The Asian Development Bank (ADB) and the State Bank of Vietnam (SBV) have jointly launched a $2 million initiative focused on green banking capacity development, marking a strategic push to help Vietnam scale up green and climate finance across its banking sector. The program, announced on January 30, 2026, represents a critical component of Vietnam’s broader effort to mobilize the estimated $368 billion needed by 2040 to meet the country’s climate mitigation and adaptation targets.
The initiative forms part of the larger technical assistance project titled “Expanding Inclusive and Climate Finance,” funded by the Japanese Government through the Japan Fund for Prosperous and Resilient Asia and the Pacific (JFPR). This funding mechanism demonstrates Japan’s sustained commitment to supporting green growth and climate resilience across the Asia-Pacific region, particularly in economies like Vietnam that are experiencing rapid development while confronting mounting climate vulnerabilities.
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Workshop Convenes 80+ Stakeholders to Chart Path Forward
The inception workshop marking the implementation of the $2 million component brought together more than 80 participants from the State Bank of Vietnam, relevant ministries and government agencies, development partners, commercial banks, and business associations. This diverse stakeholder assembly reflects growing recognition that Vietnam’s transition to a green economy requires coordinated action across government, financial institutions, and the broader business community.
Participants engaged in substantive discussions on several critical topics shaping Vietnam’s green finance landscape. Climate risk assessment emerged as a priority focus area, with banking professionals examining methodologies to integrate physical and transition risks into credit decision-making processes. The State Bank of Vietnam’s environmental risk management regulations, issued under Decision 1663/2024, mandate that by 2025 all domestic lenders and foreign banks operating in Vietnam should have internal regulations on environmental risk management in credit-granting activities.
The workshop also explored the macro-economic impacts of carbon pricing—a policy tool that Vietnam is considering as part of its climate strategy. As countries worldwide implement carbon pricing mechanisms to incentivize emissions reduction, Vietnamese policymakers must carefully assess how such policies would affect different economic sectors, influence competitiveness, and create opportunities or challenges for businesses that rely on bank financing.
Discussions on the role of credit institutions in carbon market development examined how Vietnamese banks could support emerging carbon trading mechanisms. The country is working to develop carbon market regulations, with a revised decree on greenhouse gas emissions mitigation and carbon market development expected to be issued soon, following support from development partners including the International Finance Corporation.
Green Bond Issuance and Taxonomy Development Take Center Stage
Green bond issuance featured prominently in workshop deliberations, building on Vietnam’s recent progress in this market segment. In 2023, green bond issuance reached $1 billion, highlighting strong expansion potential despite the nascent state of Vietnam’s sustainable finance markets. Notable milestones include Vietcombank’s first green bond in 2020, which raised VND 3,000 billion (approximately $130 million) to finance renewable energy and sustainable agriculture projects.
The State Securities Commission and the State Bank of Vietnam have issued guidelines for green bond issuance aligned with International Capital Market Association (ICMA) standards, opening long-term green financing channels for renewable energy and climate adaptation projects. The SSC is currently implementing the Green Capital Market Development Plan to expand green financial instruments and promote sustainable finance across the securities sector.
Participants also exchanged perspectives on Vietnam’s green taxonomy—one of the most significant recent developments in the country’s sustainable finance framework. In August 2025, Vietnam introduced Decision 21/2025/QD-TTg, establishing the country’s official framework for confirming investment projects as part of the green project classification list. This represents Vietnam’s first legally binding green taxonomy, providing statutory authority and procedural guidance for determining whether a project qualifies as ‘green’ and thus eligible for green credit and green bond financing.
The Vietnam Green Taxonomy, which became effective on August 22, 2025, addresses a long-standing challenge in Vietnam’s green finance ecosystem. Previously, financial institutions relied on their own internal criteria to determine green project eligibility, leading to inconsistent interpretations across the banking sector. The lack of standardized definitions created ambiguity that not only hampered implementation of green finance initiatives but also undermined investor confidence.
Japanese Partnership Demonstrates Regional Climate Cooperation
At the workshop, Shige Watanabe, Minister-Counselor and Chief of Economic Section at the Embassy of Japan, expressed his expectation that the project will use Japanese public resources effectively and contribute meaningfully to Vietnam’s green and inclusive growth. This statement underscores Japan’s strategic interest in supporting Vietnam’s sustainable development while strengthening bilateral economic ties and promoting Japanese expertise in environmental management.
