14/06/2025
Sustainability Reporting Practice: The Need for Progressive Harmonization of International Standards
To contribute to promoting credit institutions (CIs) in implementing the practice of Sustainable Development Reporting, thereby further promoting the role of the banking sector in implementing the Government's Sustainable Development goals, on June 6, 2024, in Hanoi, Banking Magazine - State Bank of Vietnam (SBV) coordinated with the Association of Chartered Certified Accountants (ACCA) to organize a Seminar with the theme: "Practicing Sustainable Development Reporting: Experience and implementation practices".
In order to contribute to promoting credit institutions (CIs) in implementing the practice of Sustainable Development Reporting, thereby further promoting the role of the banking sector in implementing the Government's Sustainable Development goals, on June 6, 2024, in Hanoi, Banking Magazine - State Bank of Vietnam (SBV) coordinated with the Association of Chartered Certified Accountants (ACCA) to organize a Seminar with the theme: "Practicing Sustainable Development Reporting: Experience and implementation practices".
Attending the Seminar, on the side of the State Bank, there were Dr. Dao Minh Tu - Permanent Deputy Governor of the State Bank; Mr. Pham Thanh Ngoc - Deputy Director of the Legal Department; Ms. Pham Thi Thanh Tung - Deputy Director of the Department of Credit for Economic Sectors; Associate Professor, Dr. Chu Khanh Lan - Deputy Director of the Banking Strategy Institute; Mr. Dao Van Ha - Deputy Director of the Monetary and Financial Stabilization Department; Ms. Thai Thi An Hoa - Deputy Director of the Forecasting and Statistics Department... On the side of the ministries and branches, there were Associate Professor, Dr. Nguyen Dinh Tho - Director of the Institute of Strategy and Policy on Natural Resources and Environment, Ministry of Natural Resources and Environment. On the side of universities, academies and research institutes, there were Associate Professor, Dr. Nguyen Thanh Phuong - Deputy Director of the Banking Academy; Associate Professor, Dr. Pham Thi Hoang Anh - Deputy Director of the Banking Academy; Associate Professor, Dr. Nguyen Duc Trung - Principal of the Banking University of Ho Chi Minh City. On the side of the Vietnam Banking Association, there was Mr. Tran Van Tan - Vice President of the Vietnam Banking Association. On the side of credit institutions, there were Mr. Le Ngoc Lam - General Director of the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV); Mr. Le Quang Vinh - Deputy General Director of the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank); Mr. Nguyen Tran Manh Trung - Deputy General Director of the Vietnam Joint Stock Commercial Bank for Industry and Trade; Mr. Nguyen Duc Hai - Deputy General Director of the Vietnam Bank for Social Policies; Mr. Nguyen Duc Thai Han - Deputy General Director of Asia Commercial Joint Stock Bank (ACB); Mr. Tran Quang Phuong - Deputy General Director of D**g A Commercial Joint Stock Bank (D**gABank).
On the side of the Banking Magazine, there was the participation of Ms. Nguyen Thi Thanh Binh - Deputy Editor-in-Chief in charge of the Banking Magazine; Mr. Nguyen Thanh Nghi - Deputy Editor-in-Chief. On the side of ACCA, there was Ms. Sharon Machado - Director of Sustainable Development, ACCA Global; Mr. To Quoc Hung - Country Director, ACCA Vietnam.
Attending the Seminar were also leaders and representatives of domestic and international corporations, general companies, enterprises and nearly 300 delegates who are economic, financial - banking experts, managers from ministries, branches, universities, enterprises and credit institutions, commercial banks at home and abroad.
In his opening speech, Dr. Dao Minh Tu - Permanent Deputy Governor of the State Bank of Vietnam stated that sustainable development has become an inevitable trend worldwide as well as in Vietnam today. Organizations and enterprises are increasingly promoting their role in sustainable development; being aware of taking responsibility for the environmental, economic and social impacts they create in the entire value chain. International organizations and governments are increasingly interested and have many regulations and policies to promote enterprises, financial institutions and banks to apply environmental - social - governance (ESG) standards and publish information in Sustainable Development Reports. Implementing a sustainable development strategy, aiming to harmonize relationships between stakeholders, is an essential strategy for the long-term success of a business.
Deputy Governor Dao Minh Tu said that the topic of the Seminar is very new and is of great interest to many organizations, agencies, scientists, experts, and economists; especially, for the Government of Vietnam, this is a big issue, because it is one of the very important components, one of the indispensable contents to realize Vietnam's sustainable development goals.
Implementing the commitment on climate change prevention and ensuring social and environmental risks, Vietnam is one of the leading countries, strongly committed to at the 26th United Nations Conference on Climate Change (COP26). The Government has also been developing strategies and legal corridors for drastic implementation to achieve the goal of achieving net emissions of "0" by 2050. In the general context of the country, with the drastic direction of the Government and the Prime Minister, the Banking sector is one of the sectors that must take the lead in developing orientations, strategies, and action plans to implement the goals of the green economy, especially green credit; in which, issues related to sustainable development reporting of credit institutions are a very important content.
