Topic Understanding The Role Of Green Bonds In Achieving Sustainabilit An Investigation Of Renewable Energies In Vietnam.pdf

HOW GREEN BONDS IMPACT SUSTAINABLE DEVELOPMENT IN TERMS OF SUPPORTING RENEWABLE ENERGY PRODUCTION IN VIET NAM?. This research looks into the role of green bonds in the achievement of sus

HOW GREEN BONDS IMPACT SUSTAINABLE DEVELOPMENT IN TERMS OF SUPPORTING RENEWABLE ENERGY PRODUCTION IN VIET NAM?

Submitted by NGUYEN VAN TRONG - K62CLC8 NGUYEN DAI VU — K62CLCS5 NGUYEN NGO DIEM QUYNH —- Kk62CLC8 NGUYEN LE VI- K62CLCS5 BUI THANH THUY TIEN — Kó2CLUC8

Foreign Trade University

Ho Chi Minh City

June, 2024

ABSTRACT:

Green bond is a financial tool that plays an important role in maintaining sustainability

as the profits gained from investing in green bonds are channeled towards eco-friendly projects, contributing to the green future In Vietnam, green bonds are still quite new but have a strong potential in promoting renewable energies usage This research looks into the role of green bonds in the achievement of sustainable economic development, targeting the 7th goal of Sustainable Development Goal (SGDs 7): Affordable and clean energy The main method we use to achieve our study aims is the generalized method of moments (GMM) Specifically, one-step GMM is applied on a dynamic data panel with data retrieved from a five-year period (2019-2023) We expected our results to show whether there is a positive relationship between the issuance of green bonds and the pursuance of sustainability in terms of renewable energy production in Vietnam The outcome derived from our findings will be a rigid base for us to draw a conclusion and make educated guesses about the future of green bonds in the Vietnamese bond market

Keywords: green bonds, sustainability, renewable energy, sustainable development goal (SDG), bond market, generalized method of moments (GMM)

1, INTRODUCTION

Humanity is currently at a crucial point Unsustainable practices have resulted in climate change, which represents a major danger to the wellbeing of living things on Earth (Climate Change, nd.) The urgent need to address climate change, environmental deterioration, and the rising demand for sustainable energy solutions have made the worldwide move towards sustainability more critical in recent years (Hassan et al., 2024) For this reason, the Sustainable Development Goals (SDGs) were established during the 2012 Rio de Janeiro United Nations Conference on Sustainable Development With sustainability at its core, the 2030 Agenda for Sustainable Development was accepted by all members of the United Nations in 2015 and produced 17 global Sustainable Development Goals (SDGs) (Transforming Our World: The 2030 Agenda for Sustainable Development | Department of Economic and

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Social Affairs, n.d.) The relationships between the environmental, social, and economic facets of sustainable development are emphasized by the SDGs A global movement towards sustainability has gained steam as a result of this recognition of urgency (Meeting the SDGs_ A Global Movement Gains Momentum.Pdf, n.d.) The rapidly expanding green bond market is one important tool in this battle Due to the growing awareness of climate change and the pressing need to fund sustainable projects, the global green bond market has grown significantly in recent years (What Are Green Bonds and Why Is This Market Growing so Fast?, 2023)

Green bonds are fixed-income securities designed to raise capital for projects with environmental benefits, including renewable energy, energy efficiency, clean water, and sustainable agriculture (Renewable Energy Finance: Green Bonds, n.d.) The world's first green bond, called the "Climate Awareness Bond," was introduced by the European Investment Bank (EIB) in 2007 This marks the beginning of the history of green bonds (Climate Awareness Bonds, n.d.) The first-ever green bond issuance is generally attributed to the World Bank in 2008, marking a turning point in mobilizing private capital for environmental goals (World Bank Marks 10-Year Green Bond Anniversary with Landmark Issuance US$1.3 Billion Issuances Bring World Bank Green Bond Program to US$12.6 Billion, n.d.) Since then, the green bond market has expanded dramatically, with the Asia Bond Monitor estimating that it will reach an astounding $3.3 trillion by mid-2022 (The Significant Growth of Green Bonds, 2022) This quick growth is a result of both the rising demand for funding sustainable projects and the increased appetite of investors for investments that take the environment into consideration (From Profit to Purpose: The Evolving Landscape of Sustainable Investments, n.d.) Green bonds have gained popularity as a way to direct funding toward environmentally beneficial projects such as energy efficiency programs, infrastructure for renewable energy, and other sustainable projects (Alamgir & Cheng, 2023) These bonds offer investors the opportunity to align their financial decisions with their environmental, social, and governance (ESG) objectives, while also providing issuers with a dedicated source of funding for green projects (Green-Social- Sustainability-Bonds-Developing-Countries-Donor-Co-Ordination.Pdf, n.d., p 10) Vietnam, a nation severely affected by climate change, has realized how important