Japan has emerged as a major partner for Vietnam on climate and environmental issues, supporting numerous projects related to renewable energy, energy efficiency, sustainable transport, and environmental management. The Japan Fund for Prosperous and Resilient Asia and the Pacific, which finances this green banking initiative, represents a trust fund administered by ADB to channel Japanese development assistance toward climate action and sustainable growth across the Asia-Pacific region.
The Japanese partnership extends beyond this specific initiative. The Japan International Cooperation Agency provided a $50 million syndicated parallel loan as part of ADB’s $250 million financing package with BIDV to promote sustainable agriculture and support women-owned small and medium enterprises. Japan’s involvement in Vietnam’s green transition also includes the Joint Crediting Mechanism, a bilateral initiative allowing Japan to count verified emission reductions from Vietnamese projects toward its own climate targets while directing capital investment.
ADB Alignment with Vietnam Country Partnership Strategy
Maria Joao M. Pateguana, Unit Head of Private Sector Development at ADB’s Vietnam Resident Mission, emphasized that the technical assistance aligns closely with ADB’s Country Partnership Strategy for Vietnam and supports the Government’s broader financial sector reforms. She underscored that continued dialogue and targeted support will help unlock the banking sector’s potential for sustainable growth while strengthening the sector’s ability to manage climate risks.
The ADB’s country partnership strategy for 2023-2026 rests on two main pillars: transitioning to a green economy and fostering private sector participation while promoting social equity. The bank’s assistance portfolio has expanded to include sustainable coastal forest management, green transition policies, and enhanced private sector engagement. Addressing climate change remains at the core of ADB’s support program for Vietnam, with priority investments aimed at climate change adaptation, environmental sustainability, green development, digital transformation, and regional cooperation and integration.
Vietnam’s vulnerability to disasters triggered by natural hazards presents major risks to the country’s economy and infrastructure. Without proper adaptation and mitigation measures, climate change is estimated to cost Vietnam approximately 12 to 14.5 percent of GDP annually by 2050 and could plunge up to one million people into extreme poverty by 2030, according to the World Bank’s Country Climate and Development Report.
ADB has demonstrated its commitment through substantial investments. In 2024, ADB approved a $2 million grant to support Vietnam’s emergency response to and recovery from damage caused by Typhoon Yagi. The bank has also arranged and syndicated a $173 million green financing package for PC1 Group Joint Stock Company and RENOVA, Inc. to finance the Lotus Wind Power Project, the first internationally-financed wind power project in Vietnam.
Vietnam’s Green Credit Landscape: Progress and Challenges
Vietnam’s banking sector has made significant strides in expanding green finance, though substantial challenges remain. According to the State Bank of Vietnam, by the end of November 2025, outstanding green credit reached approximately 750 trillion VND ($28.55 billion), with an average growth rate exceeding that of overall credit in the economy. Commercial banks are providing approximately 88 percent of total green credit outstanding in Vietnam.
However, this figure represents only 4.5 percent of total outstanding credit as of March 31, 2024, highlighting the significant gap between current financial flows and the scale of green investment needed. This marks a nine-fold increase since 2015, with an average annual growth rate of nearly 100 percent, demonstrating rapid expansion from a low base.
Medium and long-term loans account for 77 percent of total green debt, with green credit primarily directed to renewable energy (47 percent), green agriculture (32 percent), clean water (11 percent), and forestry. This sectoral distribution reflects Vietnam’s development priorities and areas where climate finance can deliver both environmental and economic benefits.
The government has set ambitious targets to accelerate green credit expansion. Key initiatives include the Prime Minister’s strategies to increase green credit to 10 percent of total loans by 2025 and up to 25 percent by 2030. Achieving these targets will require substantial capacity building across the banking sector—precisely what the ADB-SBV initiative aims to deliver.
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Regulatory Framework Development and Institutional Capacity
Vietnam has established an increasingly comprehensive legal framework for green finance development in recent years. A key milestone was approval of the Vietnam National Green Growth Strategy for 2011-2020, with a vision extending to 2050, which focused on three main tasks: reducing greenhouse gas emission intensity and promoting clean and renewable energy use; greening production; and encouraging green lifestyles.
More recent regulatory developments include Decree 08/2022/ND-CP (January 10, 2022), which defines categories of projects eligible for green credit and green bond issuance. Decision 1726/QD-TTg (December 2023) approves the Strategy for Stock Market Development to 2030, focusing on expanding green financial instruments, promoting sustainable finance, and accelerating digital transformation in the securities sector.
The State Bank of Vietnam’s Decision 1663/2024 establishes updated sustainable banking framework requirements. By 2025, all domestic lenders and foreign banks operating in Vietnam should have internal regulations on environmental risk management in credit-granting activities and should be conducting environmental risk assessments. The framework aims for at least 10 national banks to have specialized units handling environmental risks by 2025, signaling expectations that major institutions will develop dedicated capacity rather than treating environmental considerations peripherally.
