Vietnam’s sustainable debt market records fivefold growth

The country’s GSS debt was the fifth highest in ASEAN, but the second largest source of green debt in the region at $1 billion, most of it from the transport and energy sectors.

The report also highlighted the rapid growth of the GSS debt market in ASEAN, whose value surged to $24 billion from $13.6 billion in 2020.

Meanwhile, sustainability-linked debt rose by over three times, from $8.6 billion in 2020 to $27.5 billion.

Annual green, social, and sustainability (GSS) debt issuances from ASEAN-6 countries. Photo courtesy of Climate Bonds Initiative & HSBC

Singapore remained the region’s leader with GSS debt issuance of $13.6 billion, up from 2020’s $4.9 billion.

Growth was mainly driven by the green theme and reflected strong support for green finance from the Singaporean government. It was the largest source of green debt at $12 billion.

The report said the growth reflected the region’s enthusiasm to allocate capital for the response to the Covid-19 pandemic along with facilitating long-term, low carbon, and climate-resilient economic growth.

Vietnam, Thailand and Malaysia all aim to achieve carbon neutrality by 2050, while Indonesia has fast-tracked its emission goal by 10 years to 2060 or earlier.

Kevin Tan, head of HSBC’s Sustainable Finance and Investment in ASEAN, said more companies are aligning climate risk with their business strategies, but “significantly more financing needs to be deployed, to mitigate and adapt to climate change.”

Sean Kidney, CEO of Climate Bonds Initiative, praised regional policies’ contribution to the rapid growth of GSS debt market, but warned of “a huge gap that needs to be addressed – and quickly.

“High-emission and hard-to-abate sectors must transition from brown-to-green rapidly. That includes activities, assets and projects linked to energy, heavy manufacturing industries and agriculture,” he said.

Climate Bonds Initiative is an international organization working to mobilize global capital for climate action. It promotes investment in projects and assets needed for a rapid transition to a low-carbon, climate resilient, and fair economy.