Law on social responsibilities of the bank for implementation of green credit / Nguyen Ngoc Anh Đao

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Volume 31 Year Eleventh Nov 2021-Special Edition

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Contents of issue (31) - November - 2021, volume (1)

FIRST PART: OVERVIEW OF THE LAW ON CORPORATE SOCIAL RESPONSIBILITY

1 The theoretical, legal and practical aspects of the role and responsibilities of enterprises in respecting human rights in Vietnam today A/Prof Dr Tuong Duy Kien P 11

2 Corporate responsibilities in the context of covid-19 pandemic in Vietnam currently: Legal issues and recommendations for completion Dr Hoang Kim Khuyen P 31

3 Corporate social responsibilities in new general free trade agreements: Opportunities and challenges for Vietnam enterprises Dr Dinh Trong Lien P 54

4 Law on the role of grassroots unions in implementation of social responsibilities at enterprises in the era of integration in Vietnam Dr Le Thi Thuy Nga, A/Pro.Dr Hoang

7 Legal and practical aspects of ensuring the rights of employees in the unilateral termination of labor contracts in the context of the Covid-19 pandemic in Vietnam

A/Pro.Dr Tran Thi Dieu Oanh, Dr Nguyen Binh An P 143

8 Legislation on measures to ensure the implementation of corporate social responsibility towards employees Dr Bui Huu Toan P 160

9 Law on corporate social responsibility towards employees in the field of social security through types of compulsory insurance Dr Bui Kim Hieu P 179

10 Law on corporate social responsibilities in meeting the entertainment needs of workers in

industrial parks in Vietnam Dr Vu Thi Bich Ngoc - LLM Nguyen Chu Du P 208

THIRD PART :THE LAW ON CORPORATE SOCIAL RESPONSIBILITY IN THE ENVIROMENT FIELD

11 Human rights to environment and corporate responsibilities in ensuring human rights to environment in Vietnam Dr Tran Thai Duong P 226

12 Law on social responsibilities of the bank for implementation of green credit Dr Nguyen Ngoc Anh Dao P 258

13 Corporate social responsibility for the environment in Vietnam's environmental law

LLM Tran Linh Huan, LLM Tran Minh Chuong P 279

(12)

LAW ON SOCIAL RESPONSIBILITIES OF THE BANK FOR IMPLEMENTATION OF GREEN CREDIT

Received: July 21, 2021 Revised: September 27, 2021 Accepted: November 12, 2021

Abstract:

"Green credit" is a prominent strategy that is increasingly applied by many credit institutions This strategy helps credit institutions ensure that their development does not harm people, natural resources, and the ecosystem It also helps to protect their credit portfolio from business risks and seek new environmentally-friendly business opportunities Green credit policies are pursued by many countries and are becoming a dominant development trend and an important constituent of many countries' sustainable development strategies Green credit aims to help banks limit environmental and social risks in business activities Although this trend is increasingly gaining popularity in Vietnam, there are still many difficulties to face and solutions are needed to further promote the capital flow in green credit.

Keywords: Corporate responsibility, green credit, green banking

1 Doctor of Law Faculty of Economic Law, Banking University of Ho Chi Minh City Address: 56 Hoang Dieu 2, Thu Duc City, Ho Chi Minh city, Vietnam Phone: 0909091710 Email: daonna@buh.edu.vn

1 INTRODUCTION

“Green economy” or “green growth” is becoming prevalent in economic development policies of many countries around the world: Netherlands, UK, USA, France, Germany, Japan, Korea, China, and so on It can be said that the banking industry is playing a vital role to promote investment in sustainable environment development and the responsibilities towards society In this context, the development of green credit is considered as one of the important strategies to develop the “green banking” model Currently, at the global scale, some initial achievements have been recorded in the development of “green banking”, mainly related to the primary solutions of developing green credit and green financial products and services.

2 OVERVIEW OF LAWS ON THE SOCIAL RESPONSIBILITY OF BANKS IN IMPLEMENTING GREEN CREDIT

2.1 LEGAL CONCEPT OF BANK'S SOCIAL RESPONSIBILITY IN IMPLEMENTING GREEN CREDIT

In the world, promoting "green credit" is a popular strategy that is increasingly being employed by credit institutions However, in Vietnam, the social responsibility of banks to the community is a relatively new issue The banks themselves may not directly cause environmental pollutions, but their businesses, customers or investment projects might be the culprits Furthermore, new conditions for loan consideration for projects that take environmental impact factors into account are being launched by many commercial banks A limitation currently recognized by experts is that the implementation of green credit support measures has not been well executed by banks, with a sluggish determination of support payments for green projects.

In general, experience in many countries shows that green growth projects often face obstacles in capital mobilization because the State budget only covers a small part of the capital; the rest stems from the project’s capital or mobilizing from other channels Although green credit has great potential and brings opportunities for technological innovation to the economy, at

present, it still faces many difficulties With the goal of promoting "green credit" for "sustainable development", the introduction of Directive 03/CT-NHNN on promoting green credit growth and managing environmental and social risks in operations providing credit, sent a strong message to the banking industry to take responsibility for environmental protection.