However, in order to contribute to increasing the value of enterprises and optimizing the benefits of sustainable business operations, enterprises need to disclose information on sustainable development to the public to enhance the transparency of information of enterprises and gain external recognition. Sustainable Development Reporting is a practice of measuring, disclosing and being accountable to stakeholders for their activities towards sustainable development, not only helping businesses strengthen cooperation with stakeholders, investors and the community but also helping businesses strengthen business risk management, improve adaptability in a rapidly changing environment and compete more effectively. This is also one of the tools to help build a transparent, fair, sustainable business environment, ensuring accountability. Sustainable Development Reports will effectively contribute to the achievement of sustainable development goals in Vietnam by 2030. Currently
, Vietnamese organizations and businesses have gradually realized the importance of building Sustainable Development Reports; many businesses and corporations have pioneered in preparing Sustainable Development Reports even before there were legal regulations requiring mandatory implementation. However, there are still many organizations and businesses that do not understand much about Sustainable Development Reports and lack the necessary knowledge and skills to implement Sustainable Development Reports.
For the banking industry, commercial banks are increasingly interested in Sustainable Development Reports. However, the number of Sustainable Development Reports published in recent times is still quite modest. Some banks have published separate Sustainable Development Reports such as BIDV, ACB, Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank); some other banks have integrated Sustainable Development Reports into their annual reports; some banks still do not have sustainable development information in their published reports, while credit institutions are the subjects that play an important role in implementing monetary policy goals and economic development orientation of the country through directing the bank's capital flow to necessary areas, ensuring the country's sustainable development goals.
Deputy Governor Dao Minh Tu suggested that speakers, experts, and scientists focus on exchanging and discussing the following contents: (i) Issues on practical implementation of ESG and practice of Sustainable Development Reporting at Vietnamese credit institutions - Advantages, difficulties, and obstacles; (ii) Legal framework, regulations, policies, etc. related to the practice of Sustainable Development Reporting at Vietnamese credit institutions; (iii) The role and importance of the sustainable development process and the development of Sustainable Development Reporting for organizations and enterprises; (iv) Sharing useful experiences on Sustainable Development Reporting standards; providing guidance and advice on the content and method of preparing reports; developing information disclosure procedures, practicing Sustainable Development Reporting according to international standards; (v) Propose appropriate solutions and recommendations in implementing sustainable development, publishing the Sustainable Development Report and making the Sustainable Development Report widely applied in enterprises in general and credit institutions in particular.
Deputy Governor Dao Minh Tu emphasized that the Seminar "Practicing Sustainable Development Reporting: Experience and implementation practices" is an opportunity for organizations and enterprises in general and credit institutions in particular to further raise awareness of sustainable development of enterprises, thereby calling for the response and cooperation of relevant units and organizations in promoting increased social awareness of the value of the Sustainable Development Report.
In his welcoming speech at the Seminar, Mr. To Quoc Hung - Country Director, ACCA Vietnam said that by 2025, the global green finance market is expected to reach nearly 8 trillion USD. Organizations around the world have been devoting a lot of resources and making continuous efforts in the green transformation. Practicing Sustainable Development Reporting will improve competitiveness, attract investment capital and promote Vietnam's integration into the global economy.
In Vietnam, the level of ESG commitment and the practice of Sustainable Development Reporting are increasingly receiving strong attention from businesses. Mr. To Quoc Hung hopes that through the Seminar, the knowledge shared and discussed will bring meaningful values, update more information on Sustainable Development Reporting standards from prestigious international organizations and practical experience in implementing to build information disclosure processes, practice Sustainable Development Reporting, contribute to improving competitiveness, and more strongly unlocking green credit capital sources of Vietnam and the world. Financial
information and sustainability information are key factors to establish and achieve sustainable strategies.
With the topic of the discussion: "Sustainable development in banking - the importance of preparing Sustainable Development Reports in the Banking industry", Ms. Sharon Machado - Director of Sustainable Development, ACCA Global shared that creating and using information related to sustainability will help all organizations, consultants and stakeholders identify, manage risks, and create opportunities related to sustainable development better; thereby, delivering sustainable business performance over the long term and at the same time, putting these organizations in a stronger financial position, capable of complying with sustainability-related regulations that are set to grow at a higher level. The
Banking, Financial Services and Insurance (BFSI) industry is gradually moving towards opening up more opportunities related to sustainable business. Each industry will have its own sustainability-related risks and opportunities.
The linkage between financial and sustainability information is a key factor in establishing and achieving sustainability strategies, providing comprehensive insight and promoting parallel implementation between thinking and action. Furthermore, BFSI can benefit from improved access to the resources needed to create value, from attracting capital for investment (financial capital) to recruiting and retaining high-caliber talent (human capital).
ACCA supports the harmonisation of Sustainability Reporting requirements globally and within this, the International Sustainability Standards Board (ISSB) sustainability disclosure standards (IFRS) are identified as suitable for use on their own or as a basis for the requirements of other reports to be applied.
To support the implementation of sustainability reporting requirements, ACCA has developed video materials explaining IFRS and guidance on implementation. In addition, ACCA provides a range of training resources including certification and sustainability integrated throughout.
Sustainability-related information will support decision-making and analysis, helping organisations to comply with relevant regulations; access the growing sustainable finance market; and identify the factors that drive better business performance.
At COP26, Prime Minister Pham Minh Chinh made a commitment for Vietnam to strive for net zero emissions by 2050. Commitments made at major global events are being translated into regulations and plans.
Compliance needs to be explained and demonstrated in practice. Sustainability disclosure standards are in the process of being adopted by many jurisdictions globally. The IFRS requirements support good quality information for decision-making, whether for setting and implementing sustainability strategies or for accessing and serving financial purposes when an organization considers the impact of sustainability-related risks and opportunities in the short, medium and long term. Other Sustainability Reporting frameworks or standards can be applied to provide a multi-stakeholder perspective on sustainability-related risks and opportunities.
The sustainable finance investment market will grow
The sustainable finance market is expected to grow at an overall average growth rate of 20.4% from 2023 to 2032, with the fastest growth expected to be in Asia-Pacific. To participate in that market, organizations must be ethical in demonstrating and explaining their sustainability information; In some cases there needs to be a tighter definition of what constitutes sustainable finance and investment.
In her presentation at the Seminar, Ms. Sharon Machado introduced an eight-stage cycle to generate information related to sustainability, including: Stage 1: Allocating responsibility for Sustainability Reporting; Stage 2: Establishing the reporting context; Stage 3: Identifying information related to sustainability factors that need to be reported; Stage 4: Identifying data requirements; Stage 5: Collecting data; Stage 6: Reporting based on collected data; Stage 7: Implementing subjects including plans, technology, human resources; Stage 8: Verification and continuous improvement. In
addition, Ms. Sharon pointed out the action plan for sustainable development including: (i) Integrating sustainability into the way of working; (ii) Applying an inclusive culture - collaboration, co-creation and sharing; (iii) Leveraging technology to collect, analyze, and communicate financial information related to sustainability; (iv) Ethical practices in creating and using sustainability information; (v) Continuous learning to grasp and update sustainable development trends and business situations.
At the Seminar, Ms. Sharon Machado presented ACCA's commitments to developing the capacity to create and use information related to sustainability as well as achieving sustainable business operations for many years, including ACCA's commitment to reporting and integrated thinking, which was first included in the ACCA Certificate in 2013. Ms. Sharon said that ACCA continues to make efforts through policy research, education and professional qualifications in topics such as strategy setting, risk identification, innovation, supporting business model change, measuring progress through target setting, and establishing sustainability reports.
Promoting the orientation of green banking and green credit, contributing to the implementation of sustainable development goals.
With the presentation: "Solutions for sustainable development of Vietnam's banking industry", Ms. Pham Thi Thanh Tung - Deputy Director of the Department of Credit for Economic Sectors, State Bank of Vietnam shared that in recent times, in order to implement the goals of green growth and sustainable development, Vietnam has actively participated in international commitments on green transformation, reducing greenhouse gas emissions, minimizing the impact of climate change, towards sustainable development. Specifically, in 2015, Vietnam committed to implementing the 2030 Agenda for Sustainable Development at the United Nations Summit; in 2016, Vietnam, together with more than 170 countries around the world, signed the Paris Agreement on climate change. In particular, at the COP26 Conference, Vietnam strongly committed to achieving the goal of bringing net emissions to "0" by 2050.
Also according to the report of the countries at the COP27 Conference (Egypt 2022), among nearly 150 countries committed to implementing the NetZero target, Vietnam is one of the countries that has taken quick and timely actions to implement the commitment by issuing a green growth policy framework such as: National Strategy on Green Growth; National Strategy on Climate Change to 2050; Project on tasks and solutions to implement the results of the COP26 Conference; promulgating the Law on Environmental Protection (2020) to create a legal framework to promote economic tools to implement green growth such as green credit, green bonds, and requirements for environmental risk management in credit granting activities of credit institutions. On the banking sector side, credit resources are always one of the important sources of capital for the economy, contributing to promoting production, business activities, and socio-economic development; Therefore, the implementation of solutions by the State Bank will orient credit flows to green, environmentally friendly projects, thereby contributing to the implementation of the national strategy for green growth and sustainable development.
Based on the objectives of the National Assembly, the Government and domestic and foreign macroeconomic and monetary developments, in recent times, the State Bank has been proactive and flexible in operating monetary, credit and banking policies with the aim of controlling inflation, stabilizing the macro economy, focusing credit on production, business sectors, priority areas, promoting green credit, contributing to supporting economic growth...; at the same time, directing credit institutions to proactively deploy solutions to promote green credit, contributing to the implementation of sustainable development goals.
