Green credit – an inevitable trend

According to Dr Le Duy Binh, Director of Economica Viet Nam, as the country strives to achieve double-digit GDP growth over many consecutive years, the issue is not merely one of speed but also of growth quality. ESG is therefore becoming a core element of both corporate and national development strategies.

The Government plays a particularly important role in driving the green transition. With medium-term public investment for the 2026–2030 period projected at around 8.22 quadrillion VND (312 billion USD), alongside recurrent expenditure of approximately 10.06 quadrillion VND (381 billion USD), the State is not only a policymaker but also the economy’s largest consumer. “Through public procurement, capital allocation and project selection, the Government can steer business behaviour towards greener and more responsible practices,” Dr Le Duy Binh said.

The economist also noted that green consumption is emerging as a new driver of growth. Viet Nam’s retail market was estimated at around 7 quadrillion VND (269 billion USD) in 2025. Notably, around 84% of Vietnamese consumers are willing to pay a premium for green, environmentally friendly products with ESG commitments. In the export sector, standards related to emissions, traceability, environmental protection and labour practices are increasingly becoming new technical barriers. This requires businesses to adapt if they wish to maintain and strengthen their position in international supply chains.

Meeting these transition requirements will demand substantial financial resources. According to Nguyen Ngoc Canh, Deputy Governor of the State Bank of Viet Nam, the central bank has implemented a range of measures in recent years to promote green credit.

The regulator has established specific objectives and directions for credit institutions in developing green banking, green lending and environmental and social risk management; issued guidance on green credit activities; and introduced preferential credit mechanisms for organic agriculture, circular economy production models and sustainable development projects.

Notably, the State Bank is submitting to the Government a draft decree proposing a 2% interest-rate subsidy from the state budget for private-sector enterprises, household businesses and individual business operators borrowing from banks to implement green projects, circular economy initiatives and ESG frameworks.

These efforts have yielded encouraging results. By the end of the first quarter of 2026, 82 credit institutions had recorded outstanding green credit loans, with total green lending reaching approximately 828 trillion VND (31 billion USD). Average annual growth exceeded 20% during the 2017–2025 period. Outstanding loans subject to environmental and social risk assessments surpassed 5.7 quadrillion VND (216 billion USD), roughly 25 times higher than at the end of 2017 and accounting for more than 30% of total outstanding credit across the economy.

For commercial banks, green credit has also become a strategic priority. Vu Thi Mui, Deputy Head of Wholesale Product Policy at Vietcombank, said the bank began greening its credit portfolio at an early stage and has continuously increased the proportion of funding allocated to green projects.

Vietcombank’s outstanding green credit balance increased more than fourfold between 2020 and 2025, making it one of the largest providers of green finance in the market. “In the coming period, the bank will continue to prioritise resources for nationally significant infrastructure projects, key transport developments, smart transport systems and renewable energy projects such as wind and solar power. These sectors not only offer substantial growth potential but also contribute to green growth, the energy transition and national energy security,” the bank representative said.

Similarly, Agribank is implementing a 3 trillion VND (113 million USD) green credit programme offering preferential interest rates from 5.8% per year to support rooftop solar investment, electric vehicle purchases, forestry development and other environmentally friendly projects.

The bank has also launched a preferential credit package worth 50 trillion VND (1.9 billion USD) for clean agriculture and high-tech farming, while participating in a range of green agriculture initiatives, including the project to develop one million hectares of high-quality rice in the Mekong Delta.

Improving mechanisms to channel green capital

Despite the positive progress, the development of green credit still faces challenges that need to be addressed. Pham Tuan Anh, Director of Sustainable Development at GreenFeed Viet Nam, said businesses require a stable policy environment and streamlined administrative procedures to invest with confidence.

“These include specific incentive mechanisms such as tax preferences, technical assistance and access to green finance. We have heard a great deal about green capital over the past few years, but accessing it in practice remains challenging,” he said.

Meanwhile, Pham Thi Thanh Tung, Deputy Director of the Credit Department for Economic Sectors at the State Bank of Viet Nam, noted that guidance on identifying circular economy projects and implementing ESG standards remains inconsistent. The green bond market and carbon market are still at an early stage of development, while the capacity of many credit institutions and businesses to implement green finance initiatives requires further strengthening.

From the perspective of commercial banks, Tran Hoai Phuong, Director of Corporate Banking at HDBank, said the bank currently applies ESG assessments to all corporate borrowers seeking financing.

“Through the ESG assessment process, businesses can gain a clearer understanding of their readiness for sustainable development trends while also improving their ability to access funding in the future,” he said.

According to experts, when capital is channelled effectively towards the right objectives, businesses will be better positioned to transform their production models, enhance competitiveness and lay the foundation for high-quality growth in the years ahead.