Viet Nam introduces first-ever green financing incentive for businesses

Viet Nam is linking preferential loan interest rates to green criteria for the first time, requiring businesses to meet ESG (Environmental, Social and Governance) standards to access a 2 percent annual interest support.

Viet Nam is linking preferential loan interest rates to green criteria for the first time, requiring businesses to meet ESG (Environmental, Social and Governance) standards to access a 2 percent annual interest support. The move aims to expand capital access while promoting sustainable business practices.

On April 2, the Ministry of Agriculture and Environment announced that the ministry is seeking public feedback on a draft Prime Ministerial Decision guiding the identification of green projects, circular economy projects and the application of ESG standards.

According to the ministry, this is the first time state budget interest rate support is directly tied to a project’s adherence to green criteria.

Businesses, business households and individual entrepreneurs seeking the 2 percent annual support must demonstrate that their projects comply with green or circular economy criteria and apply the ESG framework. This policy operationalizes Resolution No. 198/2025/QH15 of the National Assembly on supporting the private sector.

The ESG frameworkincludes three pillars, including environmental, social and governance, with 52 criteria. Large enterprises must meet at least 40 criteria, while smaller enterprises and business households face lower thresholds tailored to their scale.

The draft also outlines project assessment mechanisms. Project owners may self-assess or hire independent organizations meeting ISO/ISAE standards to verify compliance. Assessment results will guide commercial banks and financial funds in granting loans and interest rate support.

Businesses must maintain compliance throughout the incentive period.

If businesses fail to maintain compliance, the support will be withdrawn in accordance with policy regulations.

Previously, green policies in Viet Nam were primarily incentive-based, lacked standardized criteria, and made project selection and monitoring challenging. The new ESG-linked framework aims to allocate resources more transparently, enhance access to capital, and strengthen the competitiveness of Viet Namese businesses globally.

The draft is currently open for consultation with ministries, local authorities and the business community before submission to the Prime Minister for approval.

Source: SGGP