Green Bonds: Need for Standardization and Diversification of Organizational Participation for Sustainable Development
In 2024, the green and sustainable bond market in Vietnam achieved impressive milestones with a total outstanding bond value of USD 1.1 billion and new issuances reaching USD 395 million.
Factors Driving Development:
- Commercial Banks: Actively promoting the mobilization of green capital to finance sustainable projects.
- Businesses: Accelerating green transformation and leveraging green capital to create growth momentum.
- Investors and the Market: Improved investor sentiment and liquidity in the corporate bond market.
Challenges to Overcome:
For Issuing Organizations:
- Lack of Independent Assessment Units: The Vietnamese market still lacks the participation of competent assessment companies to meet the diverse requirements for applying green principles and standards (e.g., applying ICMA, regional standards - ASEAN, or domestic standards), making it difficult for businesses to mobilize and access green capital.
- Barriers to Compliance and Issuance Costs: Additional requirements for green bonds lengthen the issuance process and increase short-term costs, especially for first-time issuers. However, in the long term, this will open up opportunities to access new capital sources and diversify the capital structure of issuing organizations.
For Investors:
- Risk of Greenwashing: Lack of transparent information makes it difficult for investors to accurately determine the green commitments of issuing organizations. Independent assessments from rating agencies, along with strict management and information disclosure from issuing organizations, will help minimize this risk.
What other advantages and challenges exist in the development of the green and sustainable finance market? Let's discuss with VIS Rating to gain in-depth and up-to-date insights into green finance trends in Vietnam.
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