Taking Agricultural Specificities into Account

According to Mr. Trần Đại Nghĩa, Climate Finance Specialist at the Food and Agriculture Organization of the United Nations (FAO) in Viet Nam, the country needs a new policy approach if green finance is to meaningfully reach the agricultural sector.

A key characteristic of agriculture is that more than 90% of producers are smallholder farmers, cooperatives, and micro-enterprises. These groups often lack collateral, sufficient documentation, and the capacity to meet green criteria. If policies are designed without accounting for these realities, the majority of producers will continue to be left out.

An urgent requirement is to finalize a set of “green” criteria for agriculture and the environment. In many countries, standards developed by international organizations such as the Climate Bonds Initiative have created a foundation for issuing green bonds for agriculture, giving investors confidence that their capital truly delivers environmental benefits.

Experience from Thailand, Indonesia, and the African Development Bank shows that when criteria are transparent, the green bond market for agriculture can expand very rapidly. These models are considered highly relevant for Viet Nam as it works to完善 its legal framework.

Another lesson comes from the European Bank for Reconstruction and Development (EBRD), where green bonds have been successfully allocated to smallholder farmers and small agricultural enterprises—groups traditionally viewed as high risk. EBRD’s success demonstrates that with strong monitoring mechanisms, clear environmental impact assessment processes, and transparent reporting systems, green capital can reach small actors while still ensuring financial safety.

In Viet Nam, green bonds have so far been concentrated mainly in the renewable energy sector. Some large enterprises have piloted issuances, providing initial experience for the market, but agriculture remains a major gap. Therefore, Mr. Nghĩa argues that to unlock capital flows, multiple instruments must be developed in parallel: preferential credit, risk guarantees, public–private investment, and climate insurance. These tools not only help banks reduce concerns about non-performing loans but also create a “safety net” for borrowers facing disease outbreaks, natural disasters, or fluctuations in agricultural commodity prices.

Establishing Monitoring Mechanisms to Prevent “Greenwashing”

One viable solution emphasized by FAO experts is the “anchor borrower” model in credit provision. Instead of working directly with hundreds of individual farmers, banks assess a cooperative or enterprise that borrows on behalf of farmers and then allocates capital through contract-based linkages. This mechanism reduces monitoring costs, improves control over green standards, and builds trust among stakeholders. In practice, many areas have demonstrated the effectiveness of this model in improving small producers’ access to finance.

However, green finance cannot develop without monitoring mechanisms to prevent “greenwashing.” In many European countries, environmental impact assessments are embedded directly into the disbursement process. Proceeds from green bonds are managed through dedicated accounts, accompanied by periodic impact reporting and independent audits. These practices provide important lessons for Viet Nam to avoid the risk of projects merely “wearing a green label” to access capital without delivering real environmental benefits.

The final key point is the need to build platforms for dialogue among three groups: policymakers, banks, and businesses. When these stakeholders come together, the issue is no longer a “lack of capital,” but rather that capital has not reached the right places. Accordingly, multi-stakeholder forums can help clarify responsibilities: the State completes the legal framework, banks design products suited to agricultural realities, and businesses and producers demonstrate the real impacts of their projects.