Unlocking green finance through disclosure of climate related financial risk

The Asia Foundation, in collaboration with Ernst and Young Vietnam, is spearheading a transformative initiative titled "Unlocking Green Finance through Disclosure of Climate Related Financial Risk". This project aims to accelerate Vietnam's transition to a low-carbon economy and sustainable development, aligning with its net-zero emissions goal by 2050.

Vietnam is facing increasing regulatory requirements on Environmental, Social, and Governance (ESG) standards and climate-related financial risks. The revised Environmental Protection Law and Decree 06/2022/ND-CP on Emission Reduction and Ozone Layer Protection have set the stage for the development of Vietnam's Carbon Market and mandatory carbon inventory for specific sectors. Additionally, listed companies are now required to disclose ESG matters in their annual reports. 

Internationally, Vietnam's trade agreements with developed countries necessitate local enterprises to meet stringent ESG standards to capitalize on these agreements. Investors, particularly foreign ones, are increasingly seeking low-carbon and decarbonization solutions through responsible investment and impact investing. Financial institutions and lenders are also requiring enterprises to disclose information on ESG and climate-related financial risks as part of their financing criteria. 

Despite these pressures, local firms lack guided frameworks, capacity, and capability to effectively disclose ESG and climate-related financial risks. This project addresses these gaps by developing comprehensive ESG frameworks, building capabilities in integrating ESG into corporate strategy, governance, and management, and enhancing awareness of ESG requirements and regulations.

The project aims to create a significant positive change by:

• Increasing awareness and activities in the sustainable finance market
• Enhancing the capacity of stakeholders involved in the low-carbon energy transition
• Strengthening policy and regulatory frameworks on sustainable finance and enterprise development
• Leveraging international benchmarks and providing tailored technical assistance, this initiative will support Vietnam's journey towards green growth and sustainable development, ensuring a resilient and inclusive future

• Capacity building for enterprises: developing and disseminating a handbook on ESG frameworks and climate-related financial risk disclosure, conduct workshops to raise awareness, and provide technical assistance to selected enterprises for pilot implementation
• Policy enhancement: providing benchmarks and case studies to policy makers on how policies can enable and accelerate businesses' access to sustainable finance
• Sectoral guidance: customising ESG frameworks and disclosure procedures for key sectors such as financial, construction, and industrial manufacturing