it is to make the shift to a sustainable economy The Vietnamese government has taken

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the lead in addressing climate change and advancing sustainable development, supporting international programs like the Paris Agreement (World Bank, 2015) Vietnam has a growing green bond market and is dedicated to sustainable development Vietnam reaffirmed its commitment to fight climate change, transition to

a green economy, and achieve net-zero emissions by 2050 at COP 26 and COP 27, in

2021 and 2022, respectively In order to achieve this, the government of Vietnam wants to raise the percentage of electricity generated from renewable energy sources, such as hydro, solar, wind, and biomass power, from 16.8% in 2022 to 33% by 2030 and 55% by 2050 The usage of green bonds has been promoted by Vietnam The municipal government of Ba Ria-Vung Tau and a government-sponsored organization

in Ho Chi Minh City issued green bonds in 2016 with respective values of US$3.6 million and US$23.4 million Additionally, green bonds have been issued by Vietnamese companies for their solar panel projects in Ninh Thuan Province, including the Trung Nam Group and Trung Nam Solar Power JSC EVN Finance JSC released an internationally certified onshore green bond in July 2022 The Global Green Growth Institute provided technical assistance for the US$75 million bond, and GuarantCo provided US$50 million in sponsorship Vietnam has gained international recognition as a result of these accomplishments Of ASEAN member governments, Vietnam is the second-largest issuer of green bonds, according to the ASEAN Sustainable Finance State of the Market 2021 study (Vietnam Needs a Green Bond Legal Framework | East Asia Forum, 2023)

Vietnam will issue its first green bond on October 25, 2023 The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) in Vietnam received technical support from the World Bank to issue its first green bond, valued at USD 104 million This deal represents a number of firsts for the Vietnamese market, including the issuance of the country's first senior, unsecured, and unguaranteed green bond by a regional commercial bank With this initiative, the nation’s commitment to sustainable development and green financing took a major stride forward Vietnam is

an important player in the global sustainability movement, especially in the area of creating renewable energy sources, given its quickly rising economy Investors, however, are concerned about “greenwashing," which occurs when businesses fabricate or exaggerate claims about being environmentally friendly in order to attract

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capital Financial losses and a decline in investor confidence may result from this To prevent greenwashing, Vietnam should create a national framework, or "taxonomy," to categorize green bonds in accordance with the regulatory frameworks already in place

in the EU and ASEAN Vietnam's green bond market will be completely changed by a green bond taxonomy, which will also stop greenwashing, establish Vietnam as a reliable investment partner, and increase capital for renewable energy projects However, this is only possible if the nation incorporates regional and global norms into its legal system (Case-Study-Viet-Nam-BIDV-Green-Bond-TA.Pdf, n.d.)