Firstly, the State Bank has issued documents, regulations and orientations on green banking and green credit in line with the goals of green growth and sustainable development. Specifically, the SBV has developed a green banking development orientation through the issuance of Decision No. 1604/QD-NHNN dated August 7, 2018 of the Governor of the SBV approving the Green Banking Development Project in Vietnam; supplementing and integrating the goal of developing green credit and green banking into the operational and development orientations of the banking industry (Strategy for developing the banking industry to 2025, with a vision to 2030, issued together with Decision No. 986/QD-TTg dated August 8, 2018 of the Prime Minister, the Project "Restructuring the system of credit institutions associated with handling bad debts in the period 2021 - 2025" according to Decision No. 689/QD-TTg dated June 8, 2022 of the Prime Minister); promulgate the Action Plan of the Banking sector to implement the National Strategy on Green Growth for the period 2021 - 2023, attached to Decision No. 1408/QD-NHNN dated July 26, 2023 of the Governor of the State Bank.
In addition, the Governor of the State Bank of Vietnam has issued a document guiding green credit activities associated with the goal of environmental protection, reducing carbon emissions, and moving towards green growth: Directive No. 03/CT-NHNN dated March 24, 2015 on promoting green credit growth and managing environmental and social risks in credit granting activities; guiding credit institutions to identify, compile statistics and report credit investment results for green projects and plans, environmental protection, climate change mitigation and adaptation of 12 green sectors/areas; Circular No. 17/2022/TT-NHNN dated December 23, 2022 guiding the management of environmental risks in credit granting activities of credit institutions and foreign bank branches to implement the assigned tasks in the Law on Environmental Protection (2020)...
Second, the State Bank of Vietnam implements solutions to support credit institutions in diversifying green banking and credit products, contributing to green growth and sustainable development. The State Bank of Vietnam encourages credit institutions to focus bank credit capital on projects, production, business and investment plans for green industries/sectors, mitigating and adapting to climate change.
The State Bank has submitted to competent authorities to issue/issue under its authority policies to minimize the impact of climate change, suitable for sectors and fields affected by climate change, to support businesses and people to overcome difficulties, develop production and business such as policies to restructure debt repayment terms, maintain debt groups, and waive interest-free debts for customers in production and business in the agricultural and rural sectors who have suffered losses in loan capital and assets formed from loans due to natural disasters and epidemics under the direction of the Government; implementing credit programs for agricultural and rural development associated with green and sustainable goals such as: Providing credit capital to serve the Project "Sustainable development of one million hectares of high-quality and low-emission rice cultivation associated with green growth in the Mekong Delta", a loan program to encourage the development of high-tech agriculture and clean agriculture; lending for coffee replanting in the Central Highlands region...; lending for production forest planting and livestock development; The Forestry Development Project is implemented through the Bank for Social Policies. Implementing programs to support the poor in housing to prevent climate change such as: Loan program to build storm and flood-proof houses in the Central region, building houses in flooded areas of the Mekong Delta; credit programs to contribute to reducing greenhouse gas effects and environmental pollution such as the clean water and rural environmental sanitation program...
Third,The State Bank of Vietnam has implemented solutions to enhance the capacity of the banking system in implementing green credit and banking. The State Bank of Vietnam has organized training and capacity building for credit institutions and individuals participating in the development and implementation of mechanisms, policies, programs, and green banking and credit products, participating in international forums on sustainable finance to learn from international experiences in green credit, green banking, and promoting green finance through Fintech and Digital Banking initiatives to serve comprehensive and sustainable financial development. At the same time, the State Bank of Vietnam has actively negotiated to mobilize resources from international financial institutions, bilateral and multilateral funding to enhance financial capacity so that credit institutions have resources to finance credit for customers to implement green projects such as: Energy saving project for Vietnam's industry; Project to replicate energy efficiency in Vietnam; Project to finance small and medium enterprises to implement green projects; Technical support projects for the Vietnam HCFC Elimination Management Plan, Phase II, Technical Support for the Southeast Asia Energy Development and Construction Investment Planning Fund, Technical Support Project on Green Financial Initiatives and Innovation for Infrastructure Development in Southeast Asia...
Regarding the requirement to publish reports related to green credit, environmental and social risk management, in projects, action plans, policy mechanisms, and directive documents on green credit activities, environmental and social risk management, the State Bank not only stipulates the tasks and solutions that need to be implemented but also sets out requirements for departments, bureaus, and credit institutions on information disclosure and reporting on the implementation of assigned tasks.
By the end of the first quarter of 2024, 47 credit institutions had reported the emergence of green credit outstanding debt according to Official Dispatch No. 9050/NHNN-TD with outstanding debt reaching VND 636,964 billion, accounting for about 4.5% of the total outstanding debt of the whole economy; 34 credit institutions conducted environmental and social risk assessments with outstanding credit assessed for environmental and social risks reaching about VND 2.9 million billion, accounting for more than 21% of the total outstanding loans of the economy. 100% of credit institutions have conducted environmental risk assessments in credit granting activities according to Circular No. 17/2022/TT-NHNN, 68 credit institutions have reported the implementation status of Circular No. 17/2022/TT-NHNN according to Official Dispatch No. 2371/NHNN-TD dated March 27, 2024 of the State Bank.
In 2023, 109 credit institutions reported the results of implementing the Project, including 36/46 commercial banks, 46/50 foreign bank branches, 21/26 non-bank credit institutions including finance companies and financial leasing companies, 4/4 micro credit institutions; Social Policy Bank, Cooperative Bank.
