Many business owners often wonder: Major banks such as have all adopted a “Green Credit Framework”, so why is it still hard to obtain green loans, and why does it almost always come back to the question of collateral? On this topic, we had a candid conversation with Mr. Phạm Quốc Hưng – CEO of VietESG.
Reporter: Mr. Phạm Quốc Hưng, many business owners are struggling because banks say they have preferential policies for green credit, yet in practice, when they apply for a loan, they are still asked for collateral as usual. Do these “green credit frameworks” exist only on paper?
Mr. Phạm Quốc Hưng: Not exactly on paper. The fact that major banks have proactively issued Green Credit Frameworks is a very commendable step forward, showing that the financial system is catching up very quickly.
But the problem is this: We are still only at the stage of “taxonomy-based green credit”. That is, banks mainly look at the sector code (such as large-scale renewable energy projects) to grant funding. For the majority of manufacturing and agricultural businesses, or other transitioning sectors, banks still have to play it safe and follow the old rules. By nature, they are businesses that deal in money; they must have collateral to manage risk and cannot take a gamble based solely on a few pledges of “we are an environmentally friendly project”.
Reporter: So in your view, what is the biggest bottleneck right now preventing businesses from truly accessing green capital without depending on collateral?
Mr. Phạm Quốc Hưng: The core bottleneck lies not in the “Framework”, but in the “Data”.
If a business brings a project to a bank and simply says “we produce very green”, the answer will certainly still be a refusal or a mandatory collateral requirement. For capital flows to truly loosen, the market must shift from “taxonomy-based lending” to “performance-based lending”. There, banks lend based on actual data on how much a business has reduced emissions and how much energy it has saved. The catch, however, is that most businesses today completely lack a transparent, properly standardised data system to prove it.
Reporter: From a business owner's perspective, they are very pragmatic: Apart from easing collateral requirements, do green loans come with preferential interest rates, or does the cost of preparing reports exceed the interest saved?
Mr. Phạm Quốc Hưng: That is a question VietESG frequently receives from CEOs. In reality, when businesses demonstrate green performance through standardised data, what they gain is not only relaxed collateral requirements but also a passport to credit packages with preferential interest rates or low-cost international capital sources.
As for the fear that “reporting is costly or complicated”, SME owners are often haunted by consulting services that drag on for years. But today's technology trends have completely solved that problem. Instead of spending many months and incurring the expense of hiring outside experts, businesses can fully take matters into their own hands.
Reporter: So specifically, what should businesses do to unlock this data bottleneck and take it to the bank?
Mr. Phạm Quốc Hưng: Businesses need to immediately standardise their “green health” according to international standards recognised by the global financial system, such as GRI or IFRS S1/S2.
That is also why the VietESG team built the vietesg.com platform. We digitise the entire data governance process and automate the generation of international-standard reports, enabling any business to do it themselves quickly and cost-effectively without going through complicated procedures.
When a business brings to the bank's table – whether a major domestic bank or an international financial institution – a transparent dossier with clearly verified figures from a reputable system such as VietESG, the collateral problem will naturally find a more flexible way forward. Low-interest green capital only truly opens up when trust is built on real data!
Reporter: Thank you, Mr. Phạm Quốc Hưng, for your very candid insights, which bring a great deal of practical value to the business community!
