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FINANCING SUSTAINABLE DEVELOPMENT
Dr. PHAM HOANG MAI
Director General
Dept. of Science, Education, Natural Resources and Environment
MINISTRY OF PLANNING AND INVESTMENT OF VIETNAM
CONTENT
1. SDG 2030 and Business Opportunities
2. SDG Private Investment Review
3. The Way Ahead
4. Challenges
VIETNAM SDG 2030
Vietnam SDG 2030 Action Plan with 17 Vietnam Sustainable Development Goals (VSDGs) and 115 specific targets.
Many VSDGs have been integrated into the national development policy and strategies, plans.
6 Ministries and 25 Provinces have formulated and approved their sectoral or provincial SDG 2030 Action Plan
SDG 2030 – US$12 trillion in business opportunities
Demand for Green Finance for Green Growth - 2020
Sector/subsector Emission reductions
cost (million USD) ERs (MtCO2)
Average MAC
(USD-ton CO2)
Construction 3,33 0,17 -69,46
Construction material 17,54 0,49 -14,39
Cement 725,00 2,61 -45,27
Household 2.279,19 16,54 -32,32
Paper and pulp 0,00 0,19 -93,46
Power generation 27.625,00 61,37 16,11
Iron, steel 79,50 0,22 -44,60
Total 30.729,56 85.12 -36,10
Sector 8% emission reductions (billion
USD)
17% ER with international
support
Total 25% ER
Energy 1,9 5,3 7,2
Agriculture 0,9 12,1 13
Total 3,2 17,9 21,2
Demand for Green Finance for ER committed by NDC- 21-30
1. Review of green finance policy framework - Demand GF
Gap of Investment for Climate Change Adaptation and Green Growth 2016 -2020 (billion USD)
CC Adaptation
(at 4% of GDP)
Green Growth ($9 Bil.)
Green Growth (NDC)
Total Demand
MTIP 2016-2020
Gap
46.85 30 21.1 24
1st
Option
76.85 52.85 2nd Option
67.95 43.95
Total Investment
(billion, VND)
Total Investment (billion, VND)
Percentage for Green Growth
(%)
1. State Budget 1.120.000 201.265 – 207.991 2% - 4%
1.1. Target programs 147.306 67.811 0% - 25% -
100%
1.2. ODA 300.000 120.000 40%
1.3.Allocation for programs, projects and 02 target programs
672.694 13.454 - 20.180
2. Local budget 880.000 26.400 -35.200 3% - 4%
Total 2.000.000 227.665 –243.191
(10 – 10.7 bil. USD) 11% - 12,2%
PUBLIC INVESTMENT PLAN 2016 - 2020
Private investment
• Enterprises
• Financial institutions
• Households
• Other private sources.
Capital source and
financial instruments
• Equity
• Loan
• Financial aid
• Government bond
Investments and
Spending in climate change
• Direct and indirect related (Mitigation, Adaptation, Mitigation & Adaptation)
Capital Sources for Private Investment
Item Sep 2016,
billion
VND
(%) Increase
from
12/2015
June
2017,
billion
VND
(%) Increase
from
12/2016
Green credit outstanding 84.789 1.57% 14.7% 109.729 1.7% 29.4%
Credit outstanding, for which
E&S risk evaluated
129.160 2.49% 562% 449.468 7.72% 348.1%
Number of banks with green
finance reports
11 20
Number of banks with E&S risks evaluation reports
20 20
Green credit remains low at 1.6%-1.7% of the total credit outstanding for the economy, but growing very fast at 14.7% and 29.4%.
Review of green finance policy framework- Summary of green credit and social & environmental risk evaluation (Directive No. 03/CT)
Private Investment Needs – Energy Efficiency
Industrial
Sector
Investment
Need
(millions
USD)
Measures considered
Investment
2010-2015
(millions
USD
Iron and
Steel 450.0
WHR, closed production lines, replacement low EE air
compressor, installation of inverter for motor etc. 169.6
Cement 650.0
WHR in about 36 cement companies (a capacity above
2,500 tons clinker per day) about 325 MW from WHR
and other types of investment in EE.
226.7
Pulp and
paper 306.0
WB study: 85 million USD (EE investment in new
efficient boilers for cogeneration, replacement of
motors, switching to biomass fuel technology, and
chemical waste recovery for heating.); ENERTEAM and
RCEE-NIRAS study, based on the energy saving
potential: 306 million USD.
104.5
Sugar 360.0
Estimated on the basis of investment in cogeneration
systems at sugar mills, the installed capacity is
approximately 360 MW.