In addition to the achieved results, Ms. Pham Thi Thanh Tung also pointed out some difficulties and obstacles in the implementation process such as: Difficulties in granting green credit, statistics and announcement of green credit results; there is no national green classification list, which serves as a basis for credit institutions to develop lending policies and statistics on green investment scale; granting green credit requires in-depth environmental technical factors, making it difficult for credit officers to appraise and evaluate the effectiveness of projects and customers' ability to repay debts, and difficulties in monitoring and managing risks when granting credit; promoting green credit and strengthening environmental and social risk management will cause credit institutions to incur costs to invest in building a management system suitable for green growth goals, and costs to invest in enhancing the professional capacity of bank officers in financing green projects, circulation, and sustainable development; The work of disclosing information on sustainable development increasingly requires higher transparency of reports, higher quality, wider reporting scope...
The State Bank creates favorable conditions for credit institutions to participate in international cooperation activities, contributing to promoting ESG practices
Regarding the implementation orientation, Ms. Pham Thi Thanh Tung said that in the coming time, the State Bank will direct credit institutions to focus resources on funding for green economic sectors and fields, circular economic model projects, green transformation, low emissions, contributing to the implementation of requirements on innovation of the national growth model; at the same time, instruct credit institutions to grant green credit, report on the implementation status of green credit after the Prime Minister issues the National Green Classification List. Continue to study and perfect the legal framework to strengthen the management of environmental, social and climate risks in credit granting activities of credit institutions. Monitor, guide and promptly remove difficulties in the process of credit institutions implementing environmental risk management according to the provisions of Circular No. 17/2022/TT-NHNN.
The State Bank will promote negotiations and create favorable conditions for international financial institutions and domestic credit institutions to participate in international cooperation activities, provide funding for green projects with environmental and social benefits, thereby increasing resource mobilization, contributing to the implementation of the National Strategy on green growth and promoting ESG practices in Vietnam. Continue to provide and publish information on sustainable development activities of the banking sector according to assigned tasks to relevant ministries, branches, units, international forums... as a basis for assessing the level of participation in sustainable development of the banking sector. Actively participate in domestic and international seminars and forums on green credit, green banking, ESG practices and sustainable growth; At the same time, promote communication and training activities to raise awareness and quality of human resources in the banking industry to meet the implementation requirements of ESG practices as well as international standards in sustainable development.
BIDV - one of the pioneers in implementing the Independent Sustainable Development Report
Speaking at the Seminar with the content "Implementing activities to promote sustainable development at BIDV: Advantages, difficulties and some recommendations", Mr. Le Ngoc Lam - General Director of BIDV said that BIDV pursues the strategy of positioning the Green Bank brand, becoming a market leader in ESG practices and sustainable finance, gradually approaching international standards on green finance and implementing the roadmap to transform into a Net-Zero Bank by 2045
BIDV has promptly established a Steering Committee and a Project Management Board to develop and implement a comprehensive Sustainable Development Strategy and ESG practices to promote the implementation of sustainable finance activities. This is an important milestone and affirms the determination of the entire BIDV system in practicing ESG. 2023 marks the seventh consecutive year that BIDV has conducted a Sustainable Development Report in a comprehensive manner in accordance with the GRI Standards guidelines and is the first year that BIDV has issued an independent Sustainable Development Report. The purpose is to provide information on BIDV's orientation, strategy, commitments and sustainable development practices in 2023. The report is prepared and published based on references to the Global Initiative's Sustainable Development Reporting Standards and its relevance to the United Nations Sustainable Development Goals.
BIDV's milestones on the journey of Sustainable Development are: Regarding the environment, BIDV has focused on investing in green projects and renewable energy projects, aiming to contribute to the country's "Net-zero" goal by 2050. As of December 31, 2023, BIDV's green credit balance reached VND 74,177 billion, accounting for 4.24% of total credit balance; green projects receiving funding increased by 24.1% compared to 2022. BIDV is the bank with the largest green credit balance in the system. Through the flow of green credit, BIDV supports businesses to invest in technological innovation, reduce carbon emissions, and contribute to the transformation of the green economy. On October 25, 2023, BIDV became the first bank to successfully issue green bonds according to ICMA principles in the domestic market with a scale of VND 2,500 billion to mobilize capital to finance green projects, save energy, reduce emissions, and protect the environment; BIDV is the first commercial bank to issue a Sustainable Loan Framework according to international standards with the advice of the Carbon Trust organization. BIDV conducts environmental risk management assessments for 100% of investment projects with environmental impact factors according to regulations of the State Bank of Vietnam. BIDV considers environmental risk and impact assessment an important factor in making lending decisions...
In terms of society, BIDV always actively contributes to the journey of supporting the community through social security and volunteer activities. In addition, BIDV also focuses on investing in technology and people, digitizing service processes, improving product quality and customer service, developing new services to anticipate market trends, thereby creating a solid foundation for continuing to enhance BIDV's brand value in the future.
