What Does Investing In Vietnam Look Like? Here Are 3 Key Takeaways From The First ESG Investor Conference

Gone are the days when investing was solely about personal gains. It is time to shift our perspective and create value for both investors and society.

But why should strategic investors in Vietnam embrace Environmental, Social, and Governance (ESG) principles?

While it is safe to say that ESG is a fairly new business standard in Vietnam, Ms. Van Ly, Partner at Raise Partners, said, “Don’t be afraid of what you don’t know.” Investing with an ESG lens goes beyond financial returns and prioritizes sustainability; environmental, social, and local economic impact; and good governance. Strategic investors look for companies that share their environmental consciousness. They consider the social impact of their investments, from fair treatment and wages of workers to community engagement. Transparency, accountability, and strong governance practices are valued.

These investors actively engage with companies, aiming to drive positive change. They want investments that align with sustainability principles while delivering long-term financial returns. It begs the question: Is Vietnam ready to attract such investment opportunities?

This is where the comes in. The first-of-its-kind in Vietnam where nearly 400 attendees, 50 speakers, and experts from private and public sectors, including leading investment funds such as Dynam Capital Limited, Vietnam Holding, Climate Fund Managers, Sarona Asset Management, Emerging Markets Impact Investment Fund (EMIIF), and Patamar Capital, gathered to discuss challenges, solutions, and investment opportunities as the country adopts ESG principles in its global integration.

Presented by Raise Partners and Vietcetera Media, the two-day Vietnam ESG Investor Conference, held at the New World Saigon Hotel, served as a platform for top investors and companies to learn about high-yield, transparent investments that address societal, environmental, and economic needs.

The conference’s priorities were to present ESG-lens investing in the Vietnam context across various sectors while hearing from different experts and stakeholders, identify investment opportunities within the many challenges faced by Vietnam (and Southeast Asia), and connect potential investors and companies.

If you missed the event, here are three key takeaways along with a few relevant details that were discussed at the Vietnam ESG Investor Conference:

Vietnam's ESG Opportunities and Challenges

In his remark about ESG Investment Criteria in Vietnam for Institutional Investors, Craig Martin, Executive Chairman of Dynam Capital, said that while the high focus on ESG adherence presents a great deal of advantages for this generation and the next, challenges remain.

According to Craig, “These challenges require innovative ESG solutions to create that positive change for the people and the planet. It’s not only a moral duty, but it's also a smart choice.”

Vietnam is a fertile ground for ESG-focused investments driven by urbanization, clean energy potential, and increasing investor demand for sustainable financial opportunities. Addressing issues related to the real estate market and plastic waste management is crucial for long-term sustainability. As the investment community continues to embrace ESG principles, Craig emphasized transparency, comparability, and clarity in ESG metrics and methodologies. Through collaborative efforts and innovative ESG strategies, Vietnam can unlock its full potential as a sustainable investment destination.

Craig posed a thought-provoking question, urging the audience to reflect on the future: “If a child was born this year, what would their life look like in 27 years? We don’t know, but all changes can start today, as we sit here discussing sustainable development and the impact of ESG investment on the lives of the next generation.”

Investing in Inclusive Opportunities, Workforce, and Leadership

On a more positive note, during the panel discussion on “Investing in Inclusive Opportunities, Workforce, and Leadership,” Shuyin Tang, CEO and co-founder of Beacon Fund and Partner at Patamar Capital, highlighted the importance of investing in diversity, citing both the economic advantages and ethical considerations.

When Patamar Capital was established 12 years ago, its primary focus was equalizing economic opportunities. However, they did not initially deliberately focus on gender diversity. Upon examining their first fund's portfolio, they discovered a noticeable lack of female representation among CEOs, board members, and management teams.

This realization struck a chord, particularly because their customer base predominantly consisted of women. Recognizing the incongruity and the potential business opportunities, they embarked on a new path to address gender and diversity imbalances while continuing their mission to “level the playing field” through their investments.

Eddie Thai, Co-Founder and General Partner of Ascend Ventures Vietnam (AVV), acknowledged the importance of exploring opportunities in various locations and believed in the equal distribution of talent but recognized that opportunities might be unevenly distributed. As a result, they actively sought out overlooked opportunities. In fact, early in their journey,

AVV made its first investment in a startup co-founded by a woman. The problem was, their subsequent 19 investments were all male-led.

