Green Banking Regulatory Support under ADB Technical Assistance on Expanding Inclusive and Climate Finance

1. Project Overview

This assignment is implemented under the Asian Development Bank (ADB) technical assistance project TA-10094 VIE: Expanding Inclusive and Climate Finance, which aims to strengthen Viet Nam’s financial sector in mobilizing resources for climate action and sustainable development.

The project provides advisory and capacity-building support to the State Bank of Vietnam (SBV) to strengthen its capacity in implementing green banking policies and regulatory frameworks. It also supports improvements in the collection, aggregation, and analysis of green finance data across the banking sector, thereby facilitating the development of climate finance and sustainable investment in Viet Nam.

2. Background

Viet Nam is among the countries most vulnerable to climate change, particularly due to the concentration of population and economic activities in low-lying coastal areas. Increasing exposure to flooding, tropical storms, rising temperatures, and salinity intrusion poses significant risks to agricultural productivity, public health, and economic growth. Climate change is projected to reduce Viet Nam’s GDP growth by approximately 1–2% by 2050 if no effective mitigation and adaptation measures are implemented.

At the 26th United Nations Climate Change Conference of the Parties (COP26), Viet Nam committed to achieving net-zero greenhouse gas emissions by 2050, phasing out coal-fired power generation by 2040, and continuing to implement its commitments under the Paris Agreement. To support these goals, the Government established the National Steering Committee for the implementation of Viet Nam’s COP26 commitments and assigned the State Bank of Vietnam a key role in mobilizing financial resources for the green transition.

In this context, strengthening the regulatory framework for green banking and climate finance has become a priority to unlock the banking sector’s potential contribution to climate action.

3. Objectives

The project aims to strengthen the institutional and regulatory capacity of the State Bank of Vietnam to support the development of green banking and climate finance in the country. Key objectives include:

• Enhancing the capacity of the State Bank of Vietnam to assess and manage climate-related financial risks in the banking sector
• Supporting the development and implementation of regulatory frameworks for green banking and climate finance
• Improving the collection and aggregation of data related to green finance within the banking sector
• Strengthening institutional capacity on climate risk assessment, carbon pricing mechanisms, and green financial instruments

4. Key Activities

The project includes a range of technical advisory and capacity development activities, including:

• Conducting technical reviews and preparing analytical reports on international best practices in assessing financial institutions’ exposure to climate-related risks and climate stress testing
• Assessing the macroeconomic impacts of carbon pricing mechanisms, including emissions trading systems and carbon taxes, and providing recommendations for Viet Nam’s policy development
• Reviewing international regulatory frameworks on green bond issuance by financial institutions and identifying gaps in Viet Nam’s current regulatory framework
• Developing recommendations to support the development of green credit, climate finance, and sustainable investment in the banking sector
• Organizing knowledge-sharing and consultation workshops to gather feedback from stakeholders and strengthen institutional learning
• Conducting training needs assessments and designing a multi-year training roadmap on climate risk assessment, green banking, climate finance, and carbon markets
• Delivering training workshops to strengthen supervisory capacity on ESG inspection and supervision for credit institutions

5. Project Contribution

Through policy advisory support and capacity development activities, the project contributes to strengthening the regulatory and institutional framework for green banking in Viet Nam. It supports the State Bank of Vietnam in integrating climate considerations into financial supervision and promoting the development of green finance instruments.

By enhancing the banking sector’s ability to manage climate-related financial risks and mobilize sustainable investment, the project also supports Viet Nam’s broader transition toward a low-carbon and climate-resilient economy.