In Vietnam's case, green bonds play a very important role in attaining sustainability because the nation is juggling the competing demands of environmental conservation and economic growth Vietnam's energy demand has significantly increased as a result

of its fast industrialization and urbanization, with fossil fuels being used to provide a large portion of this need (Li & Qamruzzaman, 2023) Nonetheless, the nation has acknowledged the significance of shifting towards sustainable energy sources, such solar, wind, and hydropower, in order to lessen the negative environmental effects of its energy industry (Vo, 2023)

The purpose of this research paper is to examine how green bonds might help Vietnam's renewable energy industry grow by offering a thorough grasp of the advantages and disadvantages of this type of financing This paper will provide insights into the potential of green bonds to support Vietnam's sustainability goals by assessing the current condition of the green bond market in Vietnam, the legislative and regulatory framework, and the impact of green bond investments on renewable energy projects

Although Vietnam's entry into the green bond market is promising, a number of aspects highlight the significance of thorough investigation The market is still in its infancy and constantly changing To maximize its effectiveness, it is essential to comprehend the unique dynamics of green bond issuance and investor behavior in the Vietnamese environment (Luu et al., 2023) Strong green bond rules and verification procedures are required due to worries about greenwashing, the practice of deceiving investors about the environmental impact of projects supported by green bonds (Can Multifarious Types of Green Bonds Be Accused of Greenwashing with a Durative Analysis? Insights from a Permanent Causality vs Temporary Causality Phenomenon |

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Environment, Development and Sustainability, n.d.) Research is essential for locating and reducing these kinds of dangers That is, a large increase in investments in renewable energy is necessary to meet Vietnam's ambitious target of achieving net- zero emissions by 2050 (The Pivot to Renewable Energy in Vietnam | McKinsey, n.đ.)

In order to thoroughly examine how green bonds contribute to sustainability in Vietnam by looking at renewable energy sources, a single-methods approach will be used in this study This strategy, which mostly uses quantitative data collection techniques, offers a thorough grasp of the subject We will use data from reliable sources, including the State Securities Commission of Vietnam (SSC), the International Capital Market Association (ICMA) Green Bond Principles, and foreign financial institutions involved in the Vietnamese green bond market, for the quantitative analysis Green bond performance measures, investor profiles, project kinds, and issuance volumes will all be included in this data We can find trends, patterns, and connections between the issue of green bonds and Vietnam's progress in renewable energy by statistically analyzing this data These quantitative studies will provide a comprehensive picture of the function, prospects, and constraints of green bonds in Vietnam's transition to a more sustainable economy This study intends to make many contributions to the corpus of current knowledge While other research has looked at the possibilities of green bonds for the growth of renewable energy generally, this study will focus especially on the Vietnamese context Policymakers, investors, and producers of green energy can benefit greatly from this research's analysis of the special features and difficulties of Vietnam's green bond market Researching green bonds in Vietnam is both important and urgent Firstly, as a developing country with rapid economic growth, Vietnam faces the dual challenge of sustaining its economic progress while mitigating environmental degradation (Viet Nam: Environment and Climate Change Assessment, n.d.) The integration of green bonds into Vietnam's financial system can provide a vital source of funding for environmentally beneficial projects, thereby supporting the country's sustainable development goals On the other hand, Vietnam's energy sector is currently heavily reliant on fossil fuels, which contribute significantly to greenhouse gas emissions (To

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Fulfill Vietnam’s Economic Ambitions, Climate Action Is Essential, n.d.) Transitioning to renewable energy sources is crucial for reducing the country's carbon footprint and meeting its international climate commitments Green bonds can play a pivotal role in financing renewable energy projects, facilitating the shift towards a cleaner and more sustainable energy landscape (Alamgir & Cheng, 2023) By establishing a robust green bond market, Vietnam can tap into this growing pool of capital, enhancing its financial resilience and sustainability (Valentina, 2021)

This study adds to the body of knowledge on green bonds and sustainable financing by offering a thorough examination of the Vietnamese green bond market and how it supports renewable energy initiatives Prior research has mostly concentrated on the development of the global green bond market in developed economies On the other hand, not much has been studied about the green bond market

in emerging nations, especially with regard to Vietnam By analyzing the particular difficulties and chances related to green bond financing in Vietnam, this paper closes this gap Moreover, the study underscores the distinct function of green bonds in funding renewable energy initiatives, an essential domain for accomplishing sustainability in Vietnam The study advances knowledge of how sustainable finance can help achieve sustainable development goals and mitigate climate change by offering empirical information on the influence of green bonds on the growth of renewable energy

