A transaction at a bank. (Photo: sggp.org.vn) Hanoi (VNA) - The State Bank of Vietnam (SBV) hascoordinated with the International Finance Corporation (IFC) to prepare ahandbook on social and environmental risk assessment for 10 economic sectorsserving credit operations of commercial banks.
The manual can be considered a toolkit to help banks assessenvironmental and social risks of credit projects and assist credit officersappraise business plans, ensuring effective green and sustainable development.
The 10 specific sectors are agriculture, chemicals, constructionand infrastructure, and energy, as well as food processing, textiles, petroleumand mining, along with non-metallic mineral products exploitation and wastetreatment.
The handbook, expected to be issued in 2017, has three parts.
Part A will contain information on the businesses and projectsthat need credit grants. In this part, credit institutions need to ask theirclients to provide information on issues such as compliance of the enterprisewith respect to environmental, labour and social regulations and company’sability to manage environmental and social risks.
Part B will focus on environmental and social impact ofprojects. This section lays out specific criteria to consider the potential andexisting risks and impact of the projects on the environment (air, water, landand hazardous waste, as well as raw materials and energy consumption), on theworkforce (working conditions and health safety), on health and the safety ofpeople living around the project area, and on biodiversity and culturalheritage.
Part C will consist of recommendations that underpin the creditdecision, the price and terms of disbursements in the credit agreements and thelevel of credit management and supervision of commercial banks.
According to IFC, green credit is the credit that banks give toprojects that are less risky for the environment or to protect the environment.
In 2016, outstanding loans for green projects reached some 84.781trillion VND, up 19.7 percent compared with the end of 2015, accounting for 1.5percent of total outstanding loans of the economy, with some 3.2 million creditcontracts.
Credit granted to projects which have gone through environmentaland social risk assessment reached some 187.9 trillion VND, with more than129,000 contracts.
According to the national action plan on green growth in the2014-20 period, the Prime Minister assigned the SBV to review, revise andcomplete financial and credit regulations so as to be aligned with green growthobjectives, organise training courses to strengthen the capacity of commercialbanks and financial institutions in green credit activities and develop financial-bankingservices to support green growth.
The SBV, therefore, aims to guide credit institutions to developbusiness strategies in line with the State’s strategy on environmentalprotection and green growth. Accordingly, investment projects with the participationof bank credit must comply with regulations on environmental protection, socialsafety and energy saving.
This handbook will be a reference document. The SBV encouragescommercial banks to apply the guidelines.-VNA
VNA
