Written by Sojin Jung, Trang Nguyễn (National Consultant) and Nora Moisio (Private Partnership Development Officer)
Green bonds - Mobilization of Resources for Green Actions
December 2, 2020
Climate change is a defining issue of our time. The impacts of climate change affect every country on the planet and pose unprecedented challenges for millions of people. Simultaneously the COVID-19 pandemic has revealed, how vulnerable our economies and societies are. The pandemic is undoubtedly bringing its challenges in achieving the 2030 Agenda and addressing climate change, but the changing development landscape also creates new opportunities. The COVID-19 enables a unique opportunity for us “to make” the world more inclusive and sustainable. Investments in social bonds are vital for a recovery that leads to greener, more inclusive economies, and more resilient societies.
Green financing in Viet Nam
When we look at the current situation in Viet Nam, approximately USD31 billion is needed in 2020 to shift the economy to a more sustainable path and achieve national emissions reduction targets. Most of this potential relates to the areas of renewable energy and green infrastructure, including public transport, water, and waste management. Compared to neighboring countries, Viet Nam has one of the highest percentages of infrastructure spending; however, public funding alone will not be enough to fund this transition. The Government is turning towards private sector-led investment. Improving planning capacity and regulatory structures will assist attract private investment. Green finance presents an opportunity for infrastructure funding and developing a robust pipeline of green projects that can attract green capital is a priority.
It is encouraging to see that more and more investors nowadays are seeking out green projects because they want to make a social contribution and generate a stable profit in the global market. Green bonds can satisfy these goals and further connect green projects and businesses in Viet Nam with global green investors.
Lessons learned from the green bond training
The Climate Business Index, which is a joint initiative by UNDP and the Ministry of Planning and Investment (MPI) encouraging companies to take climate actions, has recently co-organized the regional webinar on ”Building Low-Carbon, Climate Resilient Future through Green Bonds” under its climate finance training with Asian Development Bank and Climate Bonds Initiative. The high level of participation (more than 300 people from the governments and private sector of 15 countries) demonstrated to us that there is a lot of interest and importance of learning about green bonds.
Webinar’s objectives were to enhance the knowledge of governments and corporations interested in issuing green bonds and to highlight key lessons learned from the successful issuance of green bonds from the region. In the context of Viet Nam, where are no green bonds issuance yet, we learned from the training provided throughout the webinar that green bonds can offer an opportunity for investor pipelines to recover from COVID-19. To achieve this, we need more spread of knowledge and cohesion among investors because at the current state, the legal framework in Viet Nam is ready for green bond issuance.
UNDP has been working with the governments for the effectiveness of climate investments through creating efficiency in the existing investments and by generating resources for climate action. Green Bonds has emerged as an area of increasing importance for generation of resources, and the promising results worldwide encourages our continuous efforts.
Hopefully, in the future, the issuance of green bonds will be replicated with UNDP’s support in providing capacity strengthening and technical support to country governments and the corporate sector. Green bonds are proven to be an effective means to secure the resources required to meet the country's national climate change goals, and as we all know, Viet Nam needs actions to meet these goals.