The remainder of this paper is structured as follows: Section 2 provides Section 3 outlines Section 4 presents Section 5 discusses Finally, Section 6 concludes

2 LITERATURE REVIEW

2.1 Definition of Green Bond

Basically, green bonds are a type of investment similar to conventional bonds in terms of pricing, ratings, and other financial aspects The key difference is that the money raised from green bonds would be used to support environmentally friendly projects (Ehlers & Packer, 2017) In its early stage (2007-2013),

The European Investment Bank (EJB) could be seen as the pioneering issuer of green bonds as it was first issued by the financial institution of the European Union in

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2007 Since then, more øovernments and corporations have entered this market to finance environmentally friendly projects During this stage, the green bond market was primarily dominated by supranational issuers, namely multilateral development banks such as the European Investment Bank (EIB) and the World Bank This dominance could be partly attributed to the absence of a globally agreed-upon definition of a green bond and the lack of established standards governing this emerging financial instrument (Monk & Perkins, 2020)

Green bond market has expanded significantly with more countries entering With the participation of developed countries such as France, Sweden, Switzerland, etc, it holds many potentials to flourish and contribute to eco projects In the following years, the green bond market continued to grow as many Asian countries started to enter In Asia, China, India and Indonesia are early adopters and have contributed to the geographic expansion (“Explaining Green Bonds,” 2014) However, Vietnam is newly joined as the first green bond in this country was only issued by BIDV on October 25,

2023 This could be seen as the success of a multi institution, multi-team collaborative effort at the World Bank Group

2.2 Why green bond is important

Some researchers, including (Garcia, Herrero, Miralles-Quirds, & del Mar Mirallles-Quirds, 2023) have demonstrated the positive effects of green bonds on the environment, societal well-being, and economic status As the investors have been growing in their awareness of the possible risks and insecurities resulting from climate change, the importance of sustainability projects, climate-change mitigation plans, and eco-friendly investments, including green bonds, has also risen significantly (Reboredo & Ugolini, 2020) This trend towards sustainability has led to a considerable rise in the utilization of green bonds by both developed and developing countries, acting as a valuable tool for raising money through fixed-income debt over the past decade (Pifieiro-Chousa, Lépez-Cabarcos, Caby, & Sevié, 2021)

The current literature on green bonds mainly uses qualitative data instead of quantitative data because of the limited source of data provided (Zhou & Cui, 2019) The importance of green bonds could be divided into three following parts First is the

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investor base (Cheng, Sharma, & Broadstock, 2023), second is the connection between green bonds and the environment, and third is the branding effect, illustrated in recently published studies

In today's world, businesses that focus on ESG (environmental, social, and governance) standards have a high chance of receiving positive feedback from various parties, including both organizations and corporations, which encourages them to invest in projects that foster sustainability These sustainable initiatives not only positively influence the society and the environment, but also create more opportunities for businesses to embark on long-term eco-friendly projects (Harford, Keeskés, & Mansi, 2018) Several researchers have shown the link between green bonds and CSR (corporate social responsibility) (Baulkaran, 2019) has concluded that issuing green bonds offers great benefits to businesses, namely the ability to diversify the investor pool, especially the ones who are environmentally conscious

Green bonds also bear a strong relationship with environmental elements As the benefits raised from investing in green bonds could be effectively transferred into the budget used to support environmentally friendly projects, green bonds have had positive impacts on the environment to some extent According to (“Impact Report,” n.d.), in Serbia, the profits earned from green bonds are used to reduce energy consumption and limit air pollution discharged from in-home heating sources by focusing on residential energy efficiency and sustainable heating Furthermore, in other important areas including food security and decreasing fragility, more jobs are being offered and food supply chain is being enhanced, at the same time, people have more access to clean water and sanitation thanks to IBRD projects financed by green bonds

With more and more eco-friendly projects being supported by green bonds, businesses could enhance their image by issuing green bonds During the time of climate change, impactful corporations are continuously being expected to make efforts in protecting the environment and stopping global warming According to (Pimonenko, Chygryn, & Lyulyov, 2019), a green-imagined brand might be linked to a higher company's perceived value This positive connection could lead to a surge in investors’ interest and have a potential to raise the company's overall market

