Viet Nam seeks to attract ESG-focused investment to achieve ‘inclusive growth’

Sunday, Jun 04, 2023 15:27

Speakers at the Viet Nam ESG Investor Conference 2023 organised by Raise Partners and Vietcetera last week in HCM City. — VNS Photo Bo Xuan Hiep

Viet Nam is seeking to attract ESG (Environmental, Social, and Governance)-focused investment as it embraces ESG practices to unlock opportunities for ‘inclusive growth’.

Speaking at the Viet Nam ESG Investor Conference 2023 last week in HCM City, Daniël Stork, consul general of the Netherlands, said Viet Nam is an attractive country for its ‘incredible natural environment and wonderful people’.

“The Southeast Asian nation is a place where doing business is good and complies with international standards and regulations which are related to the health of our planet,” he said.

Meanwhile, the Netherlands remains the country’s largest EU investor and the second largest EU trade partner, he added.

ESG factors have in recent years become a serious consideration for firms worldwide, according to Stork. They must align with ESG investment standards not only for their growth but survival.

The shift towards sustainable and responsible practices is ‘not a matter of choice but a necessity’ as it is an important driver for companies’ long-term value creation, he noted.

The Netherlands government is working with partners to provide funds for sustainable development projects, such as renewable energy, clean water supply, and food safety in Viet Nam.

“The projects help support jobs, generate income, and improve people’s lives, and indeed make a difference in the country,” he said.

Sarah Hooper, consul general of Australia, said high quality foreign direct investment is essential for Viet Nam.

“We are working in partnership with Viet Nam to address our most pressing priorities such as climate change, gender equality, rapid digitalisation as well as knowledge and skills development,” she said.

Export Finance Australia (EFA) plans to make an AU$200 million loan for grid upgrades in Viet Nam, she said.

Srini Nagarajan, managing director and head of Asia at British International Investment, said the company wanted to support climate finance projects in priority markets such as Viet Nam to “create sustainable, productive and inclusive economic growth.”

Opportunities and risks

Sarah Hooper, consul general of Australia, speaks at the Viet Nam ESG Investor Conference last week in HCM City. VNS Photo Bo Xuan Hiep

Experts said the transition towards ESG represents both risks and opportunities for businesses. Therefore, companies that embrace ESG principles must prepare for the risks and stand to gain substantial benefits.

Craig Martin, executive chairman of Dynam Capital, said integration of ESG practices can help firms to enhance their reputations, attract investment, drive innovation, and create a positive impact on society and the environment.

Companies embracing the ESG transition can position themselves as leaders in sustainability, ensuring long-term success in an evolving business landscape.

Building a positive brand image aligned with ESG values can also attract socially conscious customers, enhance brand loyalty, and drive long-term business growth, experts noted.

Enterprises will have better access to capital as the growing emphasis on ESG factors has led to a surge in sustainable investing, they said.

Access to this capital resource can support their innovation, expansion, and resilience in the face of evolving market dynamics, they said.

Experts have, however, pointed out several risks to the businesses.

They will face regulatory and compliance risks as governments worldwide tighten regulations, putting pressure on them if they fail to adapt their operations to meet new ESG standards.

Those with poor ESG track records will also risk reputational damage, loss of consumer trust, and diminished market competitiveness.

An ESG transition also requires large financial investments in infrastructure upgrades, technology adoption, talent acquisition, and training. So businesses must carefully manage these costs.

In addition, businesses reliant on sophisticated global supply chains might face challenges in ensuring that ESG standards comply with the entire value chain.

According to a 2022 report by Bloomberg Intelligence, global ESG assets could reach $50 trillion by 2025. The trend toward investing in companies adhering to ESG standards is obvious.

“These investments can mitigate adverse environmental and societal impacts while generating long-term value for investors,” the report noted.

The two-day event was co-hosted by Raise Partners and Vietcetera, attracting more than 400 leaders of multinational corporations from various industries. — VNS



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