VietNamNet Bridge – Making profit is the most important task
for every commercial bank, because of which the environmental risks are sometimes
overlooked when banks approve the lending.
In general, credit officers do
not pay much attention to the possible environmental risks when analyzing
investment projects submitted by businesses for loans, simply because the
requirement has not been legalized with the regulations stipulating banks’
relevant responsibilities.
The State Bank of Vietnam, the
watchdog agency of commercial banks, also has not released any legal document,
stipulating that banks need to consider environmental risks when they provide
credit to fund enterprises’ projects.
In fact, the duty of protecting
the environment of all the subjects in the society has been stipulated in the
2005 Environment Protection Law already. However, the law only clarifies the
responsibilities of production, service enterprises, while there have been no
detailed regulations about the banks’ responsibilities.
An unreleased report by Nguyen
Hong Anh, MA from PanNature, has pointed out that most credit officers would
simply check if the enterprises-borrowers have the reports on the projects’
possible environment impacts, while some of them would check the enterprises’
waste water treatment technology and the re-settlement plans.
However, the officers would
examine the matters based on their knowledge; while there has been no guidance
on how to examine the issues.
Anh’s survey was conducted at 19
biggest commercial banks in Vietnam.
The problem is that the reports
on possible environmental impacts are made by borrowers under the
formalization, while in many cases, they do not contain true information or
cannot suggest reliable solutions.
However, credit officers do not
care about verifying the reports. They just need to be sure that such reports
exist and that they strictly follow the stipulated procedures when considering
the investment projects.
Meanwhile, banks, which have the
right to fund or not fund the investment projects, can help minimize the
environmental risks by asking the borrowers to work seriously on environmental
protection solutions. In principle, the thorough examination over production
projects would force enterprises to strive for clean and safe production.
Some international finance
institutions in Vietnam including the World Bank, the International Finance
Corporation (IFC), and the Asian Development Bank (ADB) all have the
environmental and social standards that the partners or the donation
beneficiaries have to follow.
However, the first research works
on the role and responsibilities of Vietnamese commercial banks in the
environment protection.
A survey by IFC conducted in 2012
showed that only three Vietnamese commercial banks have the environmental and
social risk management systems, two of which (Techcombank, Vietinbank), use IFC
sets of standards, while the other (Sacombank) has built up a policy of its
own.
The State Bank of Vietnam has
said it is compiling a legal document stipulating the responsibilities of
commercial banks to ensure the environmental and social safety in credit
activities.
Anh believes that it is necessary
for the banking sector to join forces with involved parties to build up an
environment risk classification and assessment system, which banks can refer to
when making decisions on providing credit.
The state should think of a
mechanism which allows non-state units to join the building of independent
classification systems.
Commercial banks should be
required to make public--the information about the credit provided to the
production projects which may influence the environment and social security, so
that people and independent supervisors can keep watching and reporting about
the banks’ fulfillment of their duties.
Thien Nhien
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