A conversation with the VGBC’s executive director on the risk of not building green

The Vietnam Green Building Council’s Douglas Snyder argues that the real cost developers should fear isn’t building green. It’s failing to do so

The question developers still ask all too often is how much more it costs to build green. Douglas Snyder believes the greater risk is what it may cost not to. As finance, regulation, and tenant expectations become increasingly linked to building performance, assets that appear cheaper to deliver today could prove more expensive to own, lease, insure, or retrofit tomorrow. That warning carries weight in Vietnam, where rapid urbanisation is colliding with tougher carbon policies, expanding green finance frameworks, and growing pressure from occupiers and investors. As executive director of the Vietnam Green Building Council (VGBC), Snyder sits at the intersection of those forces.

Vietnam’s green building market has expanded rapidly in recent years. The National Green Taxonomy has given banks and investors a framework for identifying green projects and supporting green credit and green bonds. A pilot emissions trading scheme is already underway, with later expansion expected to include commercial buildings. Green certification is also gaining ground. Ministry of Construction figures show that, by the end of the third quarter of 2025, Vietnam had more than 600 green buildings covering nearly 17 million square metres nationwide. The numbers point to a market gathering momentum, but one that will increasingly be judged on performance rather than certification alone.

The recent release of LOTUS New Construction V4 reflects that shift. Snyder discusses why the next phase of Vietnam’s green building market will depend not only on how many projects are certified, but whether those assets can hold their value as regulations tighten, capital becomes more selective, and occupier expectations evolve.

How has Vietnam’s green building conversation changed over the past decade, and what still feels underdeveloped?

Ten years ago, green buildings in Vietnam were being pursued by a select few developers. Now, most developers are at least considering adding green buildings to their portfolios. The government has helped through Vietnam’s zero-carbon commitments and follow-up policies. The 2025 Vietnam Green Finance Taxonomy defines green buildings for investment, while a 2% interest-rate subsidy for green lending has added to positive market sentiment. External pressure is also moving the market. The EU’s Carbon Border Adjustment Mechanism has influenced Vietnam’s manufacturing and export sectors, encouraging producers to build and operate more sustainable factories. We also see a lease premium of about 7.5-8% for high-end green offices in Ho Chi Minh City and Hanoi, so the green premium-brown discount idea is beginning to take hold.

Many developers now speak the language of ESG, net zero, and resilience. Where does the gap between ambition and delivery usually appear?

It usually appears in two areas. The first is cost. These concerns are often unfounded, or the cost-benefit ratio is misunderstood. Typical cost premiums are around 2% to 3%, and some developers have refined their approach enough to bring those premiums to zero. The second issue is resistance within project teams. The technical difficulty is often manageable, but teams that believe they have been successful until now may question why they should change. As the market modernises, sustainability will increasingly be required to stay competitive.

Where do developers often misunderstand the business case?

With average green building cost premiums around 2%, and contingency fees typically in the 10% to 20% range, there is little real financial burden to building sustainably. Once operational savings are included, the typical payback period is two to five years. Developers should also consider the value of a more climate-resilient asset, higher net operating profit, and reduced regulatory alignment risk. Zero-carbon buildings will carry higher premiums, likely closer to 10%, due to the technical inputs required. But they should also have strong payback because of near-zero energy costs. Other buildings may face expensive transition retrofits or even stranded-asset risk around 2030 as market preferences, corporate sustainability policies, and regulation become more demanding.

What do certification systems do well, and where do green claims need stronger evidence?

Certifications provide third-party assessments that banks and governments can use to verify the bankability of green assets. But not all systems are the same. Comprehensive green building is best covered by systems such as LOTUS and LEED, while narrower systems may focus on fewer areas. The level of certification also matters. There can be a big difference between a certified project and a platinum-certified project. Design-stage certification can indicate what might be achieved and support marketing efforts, but construction certification is closer to reality. Developers should share construction-phase certifications and achievements by category, because scoring shows how green a project really is. Physical inspection also helps verify that construction matches the planned design.

VGBC recently released LOTUS New Construction V4. What does the update say about Vietnam’s changing priorities?

With the rise of ESG, LOTUS New Construction V4 reintroduces two categories from earlier versions: Resilience and Community & Equity. There was less market interest in those areas in the 2010s, but 2026 is the right time to bring them back in stronger form. Vietnam has experienced several years of destructive storms, so awareness of climate threats to property assets and business operations has grown. Carbon is now more deeply incorporated into LOTUS, with mandatory operational decarbonisation plans through 2050 and embodied-carbon assessments for construction materials. LOTUS has also expanded renewable energy capacity to support net-zero operations. The social dimension is addressed through health criteria such as biophilia, air quality, acoustics, and daylighting, as well as worker protections, outdoor communal spaces, and inclusive design.

Is policy keeping pace with Vietnam’s green building ambitions?

Vietnam has high-level green building requirements, including ambitions for zero-carbon and sustainable buildings to 2030 and 2050. The recent green finance taxonomy is another strong step. To accelerate progress, financial and non-financial incentives would help, including tax benefits, expedited permit processing, and increased allowable gross floor area. Enforcement of the energy-efficiency building code would also help build market proficiency in basic efficiency, which can then support more advanced gains. For Vietnam to reach zero carbon by 2050 and conserve scarce resources, mandating certification for large buildings seems inevitable. Buildings can operate for 50 years or more, so we need to build correctly now.

How much pressure is coming from investors, lenders, and occupiers?

Pressure is increasing, but the market still has some way to go. Investors and lenders are not always clearly aware of the difference between comprehensive green building and narrower certifications. For now, there is often satisfaction with achieving any certification. As the market becomes more sophisticated, code compliance, climate adaptation, access to commercial insurance, and healthy buildings will become increasingly important, particularly as they are tied more closely to capital flows. The benefits of advanced green buildings, including better performance, cost savings, and futureproofing, are still not being fully maximised by investors, lenders, or occupiers.

How should emerging markets in Southeast Asia approach ESG differently from more mature markets?

Emerging markets should consider what can realistically be achieved, while still making gains across accepted impact areas such as carbon, resilience, circularity, water, biodiversity, health, social value, and governance. Extremely complex ESG criteria are not always the best path. Focusing on core criteria and taking meaningful action can speak clearly to consumers, employees, partners, and communities. Southeast Asia should also consider what is relevant to a tropical and culturally diverse region. Simply importing standards from Europe or North America can be like trying to fit a square peg in a round hole. Localisation is part of real ESG impact. The region can also teach others, because emerging economies are flexible and fast enough to leapfrog.

What will separate future-ready commercial developments from projects that meet today’s minimum expectations?

Future-ready commercial developments will need to be net-zero energy or net-zero ready. They will also need to be resilient to heat stress, flooding, high winds, power failure, and other shocks. Biodiversity will become increasingly important, with conservation and regeneration essential to mitigation. The social dimension can no longer be avoided, so operations, policy, and infrastructure must support inclusive, safe, and community-friendly spaces. Governance also matters. It works best when directed from the top, with the C-suite understanding sustainability and ensuring its implementation across portfolios.

This article was originally published on asiarealestatesummit.com. Write to our editors at [email protected].