127
Total 1,766.0 627.8
RE Project To 2020
(MW)
Investment
needs (million
USD)
Capacity
added in
2010 – 2015
(MW)
Investment
made in 2010-
2015 (USD,
millions)
Small
hydropower,
<30 MW
1,100 1,210 to 1,430 2,000 2,800
Wind power 810 1,620 to 1,863 190 428
Solar power 850 1,190 to 1,530 5 Grant funded
Total 2,760 4,020 to 4,823 3,228
Private Investment Needs – Renewable Energy
Vietnam Green Growth Strategy
National Green Growth Strategy (VGGS) - 9/2012;
National Green Growth Action
Plan (GGAP) - 3/2014;
Contents
• Reducing the intensity of GHG emissions
• Greening production
• Greening lifestyle and consumption
Green Growth Action Plan
• 12 groups of actions, 66 activities
GREEN GROWTH TO SUPPORT VSDGs
DIRECT IMPACT
INDIRECT IMPACT
Relate to 91 VSDGs (79.1%)
Provinces/ Cities have developed and promulgated the Provincial / Municipal PGGAP
07 Ministries have developed and promulgated their
GGAP including: MOF, SBV, MONRE, MOT, MOIT,
MOC, MARD to specify assigned tasks in GGAP.
39 cities/provinces have issued their GGAP
GGAP has proposed scenarios of emission
reduction, policy interventions and prioritized
projects
15
Description Unit Quantifi-
cation
GHG emissions in 2010 Mil.tCO2 equip
0,18
GHG emissions base (2020)
Mil.tCO2 equip
1,15
Applied mitigation solutions - Voluntary
11
The amount of voluntary GHG emission reduction by 2020
Mil.tCO2 equip
0,61
Reductions level compared to basic emission
% 53%
Applied mitigation solutions - with support
17
GHG emission reductions with support in 2020
Mil.tCO2 equip
1,17
The reduction level compared to basic emissions
% 101%
1.15
0.54
-0.01
-1.50
-1.00
-0.50
-
0.50
1.00
1.50
2.00
2.50
-1.50
-1.00
-0.50
0.00
0.50
1.00
1.50
2.00
2.50
2010 2015 2020
Ph
át t
hải
KN
K (
MtC
O2
)
Lâm nghiệp
Nông nghiệp
Quá trình công nghiệp
Năng lượng
Kịch bản cơ sở (BAU)
Kịch bản TTX - Tự nguyện
Kịch bản TTX - Có hỗ trợ
Ninh Thuan Green Growth Action Plan
16
No. Action/Project Objectives Implementing
agency, and
supporting agencies
Budget
(bil. VND)
GHG
emission
reduction
(th. tCO2tđ)
Expected
financial
source
A AGRICULTURE 823 352,92
1 Selection of short-termed rice seed
with high productivity and quality
Farming area of 20,000 ha in
2020
DARD/ local farmers
association
455 44,6 PPP, ODA
2 Application of “1 must – 5 less” rice
farming technique
Application area of 10,000 ha
til 2020
DARD/ local farmers
association
60 48,23 State budget,
PPP
3 Replacing rice farming of low
productivity with sugarcane farming
Replacement of
approximately 5,000ha in
2020
DARD/ local farmers
association
25 100,2 PPP, PDI
4 Replacing rice farming of low
productivity with corn farming
eplacement of approximately
4,000ha in 2020
DARD/ local farmers
association
68 80,6 State budget,
PDI
5 Replacing rice farming of low
productivity with bean farming
eplacement of approximately
3,000ha in 2020
DARD/ local farmers
association
150 60,12 State budget,
PDI
6 Application of biogas techology in
agriculture
Target of 6,570 biogas
digesters in 2020
DARD/ local farmers
association
66 19,17 PPP, PDI
B FORESTRY 205 679
1 Mangroves forestation for coastal
protection, erosion prevention
Target of 1000 ha mangroves
of 12 year production cycle in
2020
DARD 6,72 321 State budget,
PDI
2 Reforestation for natural forest with a
focus of indigenous trees
Target of 5000 ha in 2020 DARD 30 145 PPP, ODA
3 Effective organization of production
forestration on bare hills
Target of 2,400 ha new area
in 2020
DARD 168 213 PPP, PDI
Priority projects & sources of funding for Ninh Thuan
Recommendations: Green Banking • SBV continues to streamline and issue policy framework on green
finance in order to encourage banks to give preferential loans for green projects.
• International green finance programs should be continuously mobilized
• Green finance fund should be established that can access international sources of funding such as the Green Climate Fund (GCF).