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capitalization as well as stock price Therefore, it is also stated in that the green branding effect helps highlight one business among other competitors through developing a unique product that is eco-friendly such as green bonds

In Vietnam, as green bonds are still quite new, there is not so much research on how important it is to Vietnam However, (Cai & Le, 2023) have shown that the gap between Vietnamese environmental footprint and its biocapacity are so huge that an ecological deficit is now threatening Vietnamese energy consumption Besides, this also affects GDP to some extent, as GDP is supported by the effective distribution, the reasonable use of resources, and the rental income generated (Tu, Rasoulinezhad, & Sarker, 2020) To solve that problem in developing nations, CSR structure is highly recommended by international organizations (Jamali, 2014) Therefore, green bonds hold a large potential to become a significant financial weapon for Vietnam to deal with many challenging problems during the alarming climate change

However, despite some benefits listed above, green bonds still have certain limitations The first thing to be concerned about is the transparency of these environmentally-friendly projects The misallocation of funds could happen when the profits do not come to the right place, but pour into somewhere else Regulations to mitigate this risk are highly necessary (Rizzello, 2022)

Additionally, although the green bond market offers good opportunities, its growth potential might be hard to flourish due to scalability and liquidity In comparison with the overall bond market, green bonds are still a niche that need more exploration and investigation (Fu & Ng, 2021) Especially in Vietnam where the green bond has just begun its journey, the risks mentioned above are predictable in the near future if there are no effective methods to regulate

2.3 Empirical studies:

2.3.1 Empirical studies of green bonds:

Prior studies in terms of green bonds mainly try to answer the question of how corporations and society are impacted by green bonds Research shows that investors concemed about environmentally friendly projects tend to be attracted by firms

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choosing to issue green bonds and indicate their commitment to the environment (Flammer, 2021) Similarly, Maltais & Nykvist (2020) using the in-depth interview method find that the motivations enhancing investors and issuers to join the green bonds market mostly come from business-case incentives Additionally, the research findings also mention that green bonds are able to foster friendly dialogue between issuers and investors within the organisations (Maltais & Nykvist, 2020) Accordingly, issuing green bonds becomes one of the activities which organisations can conduct to make a positive impact on their employees (Maltais & Nykvist, 2020) As a result, employees’ morale is boosted and such activities related to the environment including issuing green bonds can inspire the employees to highly commit to their organisations (Ali et al., 2010) Data collected in the research was recorded with handwritten notes and patterns used in 21 interviews in total were developed based on work related to CSR and SRI, and three main theories which are institutional theory (Meyer & Rowan, 1977; DiMaggio et al., 1983; Oliver, 1991; Campbell, 2007; Scott, 2008), stakeholder theory (Roberts, 1992; Freeman, 1994), and legitimacy theory (Deegan, 2002) Businesses’ operational performance as well as their profitability are also demonstrated to be possibly enhanced by green bonds when there is a growth in the number of maturing green bonds (Zhou & Cui, 2019) The research makes an evaluation of three aspects of corporate performance including profitability, operational performance, and innovation capacity by collecting data in terms of the green bonds market in China via the Wind database and using the event study approach Some other researchers take into consideration green bond yields and conduct quantitative research although the green bond market is young leading to the limitation of time and data Broadly speaking, the financial performance of green bonds are mostly the same as conventional peers but the actors still make an investment in green bonds (Ehlers & Packer, 2017) A recent study conducted in 2019 demonstrates the effectiveness of green bonds in offering fundraising entities lower cost of capital for investments in green projects even though it may take issuers some transaction cost during the process of certifying, monitoring and reporting on the environmental use of proceeds (Gianfrate & Peri, 2019) The study makes a comparison between the returns of conventional bonds and those of green peers by collecting data of bonds issued from “Bond data” of Bloomberg between 2007 and

