Fair Finance Sida FFA II Vietnam - HAUI International practices and initiatives at the global level on ESG are increasing with the participation of many stakeholders such as society organizations, international organizations, rating organizations, auditing companies. In the banking and financesector, consideration and integration of ESG factors is evident with the introduction of the United Nations Principles on Responsible Investment (UN PRI) in 2006  and most recently is the United Nations Principles of Responsible Banking (UN PRB) in 2019.UN PRB provides a framework for the banking industry that integrates sustainability at the strategic, portfolio and transactional levels, and spreads all business sectors..  These principles align banks with the goals outlined in the SDGs, the Paris Climate Agreement, and the Corporate and Human Rights Guiding Principles (UNGP). In addition, banks often apply industry standards and are set forth by development banks such as the Environmental and Social Performance Standards of the International Finance Corporation (IFC);  and the World Bank's Environmental, Health, and Safety (EHS) General Guidelines;  Equator Principles (EP) . Although developed by different organizations, these standards all focus on core sustainability values such as economic performance, the environment, and the benefit of the community.   At the same time, many independent organizations evaluate and report on the implementation of ESG by companies and banks such as Bloomberg's ESG Data Service; Corporate Knights Global 100; DowJonesSustainability Index (DJSI); Sustainalytics ESG Risk Assessment; Thomson Reuters ESG Score. Methods, coverage, assessment criteria, scoring and reporting vary widely depending on the evaluator.
In the field of finance - banking and investment, the application of Environmental - Social - Governance (ESG) criteria are familiar trends and gradually become the norm in the world. Therefore, more and more financial institutions and investors are interested in and considering these additional non-financial criteria in the process of risk assessment and investment decision making.
In an effort to raise awareness of the responsible lending and investment practices of Vietnamese commercial banks and minimize the negative consequences for the environment and the community that may come from loans and investments. The Financial Equity Vietnam Initiative (FFV) has conducted an Environmental - Social - Governance (ESG) commitment assessment in the banking industry in Vietnam for the first time in 2020. The objectiveof the report is to identify the level of public commitment in the operating activities of commercial banks related to the contents of combating climate change; conservation of natural heritage; against gender discrimination; respect human rights; labor rights; prevention of financial crimes related to money laundering, terrorist financing, tax compliance; protect customers and move towards financial inclusion on the basis of transparency and accountability.
The published evaluation results have received the attention of researchers, policy makers and commercial banks in the context that global financial institutions are directing capital flows in the greener way and sustainable development, contributing to minimizing negative impacts on the environment, promoting a sustainable economy, contributing to preventing poverty. On that basis, with the successor and continuation, the Fair Finance Vietnam project will continue to conduct the second policy assessment and report in 2022 with evaluation criteria basedon Profundo's Evaluation Guide Kit (FFGM).
The results of the second analysis have shown progress in implementing public commitments on ESG policy by most commercial banks in internal operations and the bank's investment and/or lending to customers although commercial banks are still in the early stages of this process. However, legal frameworks have been promulgated in recent times such asthe Law on Environmental Protection which took effect on January 1, 2022; Law on Anti-Money Laundering 2022 takes effect March 1, 2023; Circular 96/2020-BTC, effective January 1, 2021, stipulating requirements for listed companies to publish sustainability reports with ESG criteria and Circular 17/2022/NHNN guiding the implementation of management Social environmentalrisks in credit granting activities of credit institutions and foreign bank branches, effective from June 1, 2023, are important legal bases to promote the process of implementing ESG policy of Vietnamese commercial banks in the coming period.
Based onthat, ESG policy analysis activities of Vietnamese commercial banks continue to be carried out every 2 years in the 5-year plan 2023-2027 based on the dot method updatedby Profundo.