• Financial institutions should be encouraged and obliged to establish internal policies on green banking, green credit, policies on social and environmental risk management and particularly periodical reporting in accordance with the Directive No. 03/CT-NHNN.
• Support for green bond issuance, attracting domestic and international investors, funding for green projects.
Establishing a Project Structure for Indirect Investment
Potential Lenders / Sources of Funding
Loans
$ $
$
Equity & Debt Financing
$
Risks and Costs
Risks:
- Foreign Exchange Risk;
- Sovereign Risk + Institution Risk;
- Green Risks (i.e. Technology, Natural Conditions, Governmental Regulations)
Costs:
- Domestic refinancing (bank’s deposit): 4-6,5%
- Management fees.
Market Lending rate: 9-11% for long-term loans
Commercial banks
Investment Fund, Fund Loans
Governmental Financial Organisations (VDB, SBV…)
Projects
Loan and / or Investment agreement
Investment: • Equipment • Installation • Services
1-3% Less than market
refinancing
Refinancing + FX Back up +
institution risk
Loans
- Governmental regulations;
- WB, JICA, GCF…
Commercial banks
Foreign Investment Fund
Governmental Financial Organisations (VDB, SBV…)
Projects
Loan Up to 70-80%
of invest volume
Refinancing + FX Back up +
institution risk
Equity investment
Local Investors
Equity Investment
- Governmental regulations;
- WB, JICA, GCF…
Owner Equity
Implementation of the Decision No.
622/QĐ-TTg by the banking sector and
(draft) Green Banking Development Master
Plan in Vietnam
Phạm Xuân Hòe
Banking Stratregy Institute
State Bank of Vietnam
Possible damages to Vietnam due to climate change
Agenda
• Part I: Overview on implementation by the banking sector of the Decision No. 622/QĐ-TTg on National Action Plan to implement the Agenda 2030 on Sustainable Development
• Part II: Brief on the Green Banking Development Master Plan
I. Necessity and legal basis
II. Current status of green banking in Viet Nam
III. Objectives, 4 main pillars and recommended solutions
Part I:
Overview on implementation by the banking sector of the Decision No. 622/QĐ-TTg on National Action Plan to implement the Agenda 2030 on Sustainable Development
Tasks Implementation status
1. Legal framework for micro finance activities
Decision No. 20/2017/TTg governing microfinance activities.
2&3 Banking restructuring
The Credit Institutions Restructuring Scheme approved in the Decision No. 1058/QĐ-TTg dated 19/7/2017: positive achievements; increase in share prices of banks; improvement in credit ratings of many banks; banks mergers
4. Banks modernization Plan to develop banking IT infrastructure; Action plan to implement Directive No. 16/CT-TTg dated 4/5/2017 by the Prime Minister (the 4th industrial revolution); Circular on safety and security in banking operations
The State Bank of Vietnam is assigned as leading agency in implementing objectives No. 8.10, 9.3.a, 10.5.c
Tasks Implementation status
5. Prioritizing branches and transaction offices access to banking services
Circular No. 21/2013/TT-NHNN on operation network of commercial banks, Circular No. 09/2018/TT-NHNN on operation network of cooperative banks; Circular No. 43/2015/TT-NHNN on post transaction office of Lienvietpostbank: priorities are given to opening transaction offices in rural, remote areas; digital channels
6. Strengthening Agribank Approval of the Agribank restructuring plan; a number of improvements gained
7&8. Assets quality and corporate governance
Vietnam Article IV country report : 10 commercial banks are piloting adoption of Basel 2 standards
9. Improving capacity for VAMC
Resolution No. 42/2017/QH142 and its implementation by the VAMC in accordance with market mechanism market for buying and selling bad debt
Tasks Implementation status
10. Simplification of lending procedure
Decisions by the Governor to implement Resolution No. 19/CP; Circular No. 39/2016/TT-NHNN on lending activities by banks; automatic credit scoring; automated credit appraisal
11. Improving accessibility to banking services
Plan on improving accessibility to banking services (Decision No. 1726/QĐ-Ttg) has been implemented for 1 year; microfinance programes by the Bank for Social Policies
12. Enterprises – Banks linkage Activities and initiatives to promote cooperation between enterprises and banks are regularly implemented in 63 provinces, cities
13. Green banking products and services
Plan on green banking development (draft)
14. Strengthening cooperation with international financial institutions
Annual cooperation programs and plans are available
Part II:
Brief on the Green Banking Development Plan
Necessity
- The Guide on Banking and Sustainability which is introduced in this Conference, has emphasized: sustainability for customers and for the society is not only responsibility of the banks, but also important for development of the banks themselves
- Negative impacts by climate change, environment pollution, CO2 emission … necessity for the banks to be responsible toward communities and society. This derives from the mission and intermediary role of the banking sector in controlling and channeling funds and financial services (Concept of green banking; environment and social risks management standards, Equatorial principles; IFC Performance Standards; practical experiences from other countries);
- Case study: Treatment of bad debt by the Biodegradable Packaging Company Jsc.in the Vinh Phuc Industrial Zone
I – Necessity and legal basis
Legal basis:
Law on Environmental Protection (2014), which stipulates those
projects that need to have environmental impact assessment report, and those projects that need only registered environment protection commitment. The Law also specifies privileges as well as penalties relating to environment protection.