Regarding governance, BIDV commits to implementing corporate governance in compliance with the provisions of the law on corporate governance for large-scale public companies and listed enterprises. BIDV always attaches importance to business ethics and does not allow acts that hinder competition as well as thoroughly implement the policies of the State and the State Bank on preventing and combating corruption, negativity and crime. 100% of BIDV leaders and staff in the entire system are trained and sign a commitment to comply with the Corporate Culture Handbook. Regarding contributions to the State Budget, BIDV has always been among the top enterprises contributing the most to the State Budget for many years.
Currently, BIDV has been researching and applying the OECD Corporate Governance Principles, the ASEAN Corporate Governance Scorecard, and the Corporate Governance Principles according to best practices for public companies in Vietnam jointly developed by the State Securities Commission and the International Finance Corporation (IFC).
In developing the Sustainable Development Report, BIDV has the following advantages: strong guidance and direction from the Government, the State Bank of Vietnam and relevant ministries and branches; support in many aspects from partners and financial institutions with capacity and experience in the world; the domestic legal framework is gradually forming and perfecting, creating a legal mechanism for green and sustainable activities; awareness of customers and the community about the role and importance of green and sustainable development and ESG practices is increasing; in addition, BIDV also receives support from consultants, especially PwC Consulting in developing the Sustainable Development Report according to GRI Global Standards.
However, Sustainable Development Reporting is a relatively new field and poses many difficulties and challenges for both management agencies as well as businesses and banks, including BIDV, specifically: Regarding the legal framework, to date, regulations on green classification and confirmation of projects granted green credit and issuance of green bonds have not been issued, making it difficult for commercial banks to implement. Determining and collecting data on emissions continues to be a difficult problem in many countries around the world, including Vietnam; the team of experts with in-depth technical knowledge of environmental, social and sustainable factors in Vietnam is still quite limited. Currently, businesses in Vietnam are only initially approaching the orientation of sustainable development and ESG practices, especially the management of environmental and social risks. Therefore, it is necessary to have more time and resources to train and support businesses, especially large, leading businesses, to shift their operations from conventional commercial activities to sustainable development. Financial support policies (tax and fee incentives, credit limits for lending institutions and businesses, bonus points for credit institutions that are outstanding in this activity when calculating annual rankings, priority in granting licenses to open new branches, etc.) need to continue to be developed and issued at a large enough level to encourage. Mr.
Le Ngoc Lam proposed a number of recommendations to the Government, the State Bank and relevant ministries and branches as follows: First, it is necessary to complete policy frameworks and guidelines for capital mobilization and green, sustainable credit granting. In the immediate future, it is necessary to soon issue Regulations on classification and certification of green projects (taxonomy). Second, it is necessary to have specific development orientations for each industry/industry group (priority, sensitivity to the environment - society). In addition to “green” projects, it is necessary to consider and study regulations on classifying projects and loans according to social and sustainable standards (combining both environmental and social) as a basis for unified implementation in the system. Third, consider issuing preferential policies large enough to encourage investors to finance capital, and credit institutions to promote green and sustainable projects. Fourth, promote training and development of human resources in the field of environment and society to promptly meet market needs during the transition process. Finally, build a national information portal on sustainable development.
ESG is a tool for risk management
Speaking at the seminar with the topic: "Integrating ESG into investment and disclosing information on climate-related financial risks", Mr. Pham Nguyen Vinh - Director of Business Development, Dragon Capital Investment Fund said that in the current global context, ESG reporting has become an essential requirement for financial institutions and businesses. However, according to a report by Ernst & Young Limited and ISSB, there are currently an estimated 600 ESG reporting standards with more than 500 metrics globally. Efforts to standardize ESG reporting are being strongly promoted to ensure transparency and consistency, while preventing "greenwashing" - the disclosure of dishonest or incomplete sustainability information. In June 2023, ISSB issued the first set of international sustainability reporting standards including: IFRS S1 - General requirements for disclosure of information related to sustainability; IFRS S2 - Climate-related disclosure.
Since 2002, with the help of IFC, Dragon Capital has built and implemented an ESG risk management system to ensure that investment decisions are not only based on traditional financial factors but also consider non-financial risks related to ESG. According to Mr. Pham Nguyen Vinh, regarding environmental and social factors in ESG, Dragon Capital applies IFC's environmental and social performance standards, while for governance criteria, Dragon Capital uses the main criteria of the ASEAN corporate governance scorecard (developed based on OECD governance principles). This system helps Dragon Capital identify, assess and manage ESG-related risks, while optimizing sustainable investment opportunities.
Currently, Dragon Capital continues to work with consulting partners to update the ESG risk assessment management system to suit current trends, by integrating new requirements from stakeholders including assessing risks of climate change, greenhouse gas emissions and biodiversity impacts of investment portfolios. In particular, an ESG assessment framework will be developed specifically for the financial services - banking industry. According to the Sustainable
Banking Assessment (SUSBA) 2023 report of the World Wide Fund for Nature (WWF), compared to ASEAN banks, Vietnamese banks still need to improve and make more efforts in announcing policies, including Industry policies, training Industry human resources and integrating ESG in products and services. SUSBA is an interactive tool that considers 6 aspects of the overall integration of ESG factors in banking operations including: Purpose, policy, process, people, product, portfolio.
Introducing Dragon Capital's VEIL (Vietnam Enterprise Investments Limited) fund, Mr. Pham Nguyen Vinh shared that VEIL has gone a step further by applying the recommendations of the Working Group on Climate-Related Financial Disclosure (TCFD). Accordingly, VEIL fund has assessed and disclosed climate-related financial risks, including physical risks and transition risks (greenhouse gas emissions) for the fund's investment portfolio. "Physical risks" are related to direct damage from climate change, such as natural disasters, while "Transition Risks" include changes in policies and regulations to reduce carbon emissions.
Applying TCFD recommendations helps VEIL improve transparency and accountability, providing detailed and timely information to investors on climate-related financial risks. At the same time, this also helps the fund manage and minimize potential risks, ensuring sustainable and long-term development. However, at the Dialogue, Mr. Pham Nguyen Vinh said that integrating ESG and applying TCFD recommendations is not easy. Organizations face many challenges, including high commitment from the board of directors, establishing policies and procedures, collecting and analyzing complex data, ensuring the accuracy and reliability of information, and meeting increasingly stringent regulatory requirements from stakeholders. To overcome these challenges, Dragon Capital has invested heavily in people and assessment systems, and closely cooperated with international experts and organizations to improve capacity and share experiences.
In general, integrating ESG into investment and disclosure of climate-related financial risks is an important step to ensure the sustainable development of financial institutions. Through the VEIL fund, Dragon Capital has demonstrated its pioneering role in this field, while contributing to promoting transparency and accountability in the financial industry.
Sustainable Development Reporting practices should be applied step by step, harmonizing existing standards, moving towards applying specific characteristics of each country.
In the Discussion session, moderated by Mr. Nguyen Viet Thinh - Head of the ACCA Sustainable Development Report Judging Board, Director of CGS Consulting Company Vietnam, speakers, experts, and scientists focused on discussing issues to clarify the content of experience as well as practices in implementing ESG and practicing Sustainable Development Reporting at credit institutions in Vietnam; including content related to the legal framework, policies as well as the importance of building a business's Sustainable Development Report, and at the same time proposing and recommending appropriate solutions in implementing the Sustainable Development Report.
Sharing about the overview of policies and the context of implementing Sustainable Development Reports in Vietnam, Associate Professor, Dr. Nguyen Dinh Tho - Director of the Institute of Strategy and Policy on Natural Resources and Environment, Ministry of Natural Resources and Environment said: At COP26, the Vietnamese Government signed a very strong commitment to achieving the target of net emissions of "0" by 2050. To achieve the target of net emissions of "0", the tool that Vietnam is directly approaching is using the circular economic model, meeting the needs of sustainable production and consumption from the process of exploiting raw materials to consuming, recycling and reusing products. This is a closed process, meeting the requirements of a circular economy. In the past time, the Institute of Strategy and Policy on Natural Resources and Environment, Ministry of Natural Resources and Environment was directly assigned by the Government to develop two legal documents, which are documents related to green classification and the national action plan for implementing the circular economy. These two documents are directly related to each other, and are tools for the banking industry and the economy to organize the implementation of the circular economy in the coming time. Vietnam is also developing and promulgating regulations to expand the responsibility of enterprises in production and business, regulations on waste classification at source, regulations on collecting fees for plastic waste, regulations on protecting the ecological environment, using economic tools such as green bonds, green credit, green procurement and market access to implement all sustainable development goals. In addition, regulations on taxes and fees have also been issued to support enterprises that are producing and trading in the field of sustainable development.
The Sustainable Development Report is not only an incentive report but has become a mandatory report. Countries such as the UK, France, Malaysia, Hong Kong, Japan, Korea, and Singapore have all made the Sustainable Development Report a mandatory report for enterprises. Therefore, if the Sustainability Report is not implemented, the bank may have its credit rating downgraded by international credit rating organizations, and at the same time pose risks to itself and businesses throughout the supply chain.
In the coming time, according to the provisions of Decree No. 06/2022/ND-CP dated January 7, 2022 of the Government regulating the reduction of greenhouse gas emissions and protection of the ozone layer, 1,912 enterprises nationwide are required to inventory greenhouse gases and meet emission quotas. However, not only these enterprises but also the entire economy will be affected by this regulation. Especially enterprises in fields such as cement, iron, steel, aluminum, chemicals. Enterprises in the energy sector have not been affected much. In other sectors, from January 1, 2025, all businesses operating in the agricultural sector exporting to Europe that originate from deforestation will be given a yellow card, which will cause many negative impacts on exporting businesses.
