As a long-term and responsible investor, we are committed to sustainability and our criteria in this respect lie at the heart of our investing approach. We believe that the Environmental, Social and Governance (ESG) issues can influence investment returns and portfolio risks in the long term and are the core of responsible investing. We seek to fully integrate Environmental, Social and Governance (ESG) standards into our core processes and choose to invest only in enterprises which meet its requirements in both financial and ESG matters.
VNH has been a signatory of the Principles of Responsible Investing (PRI) since 2009 – the first investor in Vietnam to be a signatory. VNH reports to the PRI each year. In 2020 we received A, A*, A for our ESG practices.
VNH has conducted workshops and forums to help foster awareness of sustainability principles within Vietnam’s investment community over many years:
The Long-term Value of Investor Relations
Strategic Management: Short-term View vs Sustainability
Economic Growth: Managing the Environmental Impact
Building Effective Boards: Strategic Role for Sustainable Growth
ESG Reputation in a Digital World
Managing Corporate Reputation with Responsible Business Practices
Carbon Footprint: Corporate Solutions for Sustainable Growth
ESG conference (online event organised by QuotedData, UK)
Responsible Investing in Vietnam (online event organised by Spectrum, Singapore)
As part of our climate change strategy, VNH supports the Paris Agreement and the Task Force on Climate Related Financial Disclosures (TFCD).
Dynam Capital, the Investment Manager appointed by the Company in June 2018, has its headquarters in Guernsey and an office in Ho Chi Minh City. Dynam is responsible for the day-to-day management of VNH’s investment portfolio in accordance with VNH’s investment policies, objective, and restrictions. Dynam’s investment strategy is based on research driven fundamental analysis, seeking attractive companies that also demonstrate a commitment to Environmental, Social and Governance (ESG) principles. Dynam integrates ESG principles into its investment decisions and seeks to influence greater corporate governance and best practices in investee companies, including encouraging companies to improve their investor relations as well as their financial and non-financial reporting.
The ESG Committee of VNH was established with a view to establish a unified view of ESG, increasing understanding of all three aspects: environmental, social and governance, and to promote the robust standards of corporate governance that the Company adopts.
The Terms of Reference of the ESG Committee were approved by the Board in June 2020.
In 2022 the ESG Committee will also be responsible for reviewing any internal audit or external verifications of the PRI Transparency Report to be submitted by Dynam Capital.
1. Exclusion list
Based on the guidelines of the UNPRI of which VNH is a signatory and the IFC guidelines, we have developed our own exclusion list. We do not invest, or finance companies involved in our exclusion list activities. See VNH's Exclusion list here.
2. ESG Management System
We recognize that ESG is a "journey" for many companies in Vietnam, with some at more advanced stages than others. We consider ourselves patient investors and have seen, and indeed played a part in, the positive developments in our portfolio companies on several ESG levels.
Our ESG Management System is a customized set of policies, procedures, tool and reporting guidance designed to identify, assess, manage and report on ESG risks and take advantage of opportunities for positive impacts associated with the activities of portfolio companies.
The ESG Management System has been developed by our Investment Manager to: (i) integrate ESG issues into every single step of the investment process: initial screening, due diligence, investment decision and investment monitoring; (ii) provide a framework for monitoring and reporting on ESG aspects to stakeholders; and (iii) work in partnership with our portfolio companies to help them identify and implement ESG opportunities, creating sustainable enhancement to their overall financial performance.
3. Active ownership though a Dedicated Company Engagement Programme
We assign a high priority to the engagement mandate entrusted to us by our shareholders and have been devoted to engaging portfolio company executives through face-to-face meetings as part of our Company Engagement Programme since 2012. This focuses on improving a portfolio company’s financial performance and emphasizing the necessity to systematically implement ESG factors. By enhancing our knowledge on specific issues, we are able to support investee companies in both financial and ESG aspects: from influencing better governance to helping them take positive steps toward improving sustainability policies, practices and performance. This not only helps us in our investment decisions but also adds value by influencing positive change at the investee companies.
4. Building a climate-smart strategy
According to the United Nations Framework Convention on Climate Change (UNFCCC), Vietnam is one of the five countries most vulnerable to climate change. Focusing solely on the Vietnamese market, we are strongly aware of climate-related risks and opportunities presented to the country, investee companies and thus our investing in the long term. We pay particular attention to manage the climate risks of the portfolio by keeping track of the portfolio’s total carbon emissions, analyzing the transition risks of climate-sensitive industries and helping our companies to do more on reporting their carbon emissions.
Dynam Capital, our Investment Manager, is also a member of the Asia Investor Group on Climate Change (AIGCC).
5. Voluntary measuring and reporting
Our aim in relation to Responsible Investing is to: "Do more, measure more and report more". As a signatory to the Principles for Responsible Investment (“PRI”), we report on our responsible investment activities every year through the PRI Transparency Reporting framework, the largest global reporting initiative for responsible investing. We also measure and publicly report the Company’s carbon footprint, our estimated portfolio-level carbon footprint, and assess the performance of the portfolio’s investee companies against the UN Sustainable Development Goals.