Decree No. 19/2015/NĐ-CP dated 14/02/2015 by the Government to provide detailed stipulations on implementation of selected articles of the Law on Environment Protection.
Vietnam Agenda 21 (promulgated under Decision No. 153/2004/QĐ-TTg dated 17/8/ 2004 by the Prime Minister) is the first legal document on sustainable development of Vietnam
I – Necessity and legal basis (cont.)
Resolution No. 24-NQ/TW dated 3/6/2013 by the 7th Congress of the 11th Central Executive Committee of the Communist Party on responses to climate change, natural resources management
The National target program on response to climate change, which is promulgated under Decision No. 158/2008/QĐ-TTg dated 02/12/2008:
The National strategy for climate change issued in Decision No. 2139/2011/QĐTTg dated 5/12/2011;
The National action plan on climate change for the period 2012 – 2020 promulgated under Decision No. 1474/QĐ-TTg dated 5/10/2012
The National strategy on green growth for the period 2011- 2020 with vision to 2050, which is promulgated under Decision No. 1393/2012/QĐ - TTg dated 25/9/2012, has specified 3 main tasks: (i) Reducing the intensity of greenhouse gas emissions and promoting the use of clean and renewable energy; (ii) Greening production (iii) Greening lifestyle and promoting sustainable consumption
The National Action Plan on Green Growth for the period 2014-2020 issued under Decision No. 403/2014/QĐ-TTg dated 20/3/2014, the Task No. 37 of which is: “Institutional improvement and capacity building in banking and finance activities of commercial banks for green growth in the period 2013 – 2030”
II – Current status of green banking in Viet Nam Key policy orientation of the banking sector :
1. The Action Plan of the banking sector to implement the National Green Growth Strategy (Decision No.1552/QĐ-NHNN dated 6/8/2015)
2. The Directive No. 03/CT-NHNN by the Governor of the State Bank of Vietnam on promoting green credit and management of environmental and social risks at credit institutions
3. The Banking sector development strategy by 2025 with vision to 2030 is being formulated, with key elements of green and sustainable banking being included
4. The Green Bank Development Plan is being drafted
5. Environmental and social risks management manual (for 10 environment – sensitive sectors/industries)
6. Green Projects Catalogue being piloted at 23 banks
7. Reporting requirements on Green Credit and E&S risks management by credit institutions
8. The “Green Finance – Credit Fund” proposal is being developed; and required conditions are being prepared for applying for NIE (National Implementing Entity) status of the Green Climate Fund GCF
9. Other proposals for projects in the “green” fields of renewable energy, energy efficiency, waste treatment, organic agriculture and high – tech agriculture are being prepared for accessing international funds, such as GCF
Key policy orientation of the banking sector (continued):
Practical implementation at 5 commercial banks
No. Banks Products
1 Vietnam Bank for Social Policies - VBSP
Loans to state budget to implement the National Target Program on Clean water and Environmental Sanitation Loans to projects in forestry development Loans to projects on protection and development of coastal underwater lands in the south of Vietnam
2
Vietinbank
Loans to RE and EE projects EIB Environment Credit Program GCPF Credit Program RE lending Program REDP
3
ACB
Loans in the framework of the Rural Finance Project RDF Loans guaranteed by the SME green credit Fund SMESC RE lending program REDP
Practical implementation at 5 commercial banks (continued) TT Ngân hàng Sản phẩm
4
Sacombank
Loans in the rural areas and forestry sector Loans to support household business development Loans to projects on waste recycling, renewable energy
5
BIDV
Loans to hydro power, wind power projects Loans to ecological tourism projects Loans to renewable energy sector, to clean water supply system
Difficulties/challenges
1. Understanding of and awareness about green and
sustainable development : society, enterprises and banks
2. Limited availability of funding resources (in terms of
amount, time and interest rate)
3. Lack of adequate and sufficient policy framework,
procedures, green banking products and services
III – Objectives and suggested solutions in green banking pillars
• Overall objective:
To enhance awareness and responsibility of the banking system
toward environment protection and climate change response;
to support gradual greening of banking operations; to channel
bank funding sources to financing environmental – friendly
projects, thus promoting green production, green service
industries, green consumption, clean and renewable energy; to
actively contribute to green and sustainable growth.
