Many countries have launched various initiatives to promote capital flows to places that satisfy ESG criteria.

ESG investment fund adds new recruit

Eastspring Vietnam - the largest fund management company in the Vietnamese market in terms of assets under management (AUM) - is accepting registrations to buy fund certificates from investors in the initial public offering of Eastspring Investments Vietnam ESG Equity Fund (EVESG). The registration period starts from August 9 and is expected to last until October 28 at the latest. There will be a minimum of 5 million units sold with no maximum limit, equivalent to a minimum mobilized capital of VND50 billion.

“In addition to focusing on growth prospects and financial foundations, the Fund will integrate analysis and evaluation of ESG (environmental - social - governance) factors in the investment decision-making process. The Fund believes that a company with a risk management policy and seizing opportunities related to ESG will create long-term value for the business, thereby bringing sustainable benefits to investors,” Eastspring Vietnam shared about the analysis and evaluation process in the investment decision-making process.

Thus, after nearly 2 years, Vietnam has another investment fund applying ESG standards in portfolio selection. With the appearance of EVESG fund certificates in the near future, UVEEF - fund certificates belonging to United ESG Vietnam equity investment fund of UOB Asset Management (Vietnam) Joint Stock Company will no longer be "alone" in this product niche.

UVEEF is the first and only open-end fund currently applying parallel ESG assessment. The fund was granted a certificate of establishment by the State Securities Commission in November 2022 and has a portfolio value of over VND 410 billion (according to the latest update).

Previously, since 2017, the Ho Chi Minh City Stock Exchange (HoSE) officially introduced the Vietnam Sustainability Index (VNSI) to select 20 enterprises with the best ESG performance. However, after 7 years, there is still no ETF fund that chooses to reference this index.

In the corporate bond market, there have been a number of successful deals such as two Vietnamese enterprises successfully issuing green bonds according to ICMA's green bond principles, including EVNFinance with a green bond lot worth VND1,725 ​​billion and BIDV with a mobilized capital of VND2,500 billion. Some others have previously issued successfully in the international market such as Vinpearl (USD425 million), BIM Land (USD200 million)...

Regarding the credit channel, according to Mr. Nguyen Tung Anh, Head of Credit Research and Green Financial Services at FiinRatings, green credit recorded a remarkable growth rate compared to general credit growth. However, the proportion of green credit only accounts for 4.32% of the total outstanding debt of the entire economy.

In general, in the stock, bond or credit markets, the scale of green and sustainable financial products in Vietnam is still relatively small compared to the region. However, according to the assessment of FiinRatings representative, this shows that green financial products still have a lot of room for development.

Joint efforts to promote green capital mobilization

The green financial product market still has room and opportunities for growth, especially when the need for capital to implement green transformation is getting bigger and bigger. However, like any investment project, whether green or not, businesses themselves need to be proactive and balanced.

With experience in mobilizing green capital, Mr. Nguyen Anh Tuan, CFO of The PAN Group, pointed out two factors that businesses need to pay attention to. That is proactive capital, meaning that if the business is suitable, the capital will flow automatically. In addition, to access financial institutions, businesses must have a certain foundation in sustainable development, as well as sustainable governance - something that the representative of The PAN Group said that "Vietnamese businesses sometimes do not have available".

In addition, a policy to stimulate the market is also necessary. Many countries have introduced various initiatives to promote capital flows to places that satisfy ESG criteria. Thailand's Securities and Exchange Commission (SEC) introduced new policies for ESG investment funds in early December 2023 and continued to "prefer" further conditions at the end of June to encourage investor participation.

The incentive includes a deduction of up to 300,000 baht from the tax bill and allows ESG investments held for at least five years to be exempted from capital gains tax when sold. The policy quickly paid off, with 22 more ESG funds launched in the fourth quarter of 2023, raising 6 billion baht in the first month.

In Vietnam, regarding the development of a legal framework for green economy and green finance, this issue has actually been of concern since early on. In 2012, the Government issued Decision No. 1393/QD-TTg approving the National Strategy on Green Growth for the 2011-2020 period and vision to 2050. Circular 101/2021/TT-BTC regulating the price of securities services at the stock exchange has also reduced by 50% the price of services for listing registration, trading, securities registration, securities cancellation... for issuers and investors of green bonds.

Developing a green capital market is one of the goals included in the Strategy for Stock Market Development to 2030. During his working trip to Singapore last week, Minister of Finance Ho Duc Phoc also emphasized his interest in ways to mobilize green bonds and operate the carbon credit trading market, hoping to receive support from Singapore in research, training, and education of personnel and experts.

The head of the Ministry of Finance also affirmed that the Ministry of Finance and the State Securities Commission always pay attention to policies and create favorable conditions and mechanisms for businesses to mobilize capital, as well as promote green development and sustainable development.