This fact led Eddie and his team to reevaluate their approach and implement simple tracking and adjustments to make their investment strategy more intentional. “We started doing some simple tracking and made some other tweaks and saw that proportions improved,” he said. “And started to see early benefits to it as well, by addressing diversity to find teams holding everything else equal. We managed a lot of risks, and it shows in the numbers so far.”

All things considered, investing in diversity and inclusion is crucial for Vietnam’s sustainable growth journey. Serge LeVert-Chiasson, CEO of Sarona Asset Management, said, “In most economies, including Canada and Vietnam, women are typically disadvantaged compared to men in terms of access to capital, resources, and advice.”

Serge added that by fostering an environment that embraces diversity, Vietnam can unlock its full potential and drive sustainable progress.

COP 26 & JETP: Investing in Decarbonization and Energy Transformation

IPG (International Partners Group) and Vietnam formed a Just Energy Transition Partnership (JETP) on December 14, 2022. With a funding of $15.5 billion, the partnership aims to support Vietnam's journey towards carbon neutrality by 2050.

Ha Do, Head of ESG for KPMG in Vietnam and Cambodia, discussed the opportunities and risks in the utility sector, particularly in relation to the JETP initiative.

She emphasized two key opportunities: First, the growing power shortage in Vietnam presents a significant opportunity for investors and developers in the green energy sector. This includes solar, wind, offshore wind, and large-scale solar projects. The country aims to have 40% of its energy from renewable sources, further enhancing this opportunity.

Second, there is an opportunity for the Vietnam government to utilize JETP funding to focus on developing regulatory frameworks and capacity building. This includes addressing outstanding issues related to the regulatory framework, such as the mechanism of action and robust power purchase agreements. A supportive regulatory environment is crucial to attract investors and encourage large-scale investments in green energy projects.

In terms of risk, Ha highlighted two main concerns: A risk of delayed or inadequate implementation of regulations and the lack of sufficient support for investors.

While intentions may exist to eventually introduce regulations, JETP’s effective execution and implementation will be challenging. The development of timely and efficient regulatory processes is essential for developers to navigate energy transition projects smoothly. The second risk pertains to the need for more regulatory support for investors in the region to ensure the successful implementation of projects and encourage potential investors to commit to sustainable investments.

Invest in People

While many individuals and organizations primarily associate ESG with climate change, other environmental issues, and governance, it is crucial to recognize that the social impact and well-being of people are integral to a comprehensive ESG strategy. Some companies, like Phu Nhuan Jewelry JSC (PNJ), Vietnam’s largest jewelry retailer, go beyond the surface and prioritize investing in their people to enhance sustainability and profitability.

On the topic, “ESG is a Marathon, Not a Sprint,” Ms. Tran Phuong Ngoc Thao, Vice Chairperson of the Board of Directors and Head of PNJ’s ESG Committee at PNJ, emphasized the importance of fostering a values-driven culture, aligning business practices with responsible and impactful actions, and continuously learning and adapting to new concepts and ideas.

PNJ’s motto combines its commitment to sustainability with its business purpose: “We act responsibly to honor the beauty of people in life in a sustainable way.” To that end, PNJ formed an internal ESG committee to identify strategic priorities, including circular economy, carbon emissions, waste management, efficient energy use, human capital, community impact, transparency, and reporting. While they are still in the early stages of translating these priorities into specific projects, PNJ has been benchmarking, reporting, and building a baseline for their sustainability efforts.

By aligning ESG principles with its financial interests, PNJ builds collaborative relationships and gains support from its employees, consumers, suppliers, and investors.

‘Nothing changes if nothing changes’

“Whether we're discussing ESG or Diversity, Equity, Inclusion, & Access, every company, and every leader must start their journey from a place of understanding their values,” said Amy Kunrojpanya, VP of Public Relations - APAC, Netflix.

Amy emphasized Netflix's mission to entertain the world and its ambition to be a truly global entertainment company during her message on investing in Diversity, Equity, Inclusion, & Access (DEIA). Netflix’s investment in DEIA practices extends to its sizable global workforce as well as original local content development, including Vietnam and Southeast Asia. Their goal is to “bring joy, escape and connection to billions of people around the world” by highlighting the importance of storytelling and enabling more people from diverse backgrounds to see themselves and their lives reflected on screen.