Specific objectives
To increase percentage of funding sources alocated to green credit
To adapt green and environmentally – friendly technologies
In 2025: 100% of the banks have internal regulations on E&S risks management; 60% of the banks get access to green funding and green loans; 10 -12 banks have organizational structure supporting E&S risks management
3 main pillars and their respective solutions as specified in the Green Banking Development Plan
Pillar I: Capital/Funding
Pillar II: Strategies, policies, procedures,
products
Pillar III: Training, internal and external
communication
Key sollutions in the Pillar I
Increase capital and total assets; increase proportion of green credit in the bank lending;
To increase investment in new technologies that enable energy saving, paper and other resources saving
To gain access to various funds: Environment Protection Fund (banks to issue guarantees for enterprises); Green Credit Trust Fund GCTF (limited capital base)…
To study an acceptable “risk conversion factor” to be applied to green loan outstanding to encourage credit institutions to extend green loans and at the same time, to ensure minimum CAR ratio
Key sollutions in the Pillar II
To integrate this Green Banking Development Plan into
the Banking Development Strategy by 2025, with vision
to 2030;
The State Bank of Vietnam: to study and issue policies
on applying relevant monetary tool(s) in accordance
with the specific targets for each period
Key sollutions in the Pillar II (cont.)
Re-discount rate/preferential refinancing rate
Reserves Requirement
OMO
• (Green) valuable papers
• Green credit documentation
• Lower rate of reserves requirements if green outstanding loans account for 10% of total portfolio
• Purchase of green local/ government bonds is prioritised
• Issuance of green government bond in cooperation with MOF
Key sollutions in the Pillar II (cont.)
SBV
• Development of the Manual on environmental and social risk assessment in credit activities of the banks to be applied to the remaining 11 economic sectors/industries.
• Periodical updating the green project catalogue
SBV
• Promulgation of circular on environmental and social risks management
• Consideration of various approaches to establish a NIE (National Implementing Entity) accredited by the GCF (Green Climate Fund) to get access to its private sector facility
SBV
• Implementation of pilot stress test to evaluate vulnerability of commercial banks to impacts by climate and environment changes
Key sollutions in the Pillar II (cont.)
Banks
• Formulation of green development strategies by commercial banks
• Establishment of policies, procedures, organisational structure for better E&S risks management
Banks
• Application of the industry 4.0 to develop banking products and services, which are simple, convenient and allow for saving of energy and paper;
• Development of a database of those customers using green credit products and services, which will be integrated with the national environment database
Banks
• Proactive study of perquisites for UNEP FI membership status, so that the sustainable banking initiatives could be applied nationwide in Vietnam
• Disclosure on the annual report those data/information on green lending products, green banking services; arrangement of a customers advisory component on the bank’s website
Key sollutions in the Pillar III • Internal training and communication
Implementation of training, re-training activites to provide staff of SBV and commercial banks with knowledge on social responsibility, environment protection; Updating training curriculum and training materials at the relevent universities and bank training centers;
Conferences, workshop on sustanable develppemnt and green banking;
Identification of criteria for an annual Green Bank Award (Vietnam Banks Association)
Reseaches, publications, books, reports
Key sollutions in the Pillar III (cont.)
• With regard to the communities
Organisation by big commercial banks of annual customer conference with focus on green and sustainable development;
Publications, leaflet, communication via mass media on responsibility of the banking sector in joining hands with other communities in environment and society protection, in promotion of sustainable development;
Provision of advices on green products and services; supporting customers in their sustainable development;
Annual awards to projects, customers using green products and services
Thank you!