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2017 and then applying propensity score matching techniques (Gianfrate & Peri, 2019) However, a recent research conducted to evaluate and compare the conventional bond yields to those of green bonds using a matching method or also known as a model-free approach mentions that the green bond yields between 2013 and 2017 are, on average, two basis points (bps) less than those of brown bonds (Zerbib, 2019) This is generally explained by the low quantity supplied of green bonds which is still not enough to meet their high demand (Maltais & Nykvist, 2020) Researchers make some predictions that compared to conventional peers, the price of green bonds will be higher in the future (Baker et al., 2018) Reboredo (2018) also strongly confirms the price of green bonds is almost stable and that it is not significantly affected by the fluctuations in stock and energy markets In general, the literature related to the green bonds market 1s still limited and does not yet answer the question of how green bonds directly influence sustainable development Prior researchers have a tendency to carry out their green bonds research using qualitative methods and collect data of the green bond market in developed countries and continents in terms of quantitative research Recently, there is still a lack of data and research on how the environment can be positively impacted by issuing and investing

in green bonds

2.3.2 Green bonds and renewable energies:

Regarding the mitigation of climate change to ensure the affordable and clean energy for sustainable development (SDGs 7), renewable energy is of paramount importance compared to other impacted factors Renewable energy sources (RES) and their utilization are considered as an intimate connection with sustainable development, therefore, transitioning to renewable energy sources (RES) is necessary for solving the environmental concerns and attaining sustainability (Dincer, 2000) The prior study applied Ward’s method to employ a hierarchical cluster analysis to examine the positive and statistically significant correlation of renewable energy resources (RES) consumption and the economic growth of 25 European countries for

10 years: from 2007 to 2016 (Ntanos et al., 2018) Consequently, the results showed that the increasing RES consumption can contribute to the environmental sustainability

as well as sustainable economic growth in these European countries (Ntanos et al.,

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2018) For high-emission countries, the effect of renewable energy consumption is limited in declining CO2 emissions because of the relatively small proportion of renewable energy use (W Chen & Lei, 2018) Their study also concluded that to meet the energy demand and reduce CO2 emissions, policies should focus on financially supporting the development and deployment of technological advancements to shift the country’s economic growth from non-renewable energy to renewable energy (W Chen & Lei, 2018) The estimation of the study using the autoregressive distributed lag (ARDL) model showed that an increase by 1% in renewable energy is expected to lead to 0.2% reduction in CO2 emissions and 1% increase in non-renewable energy is projected to increase CO2 emissions by 1.08% (Mujtaba, Jena, Bekun, & Sahu, 2022) The analysis from the investigation for renewable energy consumption in the economic sector in the EU-27 stated that the function of renewable energy consumption in the “old” (EU-14) is greater than that in the “new” (EU-13) European Union countries (Tutak & Brodny, 2022) Also, the research showed that the European Union economy is growingly using energy obtained from RES, which is a positive trend towards attaining the objectives of EU’s climate and energy policy by 2050 (Tutak & Brodny, 2022) Moreover, the research utilizing Fully Modified Ordinary Least (FMOLS) test proved that there is a positive bi-directional long run relationship between renewable energy resources (RES) consumption and the national economic growth according to the level of income of more than 108 nations (Al-mulali, Fereidouni, Lee, & Sab, 2013) Similarly, the findings from another research showed the long-run bi-directional causality between the consumption of renewable energy and the development of economy in most of the EU countries investigated (Bilan et al., 2019) The rise of renewable energy consumption by 1% for FMOLS can lead to the increase by 15.76% in GDP, and a 1% increase in GDP can result in a 0.0002% increase in renewable energy (based on FMOLS) (Bilan et al., 2019) Additionally, the research applied the Cobb-Douglas production function in order to examine the dynamic relationship between factors: electricity consumption, economic growth, foreign direct investment (FDI) and capital in the Kingdom of Bahrain between 1980Q1 and 2010Q4 (Hamdi, Sbia, & Shahbaz, 2014) As a result, the paper highlighted the importance of incorporation of foreign direct investment (FDI) and capital into electricity consumption to achieve the long-run sustainability in the