The SBV has indicated it will develop “preferential policies and support mechanisms” for financial institutions to encourage green banking development, including through refinancing and rediscounting initiatives. Resolution 198/2025/QH15 of the National Assembly has identified the policy of providing interest rate support for green projects. The SBV, in coordination with the Ministry of Finance, is finalizing a decree on 2 percent interest rate subsidies for green and circular economy projects, slated for early 2026.
International Development Partner Support
Beyond ADB and Japan, Vietnam has attracted substantial support from multiple international development partners for its green finance agenda. The International Finance Corporation has provided record climate financing to Vietnam, supporting green transition and private sector resilience. In partnership with the Swiss State Secretariat for Economic Affairs, IFC supported the State Bank of Vietnam in issuing environmental risk management regulations, creating a level playing field and helping local banks enhance their management systems to mitigate financial risks related to environment and climate.
IFC, along with other development partners, has been working with regulators to develop Vietnam’s green taxonomy, contributing technical expertise to ensure the framework meets international standards while reflecting national development priorities. IFC also supported Vietnam’s first blue bond and green bond issued by Southeast Asia Joint Stock Commercial Bank (SeABank), promoting a sustainable ocean economy and increasing climate resilience.
The World Bank Treasury’s Sustainable Finance Advisory Program provided technical assistance to BIDV, Vietnam’s oldest bank, which became the first Vietnamese issuer of a sustainability bond in the domestic market with its inaugural Vietnamese dong 3,000 billion ($115 million) issuance in fiscal 2025.
The Just Energy Transition Partnership (JETP) provides $15.5 billion of public and private capital for climate investment to help Vietnam accelerate its transition away from coal-fired power generation toward renewable energy sources. This landmark initiative, supported by UNDP as a secretariat support agency, demonstrates how strategic public sector commitments can catalyze broader financing flows through blended finance approaches that combine concessional public finance with market-based mechanisms.
Remaining Challenges and Implementation Priorities
Despite progress in building Vietnam’s green finance ecosystem, significant challenges remain that the ADB-SBV initiative will need to address. The absence of comprehensive regulatory frameworks and standardized guidelines for green projects has historically created barriers. Although Vietnam now has an official green taxonomy, effective implementation requires extensive capacity building across financial institutions to ensure consistent application.
Data and transparency challenges persist. Inconsistent environmental, social, and governance (ESG) reporting can lead to greenwashing, undermining the credibility of green finance. While 40 percent of Vietnamese banks have begun integrating ESG into lending practices to support sustainable trade, standardization remains limited. Technological advances such as blockchain are beginning to improve transparency in green finance transactions.
Market liquidity constraints also limit green finance expansion. While Vietnam’s green bond market shows strong growth potential, it remains small compared to conventional bond markets, potentially limiting pricing efficiency and investor appetite. Development of supporting infrastructure, including green credit guarantee funds and carbon credit trading platforms, is underway but incomplete.
Skill and capacity gaps present fundamental obstacles. Despite pockets of expertise in some Vietnamese banks and emerging fintech companies, knowledge must become much more broadly based to achieve green finance potential. Many banking sector personnel lack familiarity with climate risk assessment methodologies, green project evaluation criteria, and environmental due diligence processes. Building this expertise requires sustained investment in education, training, and knowledge transfer—precisely what the $2 million ADB-SBV initiative aims to deliver.
The State Bank of Vietnam has committed to strengthening connections and cooperation with domestic and international organizations to attract financial and technical assistance for green finance and green banking activities, particularly to enhance the capacity of banking personnel in green banking, green credit, and climate change response.
Integration with Broader Financial Inclusion Agenda
The “Expanding Inclusive and Climate Finance” technical assistance project addresses two interconnected development challenges: financial inclusion and climate change. These challenges, while distinct, intersect in important ways relevant to Vietnam’s development trajectory.
Almost 80 percent of Vietnam’s population remains unbanked or underbanked—a proportion higher than in Southeast Asian peers like Malaysia, Thailand, Indonesia, and the Philippines. Barriers to finance extend beyond individuals to affect small and medium-sized enterprises, with McKinsey estimating unmet demand among microenterprises and SMEs at approximately $21.5 billion affecting 1 to 2 million potential borrowers.