Practical experiences in Green and Sustainable Banking implementation
Srinath Komarina President, Responsible Banking
1
2
1,741 ATMs
19,597 employees
1,105 Branches
Balance Sheet
USD 49.99 Billion
Deposit USD 32.08
Billion
Advances USD 32.27
Billion
All figures as on June 30, 2018
Economic Performance
YES BANK: The journey so far Empowering business through Professional Entrepreneurship
3
Financial & Investor Strategy • Sustainability linked Investor
Communications
Responsible
Banking
Branch Business & Retail Banking • Green Product development • YES COMMUNITY • ISO 14001 certification
Marketing and Corporate Communication • YES COMMUNITY • Thought Leadership
Risk Management • Environment & Social Policy • Climate Risk Integration
Infrastructure and Digical Network Management • ISO 14001 Certification • Internal Carbon Pricing
YES GLOBAL INSTITUTE • Thought Leadership • Social Finance
Digital Banking • Digitizing RESP
initiatives
Human Capital Management • Employee Payroll Giving • Sustainability training and
awareness
Government Banking
• CSR Advisory & Partnerships
Corporate Finance • Climate Finance • Thought Leadership
International Banking
• International Finance for Sustainable Development
Inclusive and Social Banking • CSR Partnerships and
Projects
Responsible Banking Core plank weaving sustainability across functions
Facilitating Sustainable
Finance
Positive Impact CSR & Sustainable Development
Policy Advocacy through Thought
Leadership
Transparency & Accountability
Responsible Banking - A 360○ Framework Innovating Pathways towards building ‘World’s Greenest Bank’
FACILITATING SUSTAINABLE FINANCE
Climate Finance Strategy Mainstreaming green products and
practices Innovative financing and modelling Environment and social risks
management Climate literacy
POLICY ADVOCACY through THOUGHT LEADERSHIP
Knowledge Reports – Climate Finance, Water, Renewable Energy, Energy Efficiency, Natural Capital, SROI
Thought leadership – UN, UNEP-FI, NCFA, MoEFCC, MNRE, MoF, TERI, ISA, IBA, CAFRAL
Policy advocacy as a catalyst within financial sector
TRANSPARENCY AND ACCOUNTABILITY
Triple Bottom Line reporting Enhanced climate disclosures Environmental, Social & Governance (ESG)
disclosures GHG accounting and Portfolio mapping
(SDG) Environment Management Systems (ISO
14001) Green bond assurance and disclosure
POSITIVE IMPACT CSR & SUSTAINABLE DEVELOPMENT
Sustainable Transformation through Alliances Relationships and Technology (A.R.T)
Livelihood and Water Security Employability and Entrepreneurship Environment sustainability Media for social change Social Value Creation
Inn
ov
ati
ve m
ech
an
ism
s fo
r fi
na
nci
ng
SD
Gs
Green Bonds
Pioneered India’s 1st Green bond in
2015
First Green Infra bonds in India USD 160 million
Green Masala Bonds- private placement by IFC USD 50 million
MoU with LSE to facilitate offshore rupee green bonds
Commits to mobilizing USD 5 billion on climate action
Green Bond – private placement by FMO USD 50 million
Market Creator versus Market Follower
YES BANK’s approach towards facilitating Sustainable & Digital Economy
6
Public-Private Partnership
Committed USD 24 million to fund Sewage Treatment
Plant under Namami Gange
project
Market Creator versus Market Follower
Hybrid Annuity PPP Model
Construction Phase O&M Phase
Upto 40% of capital cost by Government
60% of the cost paid as annuity along
with O&M expenses
Yes Bank
Government Private firm
Inn
ov
ati
ve m
ech
an
ism
s fo
r fi
na
nci
ng
SD
Gs
Green Bonds
Pioneered India’s 1st Green bond in
2015
7
YES BANK’s approach towards facilitating Sustainable & Digital Economy
Blended Finance
Undertaking a pilot project in
transformational blended finance
Market Creator versus Market Follower In
no
vati
ve m
ech
an
ism
s fo
r fi
na
nci
ng
SD
Gs
Green Bonds
Pioneered India’s 1st Green bond in
2015
Public-Private Partnership
Committed USD 24 million to fund Sewage Treatment
Plant under Namami Gange
project
9
YES BANK’s approach towards facilitating Sustainable & Digital Economy
Social Bond
Sole arranger for India’s First Social Bond in December
2017
Assurance
Adherence to International Capital Market Association’s Social Bond Principles 2017
Allocation
Proceeds would be allocated to Affordable Housing
Market Creator versus Market Follower In
no
vati
ve m
ech
an
ism
s fo
r fi
na
nci
ng
SD
Gs
Green Bonds
Pioneered India’s 1st Green bond in
2015
Public-Private Partnership
Committed USD 24 million to fund Sewage Treatment
Plant under Namami Gange
project
Blended Finance
Undertaking a pilot project in
transformational blended finance
10
YES BANK’s approach towards facilitating Sustainable & Digital Economy
Social Bond
Sole arranger for India’s First Social Bond in December
2017
Market Creator versus Market Follower In
no
vati
ve m
ech
an
ism
s fo
r fi
na
nci
