Being highly vulnerable to climate change, and with rising emissions, the government of Viet Nam (GoV) recognizes the importance of mobilizing climate finance, given estimates of USD 30 billion are needed for the green growth strategy by 2030. Further, Viet Nam’s NDC sets a target of 8% reduction of GHG emissions by 2030 with domestic resources and increases to 25% with international support. Given Viet Nam’s MIC status since 2017, the country will face increasingly limited ODA grants and concessional loans and needs to mobilize climate finance from other sources, especially the private sector if Viet Nam is serious about meeting its green growth and NDC targets.

As such, the Ministry of Finance (MoF), through its Green Growth Action Plan, has outlined the task of “green capital market development and green financial products to mobilize investment resources for green projects and environmental protection”.  Whilst interest in green financial products, especially green bonds, is high, this is still a new topic for the GoV. The regulatory framework and institutional capacity still need to be further strengthened to enable and facilitate the effective issuance of green bonds, domestically and internationally (especially on a high-quality platform such as LGX).

This proposal aims to support Viet Nam in capitalizing the tremendous potential of green bonds through a partnership with GGGI and Luxembourg – bringing together expertise in green finance, to enhance institutional capacity and the regulatory framework, combined with practical experience in piloting of green bond issuance.

This project will be delivered through 3 outputs:

1. Enhanced regulatory framework for green bond development for both corporate and government/municipal bonds: supporting MOF, incollaboration with MONRE and MPI to assess and develop policies to enable green bond market development for corporate, government and municipal bonds.
2. Improved capacity and knowledge of Viet Nam government officials and market participants in green bond issuance and the global green capital market: global experience (with a focus on the experience of green bond issuance through LGX and green bond label by LuxFLAG) will be shared and knowledge products developed.
3. Increased green investments through 2 pilot green bond issuances: 2 provinces/cities and corporates will be selected for piloting the issuance of green bonds to finance their green investment projects.