Financial sector helps boost transition for low-carbon economy: experts

ABO/NDO – Vietnam’s financial sector needs to play a key role in the transitional efforts to develop a low-carbon, climate-resilient, economy through re-orienting investment to more sustainable projects, while accounting for environmental and social risks, experts have suggested.

The event features discussions on the opportunities and challenges associated with sustainable development. (Photo: NDO)

Financial and environmental experts gathered at an international workshop on the theme of “Sustainable Finance on Climate and Energy,” which opened in Hanoi on March 29, to discuss measures to boost the financial sector’s activities in promoting Vietnam’s tangible results on environmental and sustainable policy goals.

According to experts, climate change will have a profound impact on humans and eco-systems during the coming decades with adverse effects on the economy, cultures and livelihoods. The situation is particularly alarming for Vietnam. Extreme weather and snow in the north, with drought and salinity intrusion in the South Central and Mekong Delta regions, has seriously affected production and the daily activities of millions of people.

Undeterred by such challenges, more than 180 countries gathered in Paris, France, to sign a landmark climate agreement to keep global temperature increases to well below 2 degrees Celsius, reaffirming the world’s commitment to cut greenhouse gas (GHG) emissions. With domestic resources, Vietnam has pledged to reduce GHG emissions by 8% by 2030. This contribution could be increased to 25% with international support.

The aforementioned goal requires an increasingly critical role of the financial sector in managing climate-related risks and supporting the transition to a low-carbon economy. Its contribution is expected to be an important instrument to Vietnam’s accomplishment of commitments to the Paris Agreement, as well as the UN’s Sustainable Development Goals.

With 25 years of implementing sustainable development, including nearly six years of delivering the Vietnam Green Growth Strategy, Vietnam has been taking advantage of an established foundation for low carbon development. During the same period, the financial sector has made great strides in term of policies to measure up to global standards. This was exemplified by the IFC partnership with the State Bank of Vietnam in which an environmental and social risk assessment handbook across ten sectors was drafted.

Vietnam has implemented policies for delivering the Sustainable Development Goals. However, the lack of policy enforcement remains a key challenge, Naomin Tan said, adding that in the near future, WWF will collaborate with local banks, regulators and associations to promote sustainable finance though capacity building and the development of tools and guidelines.

According to the “Sustainable Scenario for the Vietnamese Power Sector until 2050” report by WWF-Vietnam and Vietnam Sustainable Energy Alliance, 100% of Vietnam’s power can be generated by renewable energy technologies by 2050, whilst significantly reducing carbon dioxide emissions linked to climate change. For that reason, the financial sector should make the transition towards investing in renewable energy while gradually divesting from unsustainable thermal power plants.

(Source: NDO)