ng
SD
Gs
Green Bonds
Pioneered India’s 1st Green bond in
2015
Public-Private Partnership
Committed USD 24 million to fund Sewage Treatment
Plant under Namami Gange
project
Blended Finance
Undertaking a pilot project in
transformational blended finance
10
Green Future: Deposit
Launched India’s first green retail liability product
in June 2018
Booking of Deposits through online channels only, for a
given tenure
Retail Customers
Assurance of Sustainable deployment of equivalent
proceeds
1. Best in class interest rate 2. E-certificate honouring the
customer with a tree for each deposit booked
YES BANK’s approach towards facilitating Sustainable & Digital Economy
USD 1,052 Million Financial Inclusion (ISB & MFI)
USD 273.5 Million Healthcare (BB portfolio)
USD 3,757 Million Sustainable infrastructure (Renewable Energy)
USD 8,267 Million MSMEs
USD 239.6 Million Affordable housing
USD 13.7 billion (INR 90,414 Crores)
SDG Financing target of USD 10 billion till FY 2020
Mapping current SDG-aligned portfolio & SDG financing targets
11
`
PROJECT 1
PROJECT 2
PROJECT 3
PROJECT 4
Socially & Environmentally sustainable Respect Rights of local staff and local communities Compliant with applicable regulatory requirements of the Exclusion List, Host Country and IFC Performance Standards and Good International Practice
For All Projects Compliance to Exclusion List (Annexure I of ESP) and Host Country Regulations
For Projects Exceeding USD 5 Million Compliance to Exclusion List, Host Country Regulations and applicable IFC Performance Standards
PROJECT 3
PROJECT 1
The Environment and Social Policy (ESP)
VISION: Be the Benchmark Financial Institution for Inclusivity and Sustainability
Listed on the Carbon Disclosure Leaders Index for five consecutive years
Listed on the DJSI - Emerging Markets for 3rd year in a row (2015, 2016 & 2017)
Positive Impact Steering Group member
Global Steering Committee member, 2013-2016
APAC Chair, 2013-2016
Launched India’s First Green Infrastructure Bonds raising INR 1000 crores in February 2015
Green Masala Bonds - private placement by IFC for INR 315 crores in August 2015
Issued INR 330 crores of Green Bonds with FMO, on a private placement basis in September 2016
744 locations certified with ISO 14001:2015 environment management standard
Chair of Natural Capital Finance Alliance Steering Committee
2008 | 2011 | 2012 2012 | 2013 | 2014 | 2015 |
2017
2014 | 2016 | 2017
2016
First Indian Signatory First Indian Signatory First & Only Indian Bank
First & Only Indian Banking Signatory
First Indian Bank to launch Green Bonds
First Bank Globally to migrate to ISO 14001:2015
ESG Leadership
2013 | 2014 | 2015 | 2016 | 2017 Best Community Initiative in Water 2017
Best Social Bank (mid-size) 2017
Sole arranger for India’s First Social Bond
First Indian Bank to launch Green Retail Product
SKOCH Blue Economy Award
(Silver) 2017
Sole arranger & subscriber to India’s First Social Bond, investing INR 1000 crores in December 2017
Proceeds would be allocated to Affordable Housing
Adherence to International Capital Market Association’s Social Bond Principles 2017
First Indian Bank to align Sustainability Disclosures to TCFD
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India’s first Green Retail Liability product
Earmark equivalent proceeds for SDG- aligned sectors
Raised USD ~51 million in 30 days
Sustainable & Responsible Banking Leadership
www.yesbank.in
Thank you
Srinath Komarina President – Responsible Banking
Srinath.Komarina@yesbank.in @kvsrinath
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CONFERENCE: GREEN BANKING TOWARDS SUSTAINABILITY
Hanoi, 7 August 2018
Yuki Yasui, Asia Pacific Region Co-ordination Manager
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Guide to Banking and Sustainability
1. WHAT AND WHO
IS THE GUIDE FOR? Hands-on guidance for practitioners on integrating sustainability across the bank, including real-life examples from banks around the world
Helps banks to fulfil their commitments as UNEP FI members
(Statement of Commitment on Sustainable Development)
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Senior management and board members seeking to educate themselves
and their employees on banking and sustainability
Sustainability teams seeking to engage employees across the bank
Employees seeking to understand the relevance of sustainability issues to their work
Banking associations seeking to understand and promote sustainability among their membership
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WH
O
WH
AT
2. HOW IS IT STRUCTURED ?
CASE STUDIES
Current practice of UNEP FI
banks
Chapter I: Leadership
Chapter II: Sustainability
Chapter III: Risk
Chapter IV: Legal
Chapter V: Corporate Banking
THE BUSINESS
CASE
Why is
sustainability relevant for
your department?