Amy outlined Netflix’s approach anchored in the 4Cs: “Consciousness,” “Competency,” “Compassion,” and “Courage.” The Netflix VP emphasized that “this approach is not adjacent to our business; it is at the very heart of our operations.” Amy concluded by urging everyone to commit to the change needed for a more inclusive future, stating, “Nothing changes if nothing changes.”

In a separate discussion, Kelvin Vuong, Managing Director of Climate Fund Managers B.V. (CFM), identified healthcare and clean energy as the most promising sectors for attracting ESG investments in the Vietnamese market.

According to Kelvin, meeting all the necessary ESG criteria to attract investment is challenging, but it’s all about the people working on achieving it that matters. “The crucial factor is building a team that understands international perspectives and local culture. This helps bridge gaps and provides a practical approach for long-term sustainability.”

Ultimately, for ESG efforts to be effective, it all begins with individuals who clearly understand the country’s needs and how the right partnerships and investments can create a positive impact. ESG initiatives can gain momentum and contribute to meaningful societal, environmental, and economic change by empowering individuals with information and a transformative mindset to make the “right” decision.

Long-term vision

Is the effort put into ESG initiatives really worth investing in?

In his talk on “The Future of ESG - A Global Outlook and Lessons Learned about Impact,” Michael Traill AM, the Founder of Social Ventures Australia, delved into the evolving landscape of ESG investing.

Drawing from his experiences in mobilizing capital and supporting entrepreneurs, Michael highlighted the notion of integrating the consequences of climate change into a wide range of social impact areas while ensuring careful analysis and seeking favorable risk-weighted returns as undoubtedly a compelling and beneficial approach.

According to the Australian business executive, there’s an undeniable potential for positive outcomes when we recognize the interplay between climate change and its effects on society and proactively address them with a thoughtful and optimistic mindset.

It is indeed worthwhile – by recognizing the interconnectedness between climate change and society, there is immense potential for positive outcomes.

In assessing the long-term vision of Vietnam's management of its ESG efforts, it becomes evident that investors can gauge their commitment to sustainability by examining how they perceive and address their environmental, social, and economic impact in their day-to-day operations.

Having been part of Vietnam's business landscape for almost three decades, KPMG has had the unique opportunity to observe the remarkable transformation within both state-owned and private companies. In recent years, there has been a tangible shift in how leaders perceive ESG efforts, as more and more private companies are forming ESG committees and adopting crucial ESG policies that affect their overall achievements.

For investors, it is paramount to carefully assess how companies engage their leadership's actions and transparency to counter associated risks using tailored ESG frameworks and reporting practices. This consistent scrutiny will be a reliable gauge of a company’s commitment to sustainable business practices. According to Ms. Ha Do of KPMG, the first question that clients always pose is, “What indicators do we need to use when we evaluate the companies?”

Looking ahead, Vietnam's progress in ESG efforts holds immense promise for the country's long-term development. As the country strives for economic prosperity, integrating ESG principles will catalyze sustainable development and establish Vietnam as a critical player in the global ESG landscape. Investors and companies will continue to embrace sustainable business practices, and there is an opportunity for Vietnam to position itself as a frontrunner in environmental stewardship, social responsibility, local economic development, and corporate governance.

In conclusion, asking questions initiates change. In the context of ESG, questioning encourages critical thinking, accountability, and transparency–all of which can ignite transformative shifts in business practices and create a better future for everyone.

Other photos from the two-day conference:

Thank you to our sponsors: Dynam Capital, Vietnam Holding (Gold Sponsors), KPMG Vietnam, HSBC Vietnam, DEEP C Industrial Zones, Netflix (Silver Sponsors), Australian DFAT, The Kingdom of the Netherlands Consulate, Raise Partners, The Embassy of Belgium in Vietnam (Partners), New World Saigon Hotel (Venue Sponsor), ECO Vietnam, DUYTAN Plastic Recycling, Alibaba Cloud (Booth Sponsors), and AmCham, AusCham, EuroCham, BeluxCham, HKBAV (Promotional Partner)