The issue of social responsibility begun to emerge since the last century, mainly in developed countries such as the US, UK, Germany, France and some other European countries It was not until the second half of the twentieth century that the explosion of social responsibility really became a large and global movement1 Today, under the great influence of global economic institutions such as the World Economic Organization (WTO), the World Bank (World Bank), the International Monetary Fund (IMF), social responsibility always requires that member countries ensure their local businesses to use environmentally-friendly technology, treat waste disposal, have a good management system, improve working conditions, not use forced labor, child labor, and to ensure freedom of association, if they wish to maintain and develop to compete with businesses worldwide.

The Law on Environmental Protection 2020 in Clause 1, Article 149

stipulates: “Green credit means a credit granted to the following investment

projects: Effective use of natural resources; response to climate change; waste

improvement; restoration of natural ecosystems; conservation of nature and

It can be understood that “green credit” is the credit that banks grant to projects that do not pose risks or aim to protect the environment In other words, green credit is the credit in the form of grants, loans and other forms of

1 Le Thanh Ha (2009), a social piece of football in the context of South Vietnam's accession to the WTO and the delicate international association Science and Technology Publishing House, p.3.

2 Clause 1, Article 149 of the Law on Environmental Protection in 2020

credit, which take into account environmental impact and promote environmental sustainability.

Thus, the law on CSR of banks in the implementation of green credit is

understood as a system of mandatory rules of conduct, issued by the government to regulate the behavior of banks in the business and production process to protect the legitimate rights and interests of enterprises on the basis of aiming for the sustainable development of society, building and developing businesses during the process of borrowing capital at banks must ensure green

RESPONSIBILITY IN IMPLEMENTING GREEN CREDIT

Firstly, although CSR means an obligation, in essence, CSR is

voluntary, that is beyond legal responsibility with the meaning of regulating decisions and behaviors of enterprises before and during operation, rather a criterion to evaluate a business after completing its operations Therefore, CSR can be negated in the case of inhibiting the development of the community and vice versa, it can be affirmed when it brings many benefits to the bank and society.

Second, CSR is often expressed in terms of bank commitments These

commitments can be recorded in the company's charter, enterprise regulations, contracts (civil, labor, ), code of conduct in the bank.

Third, CSR has a close relationship with the sustainable development of

the whole society Sustainable development is to meet the needs of society today, while remaining within the ecological limits of the planet and without compromising the interests of future generations.2 Sustainable development includes three interdependent aspects: economic, social and environmental For

1 Tran Thi Hoang Yen, 2014, “CSR in banking, literature review and new research directions”

2 Section 3.3.5, Vietnamese Standard ISO 26000:2010 Guidelines for social responsibility

example, eliminating poverty requires promoting social justice, economic development, and environmental protection.

Similarly, today's CSR aims to balance the interests between businesses and stakeholders including employees, environment, and the community Banks make decisions not only based on financial factors such as profitability, but also taking into account the immediate and long-term social and environmental consequences In addition, CSR plays an important role in controlling the risks of harm to the development of society, meeting the needs of the present generation, and at the same time ensuring that the resources of future generations are not threatened Therefore, the overarching goal of CSR is to contribute to the sustainable development of society.

2.3 LEGAL ROLE ON SOCIAL RESPONSIBILITY OF BANKS IN IMPLEMENTING GREEN CREDIT

implementation of green credit will create conditions for businesses to

implement social responsibility, which will help ensure the job security of employees Green credit not only greatly benefits businesses that implement economic development projects, but also benefits the sustainable development of the banking system, helping commercial banks to limit:

- Credit risk: minimizing bad debts, enhancing financial stability.

- Reputational risk: protecting the reputation in the market because the social environment helps the community

- Legal risks: reducing legal disputes when related to projects with risks to the social environment

Secondly, implementing CSR by banks in the implementation of green credit not only helps businesses maintain stable human resources but also

contributes to the economic growth of businesses as well as increasing the competitiveness of enterprises on the market.

- Green credit has certain impacts on economic activities and green credit also has an important role for the environment - society Green credit makes an important contribution to environmental protection and fighting against climate change

- Green credit is a very important tool for capital accumulation and concentration, thereby helping to accumulate and focus on applying new environmentally and socially friendly technologies in production and business.

- Green credit helps stabilize the money market, synchronously develop all sectors and fields in the national economy and transition to a sustainable green economic structure.

Thirdly, the implementation of CSR by the bank in the implementation

of green credit contributes to minimizing the factors that negatively affect the sustainable development of the whole society.

Implementing social responsibility for employees requires businesses to ensure safe and hygienic working conditions The minimization and control of harmful agents (For example, smoke, noise, toxic chemicals ) in the working environment of employees also partly represent the responsibility of the enterprise to protect the environment , thereby creating a foundation for the sustainable development of the whole society when the implementation of CSR is promoted.

Therefore, green credit policies are an important solution to direct the economy towards the goal of green growth Green credit activities bring great benefits in terms of growth, economic development, improvement of people's living standards, and environmental protection.

Thus, the implementation of CSR is an activity not only in compliance with the law, but also in the category of business ethics and business ethics More research is needed on this issue to suggest measures to promote CSR implementation in the banking sector Therefore, it is necessary to review to develop and improve the law applicable to CSR that needs to be done so that