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economy of Bahrain (Hamdi et al., 2014) Another research also used a Cobb-Douglas functional form and employed panel data techniques to determine quantitatively that the influence of renewable energy consumption to economic growth is positive and statistically significant (Inglesi-Lotz, 2016) The results of the analysis using the Scopus (Elsevier) database of scientific literature indicated the total world production had increased during the period studied (2003 — 2008) (Romo-Fernandez, Guerrero- Bote, & Moya-Anegon, 2012) Increased economic and societal concern over issues related to energy security and global warming are putting a great emphasis on the consumption of renewable energy (Sadorsky, 2009) The author collected data and estimated an empirical model of RES consumption for the Group of 7 (G7) countries (Canada, France, Germany, Italy, Japan, United Kingdom, and the United States) (Sadorsky, 2009) The estimates showed that in the long term, the increase in real GDP per capita and CO2 emissions per capita are major drivers of renewable energy consumption (Sadorsky, 2009) Global data collected from 188 countries for real GDP per capita, renewable energy consumption per capita, and CO2 emissions per capita stated that while energy consumption generally has a negative impact on GDP in the global scale and developing countries, that does not hold true for developed countries (P.-Y Chen, Chen, Hsu, & Chen, 2016) And the unidirectional causality from energy consumption to carbon dioxide emissions exists in both developing and developed countries (P.-Y Chen et al., 2016) Studies of long-term output elasticities found that renewable energy (RES) consumption positively affects 57% of the total economic output of the top 38 selected countries (Bhattacharya, Paramati, Ozturk, & Bhattacharya, 2016) They concluded that the deployment of renewable energy sources (RES) is urgently necessary for the sustainability of the country’s economy (Bhattacharya et al., 2016) The South African economy is intensively dependent on non-renewable energy resources, particularly coal (Bugaje, 2006) Moreover, the excessive use of fuelwood, especially in the Sahel region, is posing a threat for environment, this reality underscores the pressing needs for Africa to address the imminent energy crisis in the continent to achieve sustainable development (Bugaje, 2006) In response to that challenge, The Energy Policy Document of South Africa seeks to attain a 15% contribution from renewable energy resources to the national energy mix within the current decade (Bugaje, 2006)

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The previous research focused on the impacts of green bonds on achieving the two specific goals which are climate action (SDGs 13) and clean energy (SDGs 7) to attain sustainable development (Alamgir & Cheng, 2023) According to “Green Bonds Data” retrieved from Bloomberg Terminal from 2007 to 2021 and “Renewable Energy per Capita Data" collected from “Our World in Data’, the author applied the one-step generalized method of moment (GMM-One-Step) to yield the outcome that green bonds has a positive and significant relationship with renewable energy production (Alamgir & Cheng, 2023) In addition, their study found that the lower green bond issuance countries are struggling more to achieve their economic sustainability compared to countries with higher green bond issuances (Alamgir & Cheng, 2023) The gap between our research and the prior research is that while that research was conducted on a global scale, we will use the same method, GMM-One-Step, to estimate the influence of green bonds issued on renewable energy production in Viet Nam

2.3.3 Other variables affecting sustainability Some studies have shown that FDI (Foreign Direct Investment) and environmental taxes also have a role in maintaining sustainability According to (Voica, Mirela, & Haralambie, 2015) , the most important targets of FDI include green investments that encourage the consumption of clean energy and the improvement of technology innovation used for environmental purposes Renewable energy development is a quite attractive sector that is increasing in importance and decreasing in costs Also, the rising efficiency of renewable sources is also a determinant to attract FDI into this section Environmental taxes are another factor that impacts sustainability Green taxes could lead to an increase in environmentally friendly activities The profits generated from these could be used to finance environmental alternatives through incentives and subsidies or through tax incentives These kinds of taxes ensure that businesses are working effectively without causing environmentally damaging activities to happen (Jaeger, 2013) has said that green taxes could serve two purposes at the same time: financing green cleanup and clean technology research and development (R&D) As companies always strive to come up with legal ways to reduce tax, they tend to invest

in clean technologies and green production methods (4IR) Therefore, this not only

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