Proposing regulations on environmental criteria and confirmation for projects granted green credit and issuance of green bonds

The need to issue a Decision

Promoting socialization of environmental protection is one of the directions and tasks set out in many orientation and direction documents of the Central Government such as: Resolution No. 41-NQ/TW dated January 15. November 2004 of the Politburo on environmental protection in the period of promoting industrialization and modernization of the country; Resolution No. 24-NQ/TW dated June 3, 2013 of the Central Executive Committee on proactively responding to climate change, strengthening resource management and environmental protection and Conclusion No. 56-KL/ Central Committee of the Politburo on continuing to implement the 7th Central Resolution, Session XI on proactively responding to climate change, strengthening resource management and environmental protection; Resolution No. 29-NQ/TW dated November 17, 2022 of the Central Executive Committee on continuing to promote industrialization and modernization of the country until 2030, with a vision to 2045. The Prime Minister issued implementing many strategies emphasizing this task such as: National environmental protection strategy for different periods; National strategy on green growth and strategies of related industries and specialized fields.

 

In the last 20 years, the green credit and green bond market has developed strongly around the world with projects in the fields of energy saving, renewable energy and clean technology and projects with specific goals. Environmental goals aim at the “dual” goal of economic growth associated with environmental protection, response to climate change and sustainable development. To date, green credit and green bonds globally have become the two largest sources of green finance, playing a decisive role in green investment, environmental protection and combating climate change. It is expected that this financial source will continue to increase strongly in the coming time to meet the increasing needs for the goal of achieving net zero emissions by the middle of the 21st century.

In order to support access to financial resources to promote the economic transition towards a green economy, circular economy, low carbon and towards zero net emissions, many regional organizations , the country has developed and issued green classification lists including types of projects or investment activities with environmental criteria to help bond investors and commercial banks identify meet the requirements, contributing to the operation of a transparent, fair and effective green financial market. According to statistics, up to now, there are 35 international, regional and national organizations that have issued green classification lists. Some typical green classification lists of organizations such as: European Commission, Climate Initiative (CBI), World Bank (WB), International Finance Corporation (IFC), World Bank Asian Development (ADB), China (updated and issued on April 21, 2021), Korea (April 2021), Mongolia (December 17, 2019), Bangladesh, South Africa, Russia , Japan, Malaysia, Indonesia, Sri Lanka,… Some other regions and countries are building a green classification list, typically: ASEAN (draft 01 issued in November 2021), Kazakhstan (March /2021), Colombia (September 2021), India, Philippines, Singapore, Thailand, Chile, Mexico, UK, Donomica, New Zealand, Australia, Canada…

In Vietnam, the 2020 Environmental Protection Law for the first time includes regulations on green credit (Article 149) and green bonds (Article 150). Decree No. 08/2022/ND-CP dated January 10, 2022 of the Government detailing a number of articles of the Law on Environmental Protection has detailed regulations on the roadmap and incentive mechanism for granting green credit and issuance of green bonds (Clause 2, Article 154 and Articles 155, 156, 157). Besides, in the decrees on corporate bond issuance (Decree No. 153/2020/ND-CP, Decree No. 65/2022/ND-CP, Decree No. 08/2023/ND-CP), Bonds issued by the Government (Decree No. 95/2018/ND-CP) and local authorities (Decree No. 93/2018/ND-CP) have created a full legal corridor for the formation and development of bonds. Development and state management of these two potential financial channels to mobilize resources from the market for the transformation and development of green economic models, low waste, low carbon, and circular economy. , serving national environmental goals and climate commitments.

In fact, since 2017 up to now, the Ministry of Natural Resources and Environment, the Ministry of Finance and the State Bank of Vietnam have initially established a “Green Project List” and developed guidance documents to classify green projects. Economic activities/green projects serve green credit statistics and reporting, as well as serve as a basis for green credit granting programs and pilot issuance of green bonds. The green credit market has developed at a much higher rate than the overall credit growth rate of the economy; A number of green bonds issued by local governments and green bonds issued by businesses have been piloted, especially issuing bonds for large-scale green projects such as renewable energy and wind power. and solar power. However, the above “Green Project List” and instructions have not been classified according to Vietnam’s economic sector statistics, have not been classified according to environmental goals and benefits, and do not have clear criteria. clearly to screen and identify which types of projects meet the requirements for granting green credit and issuing green bonds according to international practices and in accordance with Vietnam’s conditions; There are no legal regulations on confirming what type of project meets environmental criteria to be granted green credit or issue green bonds (who confirms, how to confirm, …).

Due to the above shortages, this leads to limitations in the mobilization and disbursement of this potential financial source. Due to the technical nature and frequent updates and changes of the Green Classification List and at the same time the confirmation must ensure compliance with international practices and the Vietnamese legal system, Decree 08/ 2022/ND-CP dated January 10, 2022 of the Government detailing a number of articles of the Law on Environmental Protection, assigning “The Ministry of Natural Resources and Environment to preside and coordinate with relevant ministries and ministerial-level agencies.” Construction authorities submit to the Prime Minister for promulgation of environmental criteria and confirmation for projects granted green credit and issuance of green bonds (hereinafter referred to as the Green Classification List) before December 31, 2019. 2022” (in Clause 2, Article 154).

Starting from the assigned tasks, on the basis of international experience and practice in Vietnam, the issuance of the Prime Minister’s Decision promulgating Environmental Criteria Regulations and project certification is Providing green credit and issuing green bonds is necessary, in accordance with international trends and practices, ensuring full political and legal basis.

Main content of the draft Decision

Draft Decision of the Prime Minister promulgating regulations on environmental criteria and confirmation for projects granted green credit and issuance of green bonds, including 12 articles (from Article 1 to Article 12) and other provisions. Appendixes issued together with the Decision include:

– Article 1. Scope of regulation and subjects of application:

The scope of adjustment stated in the Decision includes: regulating environmental criteria for projects to be granted green credit and issue green bonds; Confirming the project belongs to the Green Classification List.

The Decision’s applicable subjects are organizations and individuals involved in granting green credit and issuing green bonds.

– Article 2. Explanation of terms.

In addition to the technical terms stated in other legal documents, the Decision additionally explains 04 new terms including: Green classification list; Screening criteria; Classification criteria; and Green Transformation Project used in this Decision.

– Article 3. Environmental criteria for projects granted green credit and issuance of green bonds.

– Article 4. Green classification list.

– Article 5. Confirming the project belongs to the Green Classification List.

– Article 6. Standards for certifying organizations.

– Article 7. Procedure for registration and announcement of organizations certifying projects in the Green Classification List.

– Article 8. Issuance of certification and service price for certifying projects in the Green Classification List.

– Article 9. Use and revocation of project certification in the Green Classification List.

– Article 10. Record keeping and reporting regime.

– Article 11. Implementation organization.

– Article 12: Implementation provisions.

According to Chinhphu.vn