Unlocking finance for forest carbon credits and agricultural innovation

Deputy Minister of Agriculture and Environment Le Cong Thanh, head of the Vietnamese delegation to the COP30 Conference, recently held a bilateral meeting with Ms. Ruth Davis, the UK Prime Minister's Special Envoy for Nature.

The meeting comes as Viet Nam and the UK are expanding deep cooperation in the environment, climate, and nature conservation. In October 2024, the Vietnamese Ministry of Natural Resources and Environment (now the Ministry of Agriculture and Environment) and the UK Foreign, Commonwealth & Development Office (FCDO) signed a Memorandum of Understanding (MOU) on environment and climate change cooperation. This MOU focuses on several key areas, including biodiversity conservation, carbon market development, green finance promotion, and the circular economy.

According to Deputy Minister Le Cong Thanh, Viet Nam boasts a forest coverage rate of about 43% and has established a national biodiversity program. However, Viet Nam is currently facing challenges related to mechanisms and policies for sustainable nature conservation, especially concerning securing additional financial resources and mobilizing funds for this sector. The Vietnamese side highly values the role of the private sector and hopes the UK will support connecting Viet Nam with British ministries, agencies, international organizations, and businesses to open up new capital flows for nature conservation.

Viet Nam is seeking to link the contents of the MOU with new nature initiatives, such as the Biodiversity Landscape Fund and nature-based solutions projects aimed at ecosystem restoration, adaptation, and greenhouse gas emission reduction.

Ms. Ruth Davis stated that the UK is collaborating with Viet Nam to prepare for the carbon market under the Reducing Emissions from Deforestation and Forest Degradation (REDD+) mechanism. This includes mobilizing investment for high-quality credits through the LEAF initiative (an international mechanism for purchasing and financing certified REDD+ credits). The UK is aware of Viet Nam's Forest Carbon Partnership Facility (FCPF) and is keen to expand opportunities for forest carbon credits further.

In addition, Ms. Ruth Davis emphasized the opportunity to expand capital flows for agricultural innovation through the Asian Development Bank (ADB). The ADB currently has over USD40 billion allocated for this sector, and the UK is committed to supporting Viet Nam in accessing these resources, particularly by encouraging the private sector to invest more in sustainable agricultural models.

The UK is also stepping up cooperation with the ASEAN Centre for Biodiversity, including in the fields of rice-based carbon credits and biodiversity credits. These efforts focus on building legal frameworks, sharing knowledge, and creating a space for countries to exchange experiences.

The meeting at COP30 serves as an opportunity for Viet Nam and the UK to consolidate their commitments on nature and climate, while also proposing implementation content for the MOU for the 2025-2030 period. Both sides can enhance support for connecting ministries, agencies, international organizations, and the private sector, as well as mobilizing resources to strongly implement the areas identified in the MOU, especially: climate change response, biodiversity conservation, carbon market development, and building a green, inclusive economy.

Over the past three years, nature finance has emerged as one of the fastest-growing areas within global climate investment. According to the UN Environment Programme, countries will need at least USD 700 billion annually by 2030 to reverse biodiversity loss and restore degraded ecosystems. Yet current public funding meets only a fraction of that need, prompting advanced economies, especially the UK, EU, and Japan, to expand blended-finance instruments and market-based mechanisms to help developing countries unlock new capital.

One of the most significant shifts is the rise of high-integrity forest carbon credits, driven by stricter safeguards and improved monitoring technologies. Initiatives such as LEAF, ART-TREES, and the Forest Carbon Partnership Facility are pushing for transparent, jurisdictional-scale crediting, which helps reduce transaction risks and attract institutional investors. Viet Nam’s north-central region became one of the early beneficiaries through its FCPF ERPA, demonstrating that large-scale forest programmes can generate both revenue and incentives for community-based conservation.

Agriculture is also becoming a major destination for climate finance, particularly in Asia. Multilateral development banks now see climate-smart agriculture as essential to food security, with ADB alone committing more than USD 40 billion to help countries adopt low-emission rice production, digital irrigation management, and resilient cropping systems. In 2024, ASEAN endorsed its first regional framework on nature-based solutions, signalling the region’s intention to mobilise private capital for climate-adapted agriculture and landscape restoration.

Alongside these financial trends, the UK has positioned itself as a leading supporter of global nature markets. Its International Climate Finance programme has prioritised Southeast Asia for biodiversity protection, peatland restoration, and carbon market readiness. Through partnerships with the ASEAN Centre for Biodiversity and multiple REDD+ initiatives, the UK aims to help countries develop credible nature assets, ranging from forest credits to emerging biodiversity credits, while ensuring that local communities remain central beneficiaries.