Regarding the challenges that Vietnamese enterprises face, related to emission reporting, according to Associate Professor, Dr. Nguyen Dinh Tho, currently, there are three areas that enterprises must comply with. The first area is related to the direct emissions of enterprises. For the banking industry, there are almost no direct emissions, but the second area is related to the use of energy such as electricity and water and the third area is related to the movement of staff will be counted as emissions. This is a big challenge for banks to comply with in the coming time. However, these are also great opportunities for enterprises if enterprises can reduce emissions in the supply chain, from the process of investigation, exploration, design, production, classification, consumption, reuse... then this entire supply chain will reduce emissions significantly, thereby gaining quite large profits.
Discussing the role of the banking industry in the sustainable development process, Associate Professor, Dr. Pham Thi Hoang Anh - Deputy Director of the Banking Academy shared that for a financial system that depends heavily on banks like Vietnam, the role of the banking industry is becoming increasingly important. In recent times, the banking industry has provided products on green finance, sustainable finance... these are inevitable development orientations associated with the future of commercial banks. Currently, many commercial banks consider green finance products and green credit as products in their core strategy associated with their future orientation. This plays an extremely important role in demonstrating the social responsibility of banks.
According to Associate Professor, Dr. Pham Thi Hoang Anh, there are three points to note: (i) When commercial banks provide green finance products and green credit, this will demonstrate the responsibility of commercial banks, correctly reflecting the environmental pillar in the Sustainable Development Report and ESG practices; (ii) Through providing green credit and green finance products, commercial banks also consider this an opportunity for development. Because when businesses themselves are customers of banks, they are aware of the risks and impacts of climate change on production and business activities, businesses themselves will have changes in production and business behavior. If commercial banks pioneer in this field, this will be a great opportunity for them to lead the trend of sustainable development; (iii) From the perspective of a university training in the field of finance and banking, the Banking Academy recognizes its responsibility in providing educational and training products related to green finance products, green credit, sustainable development, etc. Therefore, in recent times, the Banking Academy has continuously changed the training program framework, adding new subjects related to green finance, green credit, ESG implementation, etc. to improve knowledge about sustainable development for students after graduation.
Referring to the story of biodiversity, a very open topic that has not been mentioned in the reports, according to Mr. Pham Nguyen Vinh, Director of Business Development, Dragon Capital Investment Fund, Vietnam is a country with great biodiversity but is also suffering from great damage and loss of biodiversity. When banks provide capital to businesses operating in fields such as tourism, real estate, especially those operating near biodiversity areas, banks need to fully assess the risks related to the environment and biodiversity to improve the efficiency of the loan capital. Vietnam is a country heavily affected by climate change; therefore, the ESG implementation assessment report is also a way for banks and businesses to contribute to mitigating the impact of climate change, towards a green economy and sustainable development.
Sharing about ACCA's role in the International Sustainability Standards Board (ISSB) and notes when applying IFRS S1 and IFRS S2 standards for Sustainability Reporting, Ms. Sharon Machado - Director of Sustainability Development, ACCA Global said: In the early stages, it is not easy for businesses to apply all international standards, they need to try to apply step by step, taking the simple steps first. Applying different standards is a continuous journey. First, use the basic standards, then, in the process of trading with different countries, add new requirements, thereby bringing benefits to businesses.
The trend of the economy shifting from "brown" to "green" forces businesses to make the transition, thereby incurring conversion costs. For banks, if they convert early, they will have an advantage, however, initially it will be very costly to implement. From a state management perspective, Associate Professor, Dr. Nguyen Dinh Tho said: The principle applied by some countries in the world is that those who cause emissions must pay a fee, those who cause damage to the environment, causing climate change must compensate those who do not cause climate change, those who protect the environment. In the future, when implementing carbon credits, air will also be charged. The higher goal is that biodiversity must also be charged. The general implementation principle is that those who destroy biodiversity must compensate those who protect or create diversity.
According to Mr. Le Ngoc Lam - General Director of BIDV, businesses implementing green transformation must invest more in emission treatment. Currently, the requirements of the market and governments of countries around the world on environmental factors are increasingly high. Therefore, businesses that invest first will have more advantages, and as countries begin to charge carbon fees, green transformation is a must.
The practice of Sustainable Development Reporting in businesses needs to be applied step by step, starting from a small scale, from building a reporting framework suitable for the business's conditions. Currently, there are many sets of Sustainable Development Reporting standards developed by many organizations; therefore, businesses in the practice process need to apply step by step, harmonize existing sets of standards, and then proceed to apply them according to the characteristics of each country.
Concluding the Seminar, Ms. Nguyen Thi Thanh Binh - Deputy Editor-in-Chief in charge of Banking Magazine said that the Seminar had created a highly interactive exchange forum between speakers and experts from state management agencies, international organizations, departments, agencies, functional units of the State Bank, commercial banks, foreign banks, enterprises, economic experts, scientists, etc. to discuss, exchange and share useful experiences on Sustainable Development Reporting standards; thereby, contributing to raising awareness of credit institutions about the necessity of practicing Sustainable Development Reporting in the banking industry and building a process of information disclosure and practicing Sustainable Development Reporting according to international standards. The application of international standards in preparing Sustainable Development Reports will help improve the quality of reports, effectively promote and build trust in the brand of credit institutions, and at the same time contribute to the orientation of sustainable development of the banking industry in the coming time.
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