What’s driving green finance?

Sustainable finance will keep growing because Vietnamese businesses have real transition demands and plenty of reasons to green their operations. Climate change is already showing up on the balance sheet, disrupting assets and cash flows through storms and flooding, prolonged heat, drought and even saltwater intrusion.

Expectations are rising too – from investors, partners, employees and consumers alike. For companies looking to stay in supply chains and grow exports, demands for transparency, traceability and emissions reductions are quickly becoming non-negotiable.

This isn’t a challenge confined to one corner of the business community. Exporters, domestic manufacturers, service firms and logistics providers will all face their own version of the “green challenge”: cutting costs, protecting market share, managing risk, and, increasingly, taking greater responsibility for society and the wider economy.

Financial tools already within reach

The crucial point is that funding the green transition isn’t just about securing a long-term loan for a flagship project. Businesses need a broader set of financial solutions – tools that support day-to-day working capital as well as longer-term investment in fixed assets such as equipment, production lines, energy infrastructure and water treatment. Seen this way, sustainable finance stops feeling “out of reach” and starts to look like what it should be: a practical part of business planning.

When it comes to debt, businesses tend to take one of two routes. Where there’s a clearly defined investment and a demonstrable impact (i.e. replacing machinery with energy-efficient equipment, installing rooftop solar, or upgrading wastewater treatment), a green loan is a natural fit, because the proceeds are ring-fenced for that specific purpose. Where flexibility matters, a sustainability-linked loan may work better. Funds can be used across a wider set of needs, however, the loan’s pricing (e.g: the interest rate) is tied to measurable KPIs, for example reducing energy intensity per unit of output or increasing the share of certified inputs. And if a company’s reporting is robust enough to meet market expectations, green bonds can provide another option, helping diversify medium- to long-term funding.

But for sustainable finance to make a real difference in the real economy, the focus can’t stop at capex. For many businesses, the tightest bottleneck is working capital: paying for inputs, fulfilling orders, absorbing longer payment cycles, or funding process upgrades demanded by customers. That’s where trade finance becomes a vital part of the toolkit. Import–export financing, letters of credit and guarantees, receivables finance and supply-chain finance are built around the movement of goods and the timing of cash flows – ideal for firms with orders in hand but not enough revolving liquidity. Done well, these facilities can also reinforce sustainability. If terms reward stronger standards, by prioritising compliant suppliers or linking pricing to data transparency, companies can green day-to-day operations without waiting for a headline project before they qualify for funding.

Put simply, debt is the lever for structural upgrades like new equipment, technology and infrastructure while trade finance is the ‘lubricant’ that keeps the green transition running through the day-to-day machinery of business. Used in the right places, the two create a seamless funding pathway: investment that cuts waste and risk, supported by working capital that keeps orders moving and meets a market that keeps raising the bar.

What businesses should do

Accessing sustainable finance doesn’t have to begin with a report running to hundreds of pages. What matters is picking the right starting point: transition initiatives that genuinely reduce environmental impact and deliver financial benefits clear enough for banks and investors to underwrite. Instead of spreading efforts thinly, companies are better off prioritising two or three moves that can show results quickly, cutting electricity or fuel use, reducing raw-material losses, optimising logistics, or tightening processes to bring down defects and scrap. That’s how the green transition shifts from a slogan to a productivity equation.

Next, bundle those initiatives into a practical transition plan, over 12–24 months for example, with clear objectives and measurable KPIs. A strong plan doesn’t need grand promises, but it does need to answer three basic questions: what you’ll do, how long you’ll do it, and how you’ll measure success. In parallel, you only need a minimum dataset and a small set of core KPIs such as electricity use per unit of output, recycling rates, or reductions in fuel consumption for internal transport to give both internal teams and funders a clear, workable framework.

Next comes a point many companies underestimate, yet it can make or break credit approval: minimum viable data. Start with what you already have and can easily verify such as electricity and fuel bills, monthly output figures, bill-of-materials benchmarks, water use, waste volumes, and clear descriptions of operating processes. The aim isn’t “perfect” data, it’s data that’s consistent and can be reconciled over time. Capture it regularly, store it properly, and you can establish a credible baseline and show measurable improvement after investment. That’s exactly what funders need to judge both risks and impacts.

There are encouraging signs. Surveys show 82% of Vietnamese businesses have begun collecting ESG data to track KPIs and indicators. However, only around a third obtain third-party assurance for their ESG reporting. That’s a gap worth closing: a third-party assurance builds confidence for investors and lenders, supports compliance, reduces greenwashing risk, and ultimately improves access to green capital.

Once the plan and the data are in place, the next step is to present the case in the language banks and investors use every day. A strong proposal typically sets out the total investment, a clear cost breakdown, expected savings or efficiency gains, projected cash flows, the payback period, and the key risks along with how they’ll be managed. This is what helps lenders see that a project isn’t just “green”, but bankable. And for green loans in particular, companies should be explicit about the use of proceeds, so the request doesn’t come across as vague or vulnerable to greenwashing concerns.

In parallel, businesses need enough internal governance to implement the plan and report progress with confidence. In practice, many facilities are delayed or priced as higher risk not because the project is weak, but because it’s unclear who owns the KPIs, who signs off changes, and who pulls the data together. Clear accountability, simple internal approval workflows, and a regular cadence for KPI updates can materially improve credibility with funding providers.

Finally, companies should manage greenwashing risk in the simplest, most effective way possible: commit only to what they can measure, keep the evidence trail (bills, contracts, acceptance certificates, operating data), and be ready to substantiate claims if asked. This isn’t just about “meeting standards”. It’s a practical safeguard against reputational and legal risk in a market that’s demanding ever greater transparency. Get these basics right, and sustainable finance stops being a hard-to-open door, it becomes a sensible source of funding for long-term growth.

Support from regulators

The government has a pivotal role to play in accelerating sustainable finance and that starts with clear, consistent rules on governance, disclosure and market conduct. Across ASEAN, the markets that have scaled fastest tend to share a familiar mix: a clear taxonomy, meaningful incentives, and robust data infrastructure. Singapore and Indonesia, for example, have introduced policies and mechanisms to help businesses implement the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. In practice, that means clearer guidance on what climate-related information should be reported so that investors, lenders and assurance providers can assess risk with greater confidence.

Viet Nam also needs a stronger verification and assessment ecosystem so the market can function smoothly: developing talents, building the capacity of independent assurance providers, and putting in place standards and audit processes that fit the country’s context. Green standards and certification mechanisms are among the ESG policy measures that 56% of Vietnamese businesses want the Government to prioritise in future. A credible assurance ecosystem would do more than tidy up the rulebook. It would reduce greenwashing concerns, build trust in sustainable finance products, and give Viet Nam a firmer platform to align with regional practice.

With these building blocks in place and properly aligned, sustainable finance can become a powerful lever for Vietnamese businesses to upgrade, strengthen resilience and compete more effectively in a world that’s greening at pace.