GUIDANCE
How to go about it?
Chapter VI: Retail Banking Chapter VII: Communications
Chapter VIII: Human Resources
Chapter IX: General Services
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3. HOW IS IT STRUCTURED ?
Risks of inaction:
• Lack of preparedness for regulatory and policy adjustments
• Failure to identify material risks • Disengagement of investors, etc
Opportunities:
• Competitive advantage and new business opportunities, • Increased resilience due to better risk management • Better rating – more valued bank
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What can your bank do?
• Embed sustainability in the bank’s strategic vision
• Ensure accountability on sustainability issues for managers across the bank
• Corporate culture: actively communicate top-level buy-in and develop employee awareness and expertise
• Report on the bank’s sustainability approach and performance internally, as well as externally
CASE STUDY: Landesbank Baden-Wuerttemberg
• Sustainability integrated in mission statement and strategy
• Seven sustainability goals defined and operationalized through sustainability guidelines
• Accountability ensured through sustainability management system for all divisions
• Sustainability Committee consisting of division heads and chairman of the board to monitor performance and develop recommendations to the board for strategic decisions around sustainability
3. HOW IS IT STRUCTURED ?
4 . RESOURCES SECTION
◼ Relevant literature and reports on (aspects of) sustainable
banking
◼ List of sustainability Index providers and extra financial
rating agencies
◼ Links to relevant tools and frameworks
◼ Links to training and training providers
◼ Sustainable banking news outlets and magazines
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UNEP FI activities highlights
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Principles for Responsible Banking
The Why - Shaping the future of banking
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Define, shape and ultimately secure the banking industry’s role in the society and economy of the 21st century
Strengthen trust and customer engagement
Enable banks to credibly demonstrate and communicate their purpose and contribution to society
Set the global benchmark for responsible banking and provide actionable guidance to achieve it
Purpose
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“The purpose of these Principles is
to transform the banking industry
so it plays a leading role in
achieving society’s goals”
The 6 Principles for Responsible Banking
Alignment
Impacts
Customers & Clients
Stakeholders
Governance & Culture
Transparency &
Accountability
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Core Group members
2019 Global Public Consultation
Signing Ceremony & Announcement of Targets at UN
HQ in NY
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Timeline
Membership Consultation
CEOs launch draft Principles at UNEP FI GRT
Presentations at key events
July - Aug Nov 26 Sep - Dec
Q1 – Q2 Sep
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Scenario-based climate disclosures
Transition Risks & Opportunities Physical Risks & Opportunities
Scenario-based approach for estimating the impact of climate change on corporate lending portfolios
FSB’s Task Force on Climate Related Financial Disclosures (TCFD) Recommendations
• Recognition of environmental risks as financial risks by the FSB
• Forward-looking assessment of risks
• Expanding time horizons
• Use of scenario-analysis (≠ stress testing scenarios)
• Dealing with climate change in a proactive vs. reactive way
19 © Oliver Wyman
The proposed framework integrates three modules in a structured approach that deploys expert judgment in credit analysis, informed by climate scenarios
Transition scenarios
Portfolio impact assessment
Borrower-level calibration
Calibration points
Scenario description
Risk factor pathways + sensitivities
Portfolio impact assessment uses a systematic and repeatable approach to extrapolate the risk assessed by the other modules to the remainder of the portfolio.
Borrower-level calibration addresses the lack of empirical data on corporate exposure to transition risk by using industry experts to estimate the scenario’s impact on individual borrowers. Calibration specifies the relationship between economic scenarios and credit outcomes.
Transition scenarios describe an evolving economic environment in a consistent manner across time, sectors, and geographies.
20 © Oliver Wyman
Power generation risk
factor pathway; US
2 degree scenario
2 degree scenario
3.9%
2.5%
Current / Baseline / 4 degree scenario
1.5 degree scenario
1.2%
Average Probability of Default Illustrative; 2040; Based on current portfolio
Illustrative results All data is illustrative
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Market development & capacity building
Market development & capacity building
◼ Green mortgage market development – Sri Lanka
◼ Green bonds market development - Mauritius
◼ Climate finance training – online (2019)
◼ Environmental & Social Risk Assessment Training – online
& in-person
THANK YOU
Contact:
Yuki Yasui
Asia Pacific Region Co-ordination Manager
yuki.yasui@un.org
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