In 2021, at the COP 26 Summit, Vietnam made strong commitments to achieve net-zero emissions by 2050 and reduce methane emissions by 30% by 2030 compared to 2020 levels. These commitments demonstrate Vietnam's determination to combat climate change and promote sustainable development.
To achieve sustainable development goals, there needs to be a harmonious combination of economic development, social development, and environmental protection. Implementing green finance helps provide capital, assess risks, encourage businesses to apply sustainable development principles, and promote transparency in investment. Therefore, the Vietnamese government has issued many policies and strategies to promote green finance development. Some notable examples include:
The National Green Finance Strategy for the period 2021-2030
The National Action Plan on Green Finance for the period 2022-2025
Regulations on green bonds
Support for the development of green investment funds
In addition to government efforts, Vietnam still faces many challenges in green finance development. One of the major challenges is greenwashing. Fraudulent practices in greenwashing harm both businesses and erode investor trust. Ultimately, fraudulent practices increase the risk of misusing capital, thereby reducing the effectiveness of environmental protection and green finance support.
To address the risk of greenwashing, particularly in the financial sector, most countries focus on building legal frameworks for green regulations or publicly disclosing cases of fraud in information disclosure.
Experiences in limiting greenwashing from other countries:
In the case of other countries, such as the EU, there is a very strict classification system with standards for labeling green projects and products. In September 2023, the EU agreed to ban "greenwashing" tactics used by companies to convince consumers that their products are "environmentally friendly," "climate-neutral," and "biodegradable" without evidence. The draft law was passed on September 19, 2023, banning companies from labeling products as such without providing detailed evidence.
In China, greenwashing is also a pressing issue in green finance. These companies have abused green finance support to implement environmentally unfriendly projects. To minimize greenwashing, the Chinese government has imposed requirements for regular, open access to, and mandatory disclosure of company financial reports. Financial reports also need to ensure transparency and reliability of environmental-related information to reduce greenwashing risks, helping investors and governments check before making green finance decisions.
The surge in investments in sustainable development projects has led to an increase in "greenwashing" practices in Singapore's financial sector. Companies and funds with high ESG ratings have attracted trillions of dollars in investments in recent years. To address this issue, Singapore has implemented a comprehensive set of measures, including requiring all listed companies to disclose ESG information by the Group of Twenty (G20) recommendations. Mandating companies to publish financial information related to climate change regularly. Launching an AI-powered program to analyze environmental risks in the financial industry. Requiring companies to ensure the quality of their sustainability reporting information.
Lessons for Vietnam
While Vietnam has implemented measures and policies to promote sustainable development and green finance, the issue of "greenwashing" remains a significant challenge. The lack of legal frameworks and measures to address "greenwashing" practices has hindered the effectiveness of these efforts.
As "greenwashing" becomes a growing concern globally, addressing it is crucial to mitigate its negative impacts and enhance the effectiveness of green finance activities. To minimize "greenwashing" risks in Vietnam, the government should implement essential measures such as:
Strengthening ESG disclosure requirements: Establish reliable ESG reporting standards and frameworks while enhancing the quality of reporting and information disclosed.
Implementing strict sanctions for "greenwashing" in green finance activities: Severely punish "greenwashing" practices and establish a system to monitor the transparency of environmental protection activities undertaken by businesses.
Raising awareness about "greenwashing" practices: Enhance public awareness through education and information campaigns to better identify "greenwashing" activities. Heightened awareness will contribute to more effective identification and control of "greenwashing."
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