A Vinamilk farm in Lâm Đồng Province. (Photo: Vinamilk)
Hanoi (VNS/VNA) — It is undeniable that adopting environment, society and governance (ESG) principles is helping local companies improve business management and attract more foreign capital.
According to Tom Galvin, director of investment fund Columbia Select Large Cap Growth, ESG principles are one of the decisive factors in making investment as good financially-governed companies also make sure of sustained business development and high responsibility.
The global crisis caused by the COVID-19 pandemic and other natural disasters has emphasised the importance of how companies handle ESG issues.
According to market members and securities firms, investing in ESG-related assets brings less risk and higher profit in the long term, especially when climate change issues are getting more serious.
Vietnam’s partnership with other nations and economic blocs, for example the European Union-Vietnam Free Trade Agreement, has motivated local companies to pay more attention to ESG issues to draw attention from foreign investors.
Vietnam Holding has already invested in the Vietnam Dairy Products JSC (Vinamilk) and tech group FPT Corporation as the fund has faith in the companies’ high quality of corporate governance and sustainable development policy.
Dragon Capital said the fund accepts to lose 20 percent of investment opportunities when asking firms for ESG scoring and import criteria on environmental protection and climate change response into their business portfolios.
The fund’s executive chairman Dominic Scriven said environmental issues are not the biggest concerns at local companies while governance and social issues are often highly attended, tinnhanhchungkhoan.vn reported.
Jennie C Ahren, head of ESG unit at Tundra Sustainable Frontier, said there is still room for improvement among Vietnamese companies regarding their efforts in environmental protection, social responsibility and corporate governance.
Compared to other nations on the same level of socio-economic conditions, education activities in Vietnam are much more outstanding while interests from foreign investors will also strengthen the conditions on environment, transparency and labour.
A report by the Ho Chi Minh Stock Exchange (HoSE) in August pointed out that local companies understanding and adopting ESG principles have a higher ability to bounce back during the COVID-19 crisis.
To get higher ESG scores, local companies should audit their supply chains, the compliance of employees and the quality of internal operations and make adjustments if needed, according to Rachael Johnson, Head of Risk Management and Corporate Governance for Professional Insights at ACCA.
The audit will provide detailed information about the suppliers to help local firms get through the rough times such as the COVID-19 pandemic./.