Vietnam’s transition to a green economy creates both risks and opportunities for these underserved populations. Climate change disproportionately affects vulnerable communities with limited financial resources to adapt or recover from climate shocks. Yet green economic transformation also creates new livelihood opportunities in renewable energy, sustainable agriculture, green construction, and other sectors that require financing mechanisms accessible to smaller enterprises and entrepreneurs.
The technical assistance project aims to leverage financial technology (fintech) to address financial inclusion challenges while improving green banking practices. Vietnam’s 2020 financial inclusion strategy places fintech and innovation at the center of government plans to expand financial services to consumers and SMEs. The State Bank of Vietnam’s 2021 action plan for banking digitalization includes targets for credit institutions to provide at least 70 percent of disbursements and lending decisions for small loans and consumer loans in digital and automated manner.
By integrating financial inclusion and green finance objectives, the program recognizes that Vietnam’s sustainable development requires both broadening access to financial services and ensuring those services support environmentally sustainable activities. Digital financial services, for instance, can expand access to credit for smallholder farmers adopting climate-smart agricultural practices or enable microenterprises to invest in energy-efficient equipment.
Future Outlook and Pathway to 2030 Targets
The $2 million green banking capacity development initiative represents a strategic investment in Vietnam’s financial sector transformation, though success will require sustained commitment beyond this initial program. Vietnam’s ambition to achieve high-income status by 2045 while meeting its net-zero emissions commitment by 2050 necessitates fundamental reorientation of financial flows toward sustainable activities.
The country’s 2026 economic targets reflect this ambition. The National Assembly has approved an economic growth target of at least 10 percent for state-owned enterprises, with GDP per capita expected to reach between $5,400 and $5,500. Achieving these development goals while simultaneously advancing climate objectives requires that green finance transitions from a niche segment to a mainstream driver of economic activity.
The State Bank of Vietnam has committed to continuing its review and improvement of the legal framework and guidelines for green credit. In the coming period, the SBV will align its actions with socio-economic development objectives, the national green growth strategy, and assigned tasks. The central bank will continue managing credit growth carefully, focusing lending on production and business sectors, priority fields, and key economic growth drivers identified by the government, including both traditional and emerging areas.
Development of supporting mechanisms proceeds on multiple tracks. Proposals for a green credit guarantee fund and carbon credit trading platform are seen as key tools to support sustainable finance. The green corporate bond market continues expanding, with regulatory support from the State Securities Commission. International partnerships with organizations like the European Chamber of Commerce in Vietnam (EuroCham) provide technical and financial support to expand use of green trade finance products and develop local capacity.
Vietnam can build on international frameworks while adapting them to national circumstances. EuroCham recommends that Vietnam base its criteria on the EU’s green taxonomy and learn from Singapore’s Green and Sustainable Trade Finance Framework, adapting these international standards to Vietnam’s specific development stage and priorities.
Conclusion: Building Capacity for Transformative Change
The ADB-SBV green banking capacity development initiative launched in January 2026 marks an important milestone in Vietnam’s journey toward sustainable finance, though it represents only one component of the comprehensive transformation required. By strengthening green banking practices and building capacity for climate finance assessment and deployment, the $2 million program aims to help Vietnam translate its ambitious climate commitments into concrete action channeled through its financial system.
Success will depend on effective implementation that delivers tangible improvements in banking sector capacity to assess climate risks, evaluate green projects, deploy appropriate financing instruments, and manage environmental considerations throughout the credit lifecycle. The multi-stakeholder workshop convening government agencies, banks, development partners, and business associations signals the collaborative approach needed for systemic change.
The Japanese Government’s funding through JFPR demonstrates the importance of international partnerships in supporting Vietnam’s green transition, providing not just financial resources but also access to technical expertise and global best practices. ADB’s role as implementing partner leverages the bank’s extensive experience supporting sustainable finance development across Asia-Pacific economies.
As Vietnam advances toward its 2030 green credit targets—aiming for 10 to 25 percent of total lending directed to green activities—the banking sector must dramatically expand both the volume and sophistication of its sustainable finance activities. The capacity building delivered through this initiative, combined with ongoing regulatory development, policy support mechanisms, and continued international partnership, can help position Vietnam’s financial sector as an enabler rather than barrier to the country’s climate and development ambitions.
The ultimate measure of success will be tangible outcomes: increased green lending supporting renewable energy, energy efficiency, sustainable agriculture, and climate resilience; improved assessment and management of climate risks protecting bank balance sheets and supporting financial stability; and meaningful contribution to Vietnam’s broader climate and development objectives, advancing the country’s transition toward a prosperous, resilient, and sustainable future that benefits all Vietnamese people.
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By: Montel Kamau
Serrari Financial Analyst
2nd February, 2026
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