Directive 03/CT-NHNN 2015 promote green credit growth and environmental-social risk management in credit extension

DIRECTIVE

Promoting green credit growth and environmental-social risk management in credit extension

To implement the National Action Plan on Green Growth for the 2014-2020 period in the Prime Minister’s Decision No. 403/QD-TTg dated March 20, 2014, the Governor of the State Bank of Vietnam requests units of the State Bank of Vietnam and commercial banks, financial companies, financial leasing companies, cooperative banks, foreign bank branches operating in Vietnam (hereinafter referred to as credit institutions) to perform the following tasks:

I. GENERAL OBJECTIVES AND TASKS

1. To implement the National Action Plan on Green Growth, as from 2015, credit extension activities of the banking sector should focus on environmental protection, improving the efficiency of resource and energy use; improving environmental quality and protecting human health, ensuring sustainable development.

2. To review, adjust and complete credit institutions in accordance with green growth objectives; focus resources to provide credits to production and business projects and plans that are environmentally and socially friendly, contributing to supporting enterprises to implement green growth, thereby achieving the green growth and sustainable economic development goals.

II. FOR UNITS AT THE HEAD OFFICE OF THE STATE BANK OF VIETNAM

1. Based on the functions and tasks, advise the Governor of the State Bank of Vietnam to effectively implement the National Action Plan on Green Growth in the 2014-2020 period.

2. The Department of Credit for Economic Sectors shall assume the prime responsibility for, and coordinate with units of the State Bank of Vietnam in, formulating and implementing solutions to promote green credit growth in the direction and objectives of the approved National Strategy for Green Growth; focal point for organizing training courses to strengthen capacity for green credit activities and environmental and social risk management; guide credit institutions to build and implement environmental and social risk management systems.

3. Based on functions and tasks, units shall assume the prime responsibility for, and coordinate with the Department of Credit for Economic Sectors in, reviewing, researching and formulating regulations on environmental and social risk management in credit extension of credit institutions to customers.

III. FOR STATE BANK BRANCHES IN PROVINCES AND CENTRALLY-RUN CITIES

1. To proactively grasp the socio-economic situation and banking activities in the area, propose to the Governor of the State Bank of Vietnam solutions to implement environmental and social risk management in credit extension and promote green credit growth in accordance with actual conditions in the area.

2. To actively communicate and improve awareness of credit institutions about green growth in credit activities, manage environmental and social risks in credit activities.

IV. FOR CREDIT INSTITUTIONS

1. Pursuant to the approved National Strategy on Green Growth and programs and action plans of ministries, ministerial-level agencies and People's Committees of provinces and cities proactively develop green credit programs and policies to gradually increase the proportion of green credit in the structure of their credit portfolios. Details are as follows:

a) To develop and implement solutions to promote green credit growth to encourage environmentally and socially friendly business activities: research and develop green credit products, implement credit programs with incentive policies for production and business projects and plans with green growth goals.

b) To improve service quality, create favorable conditions for green credit growth, pay attention to financing production and business projects and plans to implement green growth.

c) To focus on prioritizing green credit extension for economic sectors to conserve, develop and effectively use natural resources; use advanced scientific and technological achievements; use energy economically and efficiently; develop clean and renewable energy; use environmentally friendly technologies and equipment, produce environmentally friendly products.

2. To research, develop and implement solutions to manage environmental and social risks in credit extension. To be specific:

a) To proactively research and develop environmental and social risk management systems in credit extension activities through the improvement of credit extension policies, resources, processes and procedures to enhance coordination in social environmental protection and credit management.

b) Based on the environmental and social regulations of the ministries and branches to consider and assess environmental and social risks (such as abuse of resources and energy, pollution of the natural environment, imbalance of ecosystems, climate change, damage to cultural heritage, threats to safety, security and human health and communities, unequal labor and forced resettlement) affecting the efficiency of capital use and the ability to repay debts of customers when appraising credit to customers.

c) To perform regular and periodic inspection and supervision of environmental and social risk management in credit extension to customers, ensuring that environmental and social risk management activities in credit extension become regular, continuous and highly effective tasks.

3. To actively implement information and communication on environmental and social risk management and green credit policies of credit institutions to create consensus and support of public opinion and enterprises for the objective of green credit growth of credit institutions in particular and the banking industry in general.

4. To make quarterly periodic reports in accordance with the Report Form attached to this Directive.

V. ORGANIZATION OF IMPLEMENTATION

1. This Directive takes effect on the date of its signing.

2. The Department of Credit for Economic Sectors shall assume the prime responsibility for, and coordinate with units of the State Bank of Vietnam in, monitoring the implementation of this Directive and summarizing and reporting to the Governor of the State Bank of Vietnam.

3. The Chief of Office, the Director of the Department of Credit for Economic Sectors and the Heads of units of the State Bank of Vietnam, Directors of the State Bank of Vietnam's branches in provinces and centrally-run cities, Chairpersons of the Boards of Directors, Chairpersons of the Members' Councils and the General Directors (Directors) of credit institutions and foreign bank branches shall implement this Directive./.

Name of CI: ………

REPORT

On green credit growth and environmental and social risk management in credit extension

(Issued together with Directive No. 03/CT-NHNN dated March 24, 2015)

Quarter…. Year…..

Unit: VND billion, value of unit

Note:

- Deadline for sending report: No later than the 16^th of the first month of the quarter following the reporting quarter.

- Form of sending report: written reports shall be sent to the State Bank (Department of Credit for Economic Sectors), the electronic files of such reports shall be sent to the email address: [email protected].