As Vietnam accelerates efforts to transition to low-carbon growth, IFC is providing a $70 million loan to HDBank – one of the country’s leading banks in climate finance – to increase its funding for renewable energy projects in Vietnam.
With the loan, HDBank expects to expand its climate finance portfolio to more than $800 million by 2025, resulting in a reduction of over 54,000 tons of carbon dioxide emissions per year from 2021 – 2025 and thereafter.
“Going forward, HDBank sees climate finance as a driving force, especially with countries across the world trying to adapt and mitigate impacts of climate change while ensuring sustainable economic growth,” said Pham Quoc Thanh, HDBank Chief executive officer.
IFC’s long-term financing and expertise will help accelerate it evolving endeavors in climate business with a structured approach, allowing the company to expand its climate portfolio by developing climate-targeted financial products and services that are aligned with global best practices.
As a signatory to the COP21 Paris Agreement, Vietnam aims to double its renewable energy generation capacity, excluding hydropower, over the next ten years to meet the increasing demand for power driven by robust economic growth and a growing population.
This will help keep the country on track to reduce its greenhouse-gas (GHG) emissions by at least nine percent by 2030, and further enable Vietnam to reach its recent COP26 commitment to net-zero carbon emissions by 2050.
Currently, 50 per cent of Vietnam’s electricity comes from coal, making the need to develop a greener, lower-carbon economy, including necessary financing, crucial for the country to meet its reduced carbon emission commitments.
One of the top GHG emitters globally, Vietnam’s overall climate-smart investment potential is estimated at $753 billion by 2030, of which up to $59 billion is in the renewable energy sector.
However, the share of climate financing, as a percentage of total bank lending, in Vietnam was just about five per cent or $10.3 billion as of 2016, indicating a significant climate finance gap.
“Building the capacity of private banks will help scale up climate finance markets, supporting climate change adaptation and resilience, and accelerate the shift to more sustainable lower-carbon economies,” said Alfonso Garcia Mora, IFC regional Vice president for Asia and the Pacific.
As Vietnam recovers from Covid-19, it’s a historic chance for the country to prioritize climate-smart and sustainability-linked solutions with increased private sector participation. This will help Vietnam build back better, greener, and more sustainably.
Climate change is a strategic pillar of IFC’s engagement in Vietnam. The aim is to catalyze finance and promote private sector solutions for climate action. IFC is supporting four Vietnamese commercial banks to expand their climate finance portfolios to $1.2 billion by 2025.
As part of the World Bank Group Climate Change Action Plan 2021 – 2025, IFC and the World Bank are developing a new diagnostic tool – the Country Climate and Development Report (CCDR) – to help Vietnam align its climate action with broader development efforts.
The tool will identify and prioritize opportunities for high-impact climate action to inform future World Bank Group climate engagements and investments over the next five years.
