A Vinamilk farm in Lâm Đồng Province. (Photo: Vinamilk)
Hanoi (VNS/VNA) — It isundeniable that adopting environment, society and governance (ESG) principlesis helping local companies improve business management and attract moreforeign capital.
According to Tom Galvin,director of investment fund Columbia Select Large Cap Growth, ESG principlesare one of the decisive factors in making investment as goodfinancially-governed companies also make sure of sustained business developmentand high responsibility.
The global crisis causedby the COVID-19 pandemic and other natural disasters has emphasised theimportance of how companies handle ESG issues.
According to marketmembers and securities firms, investing in ESG-related assets brings less riskand higher profit in the long term, especially when climate change issues aregetting more serious.
Vietnam’s partnership with other nations andeconomic blocs, for example the European Union-Vietnam Free Trade Agreement, has motivatedlocal companies to pay more attention to ESG issues to draw attention fromforeign investors.
Vietnam Holding has already invested in the Vietnam Dairy Products JSC (Vinamilk) and techgroup FPT Corporation as the fund has faith in the companies’ high qualityof corporate governance and sustainable development policy.
Dragon Capital said thefund accepts to lose 20 percent ofinvestment opportunities when asking firms for ESG scoring and import criteriaon environmental protection and climate change response into their businessportfolios.
The fund’s executivechairman Dominic Scriven said environmental issues are not the biggest concerns at localcompanies while governance and social issues are often highly attended,tinnhanhchungkhoan.vn reported.
Jennie C Ahren, head ofESG unit at Tundra Sustainable Frontier, said there is still room for improvement amongVietnamese companies regarding their efforts in environmental protection,social responsibility and corporate governance.
Compared to othernations on the same level of socio-economic conditions, education activities inVietnam are much more outstanding while interestsfrom foreign investors will alsostrengthen the conditions on environment, transparency and labour.
A report by the Ho Chi Minh Stock Exchange (HoSE) in Augustpointed out that local companies understanding and adopting ESG principleshave a higher ability to bounce backduring the COVID-19 crisis.
To get higher ESGscores, local companies should audit their supply chains, the compliance ofemployees and the quality of internal operations and make adjustments ifneeded, according to Rachael Johnson, Head of Risk Management and CorporateGovernance for Professional Insights at ACCA.
The audit will providedetailed information about the suppliers to help local firms get through therough times such as the COVID-19 pandemic./.
