Transition finance for hard-to-abate sectors in Vietnam

The document outlines a comprehensive approach to transition finance for Vietnam's high-emission industrial sectors. It introduces a 'Five Hallmarks' framework for creating credible transition plans—covering performance targets, robust planning, implementation, internal monitoring, and external reporting—and provides specific decarbonisation pathways and technical criteria for the steel, cement, and basic chemicals industries. Additionally, it offers a five-tier maturity scale for financial institutions to assess corporate transition credibility and provides best-practice recommendations for issuing sustainability-linked bonds (SLBs) and loans (SLLs) to support the energy transition.

• A credible transition plan must adhere to five core principles: alignment with 1.5°C global warming limits, reliance on science-based pathways rather than entity-specific goals, exclusion of offsets, prioritisation of technological viability over economic competitiveness, and a focus on actual operating metrics over pledges.
• The 'Five Hallmarks' methodology for transition planning consists of a sequential process: setting Paris-aligned performance targets, developing robust plans (including financial and governance mechanisms), executing implementation actions, establishing internal monitoring, and ensuring external reporting with independent verification.
• The steel sector is the largest industrial emitter, accounting for approximately 7% of global CO2 emissions. In Vietnam, the sector is responsible for 7-9% of total national emissions and 46% of industrial emissions, facing significant risks from the EU's Carbon Border Adjustment Mechanism (CBAM).
• The cement industry accounts for approximately 7% of global CO2 emissions. Vietnam is the third largest cement producer globally, with production accounting for about 15% of the country's total economic emissions.
• The basic chemicals sector is the largest industrial energy consumer globally, representing approximately 10% of total world energy demand. Scope 3 emissions are particularly significant, accounting for approximately 64% of total emissions in the sector.
• Financial institutions can use a five-tier corporate transition classification system to assess maturity: 'No action' (Tier 1), 'Committed' (Tier 2), 'Aligning' (Tier 3), 'Aligned' (Tier 4), and 'Net Zero' (Tier 5).
• Sustainability-linked bonds (SLBs) and loans (SLLs) are recommended as general-purpose debt instruments for hard-to-abate sectors where specific green projects for Use-of-Proceeds (UoP) bonds are scarce.
• Best practices for SLB issuance include using absolute GHG emission targets, ensuring target observation dates occur well before bond maturity, and avoiding the use of economic intensity (e.g., emissions per unit of revenue) as a KPI.

APA

Gupta, S., & Wong, C. X. (2025). Transition finance for hard-to-abate sectors in Vietnam. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Vietnam-Report_English.pdf

Chicago

Gupta, Shaurya, and Chi Xiang Wong. Transition finance for hard-to-abate sectors in Vietnam. Climate Bonds Initiative, 2025. https://www.climatebonds.net/files/documents/publications/Vietnam-Report_English.pdf.

Wikipedia

{{cite report |last1=Gupta |first1=Shaurya |last2=Wong |first2=Chi Xiang |title=Transition finance for hard-to-abate sectors in Vietnam |publisher=Climate Bonds Initiative |date=April 2025 |url=https://www.climatebonds.net/files/documents/publications/Vietnam-Report_English.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{gupta2025transition, author = {Gupta, Shaurya and Wong, Chi Xiang}, title = {{Transition finance for hard-to-abate sectors in Vietnam}}, institution = {Climate Bonds Initiative}, year = {2025}, month = apr, url = {https://www.climatebonds.net/files/documents/publications/Vietnam-Report_English.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }