonds to raise

• There is not yet a favorable mechanism for corporates when mobilizing

Content of the pilot issuance scheme(4)

Barriers to implement green bond issuance (1)

• 1. There are no specific regulations on green bond issuance and management:

Barriers to implement green bond issuance (2)

• 2. Lack of encouraging mechanisms to facilitate the green bond issuance and

Conclusion

Thank you

Pilot-issuance of municipal green bonds in Hochiminh City

Le Van Bac– Hochiminh City Finance and Investment Company (HFIC) November 2017

HFIC OVERVIEW

HFIC OVERVIEW

• HFIC’s operational functions

HFIC

PERFORMANCE RESULTS DURING 2010-2016

• Capital mobilization

• f capital

CONTENT

• 3. Barriers and proposals for solution

• 1. Pilot-issuance Scheme Of Municipal

Green Bonds

1.1. Content of the green bonds issuance scheme and pilot-issuance scheme of municipal bonds green approved by the Ministry of Finance

1.2. Tasks of the local authority

• Refer to the “Green Project Catalogue” introduced by the SBV to develop an

• Determine priority areas and projects: HCMC has not determined and given

• Compilation of a dossier and develop an issuance scheme for submission to the

• A financial management model for proceeds from green bonds has not been
• developed. Instruction from the Department of Banking and Financial

• 2. Initial experience of HCMC in

implementing the pilot-issuance scheme of municipal green bonds

2.1. Issuance scheme

• Select among Hanoi/HCMC/Danang/Ba Ria Vung Tau for pilot-

• Use local’s annual limit;
• Used for green objectives/projects;
• In the local’s priority project list;
• Pilot period: 2016-2017;
• Terms: 3 years and 5 years;
• Tendering via HNX; combining with competitive interest and non-

• Register with the Vietnam Securities Depository (VSD);
• Used in SBV’s open market;
• Banks use green bonds for compulsory reserves;
• Tax incentives when issuing and investing in green bonds;
• Other conditions.

2.1. Issuance scheme (cont.)

• In 2016, green bonds were issued via BSC’s guarantee, with the terms of 15 years,

• In 2017, the issuance volume is expected to be VND 2,000 billion; with the terms
• f 10,15,20 and 30 years. 08 green projects have the total investment of VND

• Use the Green Project Catalogue introduced by the SBV;
• In general, HCMC’s bonds and green bonds are in the refinancing portfolio and

• No tax and fees incentives for green bonds yet
• No green project catalogue or environmental project catalogue yet (HCMC is in the

2.2. Green project catalogue procedure

• Dept. of Planning and Investment develops a general project catalogue

• ffering;

• ffering)

2.3. Environmental Impact Assessment

• No environmental impact assessment of green projects;
• No indicators for environmental impact and climate change

• Request project owners to provide explanations for environmental

• Request consultation from GIZ and MonRE’s experts to calculate

• Application of MRV for environmental and climate change impacts;
• Application of Circular no.155/TT-BTC dated 6/10/2015 on

• 3. Barriers and proposals for solution

3.1. Specific legal foundation for green bonds

• 1. Currently there are only policies for orientation in the following

• f

• 2. Recent regulations: Circular no.155/TT-BTC dated 6/10/2015 regulated

• 3. In the next few years, it is recommended that the MoF will develop and

3.2. Public debt limit and issuance volume

• The annual budget limit approved by MoF and the National Assembly

3.2. Public debt limit and issuance volume (cont.)

• Project green bonds and guaranteed green bonds will beyond the scope
• f the mobilization limit of the province/city, they also are not the general

• Project green bonds and guaranteed green bonds are suitable and good

3.4. MRV

• Gradually implement 4 green bond principles of ICMA:

• In Vietnam there have not been specific guidelines on 4 green

3.5. Administrative procedures

Regulations on the procedure for development, appraisal, approval and implementation of projects are still too complex and prolonged (Public Investment Law, Decrees and Circulars, etc.) which affect the disbursement progress and project progress.

3.5. Recommendations

• MoF will revise and integrate the green bond mechanism and policy into

• SSC will draft the “Guidelines on the green bond market development”;
• MoF will provide guidelines and allow the use of proceeds from green

• HCMC has regulations specifying priority for green project catalogue;

• MoF allow a number of large localities to issue project green bonds and

• Simplify investment procedures.

Thank you!