Masao Kojima, regional head of MUFG Vietnam said, “MUFG is honoured to assume the role of chair of the BWG. Together with its members, we will continue to contribute to the development of Vietnam’s financial services sector and a strong and sustainable local market by advocating for greater public and private engagement and an enhanced regulatory framework.”

With its strong commitment to supporting Vietnam’s sustainable development, MUFG’s chairmanship of the BWG also puts it in a position to support the country’s environmental, social, and governance (ESG), and energy transition priorities.

Committed to empowering a brighter future

MUFG’s commitment to sustainability is renowned, along with its expertise and track record in ESG financing and renewables. In light of the strong progress that the group has made to date along with the growing demand for funds, MUFG has raised its target value for sustainable finance executed (total for 2019-2030) from ¥35 trillion ($231 billion) to ¥100 trillion ($660 billion).

MUFG aims to achieve net-zero emissions in all its operations by 2030, and in its finance portfolio by 2050. MUFG is also proud to play a major role in helping the global financial sector achieve sustainability as part of the Net Zero Banking Alliance.

As one of the two banks that signed strategic MoUs with the Vietnamese government in the presence of Prime Minister Pham Minh Chinh at last year’s COP28 in Dubai, MUFG was also invited to share their insights regarding topics from energy transition planning to financing clean technologies at the climate conference.

MUFG has also unveiled a comprehensive suite of ESG financing solutions, across various ESG financing instruments such as green and sustainability-linked loans, green deposits, sustainable deposits, and green trade finance products. Through MUFG’s role as a financier with strategic priorities towards ESG, MUFG encourages local companies to have more involvement in promoting Vietnam’s sustainable development.

MUFG announced the closing of its first green trade finance facility in Vietnam and the first-ever green financing for the steel sector with Vietnam-Italy Steel JSC.

This facility will gear towards more sustainable production practices, such as the development of low-emission electric arc furnaces as well as the procurement of steel scrap crucial for decarbonising steel production. This was followed by MUFG’s first successful green trade facility and green trade loan to the Joint Stock Commercial Bank for Investment and Development of Vietnam. The funds from this innovative trade loan go towards refinancing the importation of steel scrap, recognised as a component in Vietnam’s burgeoning circular economy.

The utilisation of scrap is crucial in curtailing steel industry emissions and diminishing resource consumption. According to research on energy, each tonne of scrap used for steel production prevents the release of 1.6 tonnes of CO2 emissions.

MUFG has also piloted its Sustainable Deposit scheme in Vietnam with placements by numerous corporations. It allows its clients in Vietnam to place term deposits that would go towards funding eligible sustainability-linked and social loans within MUFG’s asset portfolio in alignment with the bank’s Asia-Pacific Sustainable Deposit and Green Deposit frameworks. This differs from green deposits, which are generally dedicated to green loans or renewable projects and are also provided by MUFG.

With such solutions, companies will be financially rewarded for achieving ambitious and predetermined Sustainability Performance Targets. Products such as Sustainability-Linked Loans, Sustainable Deposits, and Sustainability Linked Trade Financing are designed to assist in this.

“Our objective is to assist corporations new to ESG and sustainability in transitioning through a principles-based approach, while accelerating the growth of those more experienced. Ultimately, we want to support corporations of various sizes in enhancing their sustainability practices,” Kojima said.

MUFG has also closed its green loan for a real estate project in Ho Chi Minh City and looks forward to supporting more green urban development projects in the country.

Ongoing public engagement to resolve Vietnam’s energy issues

“MUFG Vietnam has been actively involved in various public-private conversations to resolve some of the most pressing issues related to Vietnam’s energy supply. One that MUFG and other BWG members are keen on solving is the bankability of power purchase agreements,” said Kojima.

To achieve the country’s Power Development Plan VIII, investments in power generation and transmission systems are critical. To implement large-scale power projects, like offshore wind power, liquefied natural gas, thermal power production, and other renewable energy projects, further advancements are needed in the Investment Law, the Law on Public-Private Partnership, and the power purchase agreement (PPA) model.

Vietnam’s current PPA is not bankable to major international financiers. Many discussions and proposals on PPA challenges have been held. Relevant risk allocation between the public and private sectors should be balanced to encourage large new investment into the power sector.

MUFG’s commitment to sustainability is renowned