{"id":21248,"date":"2025-04-29T14:51:45","date_gmt":"2025-04-29T07:51:45","guid":{"rendered":"https:\/\/fpt-is.com\/en\/?post_type=goc_nhin_so&p=21248"},"modified":"2025-05-01T16:12:29","modified_gmt":"2025-05-01T09:12:29","slug":"what-is-green-loan-and-what-is-the-roadmap-for-businesses-to-green-financing","status":"publish","type":"goc_nhin_so","link":"https:\/\/fpt-is.com\/en\/insights\/what-is-green-loan-and-what-is-the-roadmap-for-businesses-to-green-financing\/","title":{"rendered":"What is green loan and what is the roadmap for businesses to green financing?"},"content":{"rendered":"

In 2024, the total value of green, social, sustainability, and sustainability-linked (GSS+) loans and bonds classified as “aligned” under the Climate Bonds Initiative standards reached USD 1.1 trillion, bringing the cumulative market value to USD 5.7 trillion (CBI, 2025). Among these, the green bond and loan segment alone accounted for over 60%, equivalent to USD 669.7 billion – the highest level ever recorded.<\/span><\/p>\n

In Vietnam, green credit is also expanding rapidly, with total outstanding loans reaching nearly VND 637 trillion by the end of Q1\/2024, primarily allocated to renewable energy, clean production, and green agriculture.<\/span><\/p>\n

Several major commercial banks in Vietnam – including Vietcombank, BIDV, and UOB – have launched large-scale green credit programs worth tens of trillions of dong, offering interest rate incentives of up to 1\u20132% for projects that meet emission standards.<\/span><\/p>\n

\"Green<\/a><\/p>\n

Source:<\/strong> Climate Bonds Initiative, 2024<\/span><\/p>\n

So, what exactly is a green loan?\u00a0 What has been and continues to be driving thousands of businesses worldwide, from energy and manufacturing to construction and logistics, to proactively transform their models to meet sustainable finance standards and access preferential funding? More importantly, is your business falling behind in the race to restructure its capital in one of the most critical financial shifts of this decade?<\/span><\/p>\n

The following article will clarify the concept of green loans, break down common evaluation criteria, and outline a practical roadmap to help businesses effectively access sustainable financing – both domestically and internationally.<\/span><\/p>\n

1. <\/strong>What is green loan?<\/strong><\/span><\/h2>\n

1.1. Green loan in accordance with international standards<\/strong><\/span><\/h3>\n

Green Loan is a loan granted to finance projects that provide clear environmental benefits. According to the Green Loan Principles (GLP) issued by the International Capital Market Association (ICMA) and the Loan Market Association (LMA), a loan is considered a “green loan” when it meets the following core principles:<\/span><\/p>\n\n\n\n\n\n\n\n
Core principles<\/strong><\/span><\/td>\nContent<\/strong><\/span><\/td>\n<\/tr>\n
1. Use of capital for green purposes<\/strong><\/span><\/td>\nThe loan must be used exclusively for projects that fall under the “green” category, such as renewable energy, energy efficiency, clean transportation, green buildings, resource circularity, sustainable agriculture, and so on<\/span><\/td>\n<\/tr>\n
2. <\/strong>Project evaluation and selection<\/strong><\/span><\/td>\nThe enterprise must clearly describe the project selection criteria, environmental risks, and the anticipated environmental benefits<\/span><\/td>\n<\/tr>\n
3. <\/strong>Management of loan proceeds<\/strong><\/span><\/td>\nLoan proceeds must be tracked separately or managed transparently to ensure they are not used for unintended purposes<\/span><\/td>\n<\/tr>\n
4. <\/strong>Transparent periodic reporting<\/strong><\/span><\/td>\nThe enterprise must commit to providing periodic reports to the bank on the progress of the project and the actual environmental outcomes (avoided emissions, energy savings, etc.)<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Green loans often require enterprises to be able to measure, inventory, and verify environmental indicators such as emission intensity (gCO\u2082\/kWh), emissions reduction (tCO\u2082e\/year), or energy savings.<\/span><\/p>\n

In Vietnam, green credit was first introduced in the law in the 2020 Environmental Protection Law (Clause 1, Article 149), which defines it as “credit granted for investment projects that effectively use natural resources; respond to climate change; address pollution; improve the environment; restore natural ecosystems; conserve biodiversity; and create other environmental benefits.<\/span><\/p>\n

 <\/p>\n

\"Green<\/a><\/p>\n

EMASI Plus Waterpoint School, Long An province, receives VND 120 billion in green financing from Standard Chartered.<\/span><\/em><\/p>\n

Source<\/strong>: Vietnamnews (2025)<\/span><\/p>\n

2. The differences between green loans and commercial loans<\/strong><\/span><\/h2>\n

Green loans are not merely a form of preferential financing – they also represent a company\u2019s commitment to sustainable development. Below is a comparison table that highlights the differences between the two types of loans:<\/span><\/p>\n\n\n\n\n\n\n\n\n\n
Criteria<\/strong><\/span><\/td>\nCommerical Loans<\/strong><\/span><\/td>\nGreen loans under GLP<\/strong><\/span><\/td>\n<\/tr>\n
Purpose of use of funds<\/strong><\/span><\/td>\nFlexible, not limited to any industry<\/span><\/td>\nMust fund projects that benefit the environment<\/span><\/td>\n<\/tr>\n
Techinical Requirement<\/strong><\/span><\/td>\nPrimarily based on credit and collateral.<\/span><\/td>\nMust have an environmental assessment report, emission quantification, or green benefits<\/span><\/td>\n<\/tr>\n
Cost of capital<\/strong><\/span><\/td>\nInterest rates depend on the credit rating<\/span><\/td>\nIt is possible to receive an interest rate discount of 0.5% \u2013 2% if the emission criteria are met.<\/span><\/td>\n<\/tr>\n
Capital usage monitoring<\/strong><\/span><\/td>\nMinimal requirement for in-depth reporting<\/span><\/td>\nMust report periodically on environmental impact and progress<\/span><\/td>\n<\/tr>\n
Brand impact <\/strong><\/span><\/td>\nNo significant ESG impact<\/span><\/td>\nEnhancing ESG credibility, facilitating international fundraising, and gaining access to the global supply chain<\/span><\/td>\n<\/tr>\n
Ability to access international funds<\/strong><\/span><\/td>\nLow or ineligible<\/span><\/td>\nHigh, especially if there are emission certifications or transparent ESG disclosures<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

2. <\/strong>Criteria that businesses need to meet if they want to secure green loans<\/strong><\/span><\/h2>\n

Accessing green loans is not simply about ‘submitting a loan application’ – it is a process of proving that the business is creating or will create a significant positive impact on the environment, according to measurable standards. Below are the core conditions, common evaluation criteria, and common mistakes businesses need to be aware of:<\/span><\/p>\n

3.1. Core requirement for eligibility<\/strong><\/span><\/h3>\n

To have a green loan approved by banks or financial institutions, businesses must meet several foundational conditions:<\/span><\/p>\n

Possession of \u201cGreen\u201d project<\/strong><\/span><\/h4>\n

According to the Green Loan Principles (ICMA) and the green financing framework of banks in Vietnam, the industries eligible for green loans typically include:<\/span><\/p>\n