The funding marks British International Investment’s first climate-directed debt facility in Vietnam, aimed at helping the country achieve net-zero emissions by 2050.
British International Investment (BII), the UK development finance institution, is providing $50m (€43.6m) to Vietnam Prosperity Joint-Stock Commercial Bank to help support Vietnam’s green transition.
The funding marks BII’s first climate-directed debt facility in Vietnam, aimed at helping the country achieve net-zero emissions by 2050.
BII says it will increase access to finance for Vietnamese businesses looking to deliver climate-related projects, focusing on sectors such as sustainable agriculture, clean transportation, circular economy, and renewable energy.
It is part of a $350m loan facility arranged by Sumitomo Mitsui Banking Corporation, with participation from Export Finance Australia, FinDev Canada and Japan International Cooperation Agency.
Regional growth
The initiative is part of BII’s goal of investing up to £500m (€578m) of climate finance across Southeast Asia and allocating 30% of total new commitments to climate finance between 2022 and 2026.
Speaking to Impact Investor about how it plans to fulfil this commitment, Srini Nagarajan, managing director and head of Asia at BII said that the region has set ambitious goals for a sustainable future, adding that BII is committed to supporting these efforts by deploying its capital and expertise to mobilise more investment.
“As Asia’s momentum towards sustainability grows, we anticipate increasing opportunities to invest in impactful projects that drive inclusive, low-carbon growth.”
To date, BII has committed approximately £245m in climate finance across the region, and Nagarajan said that mobilisation and building partnerships remain BII’s central focus.
Vietnam’s green transition
Vietnam is one of the world’s most vulnerable countries to climate change and has emerged as one of the fastest-growing per-capita greenhouse gas emitters, according to BII.
“Vietnam’s energy sector, which has traditionally relied on fossil fuel, accounts for over half of the county’s total emissions, followed by agriculture, industrial processes, and waste,” the DFI said.
In order to fully facilitate the green transition of these sectors, the World Bank has estimated that $368bn will be required, underscoring the need to mobilise private capital to help Vietnam achieve its climate targets.
Speaking about BII’s impact in attracting further private sector investment in Vietnam’s green transition, Nagarajan said its role as a DFI is to provide patient, flexible capital that supports impact-driven businesses, de-risks projects, and demonstrates their commercial viability.
Earlier this year, BII and Dutch entrepreneurial development bank, FMO, partnered with SUSI Partners to develop a renewable energy platform from scratch with Vietnam’s Dam Nai wind farm as its cornerstone asset.
