VietNam Holding Ltd (LSE:VNH) said it will engage closely with its portfolio companies in the south-east Asian country with regard to climate change after Prime Minister Pham Minh Chinh joined the pledge to phase out coal and commit to achieving net-zero carbon emissions by 2050.
The investment trust, which invests in high-growth companies in Vietnam, said it will step up work with boards and senior management on how to measure and report about sustainability by providing training and encouraging them to adopt internationally accepted accounting standards.
“Vietnam has quickly become a key country in global supply chains, and local company directors know they will be required not only to report about sustainability and their strategies for reducing carbon emissions but also take more action to ensure they achieve their goals and meet stakeholder demands,” the trust said in its monthly investor report.
Earlier this year, the VNH board pledged its own allegiance to the Paris Agreement and commitment to the Task Force on Climate-related Financial Disclosures (TCFD) in addition to becoming a member of the Asia Investor Group for Climate Change (AIGCC).
While Vietnam is still mainly a coal-powered country, it is the largest market for renewable energy in the region and the government has been proactive in directing investment into a greater mix of clean sources.
The carbon footprint of the trust’s portfolio is 32% lower than the Vietnam All Share (VNAS) national stock market benchmark, VNH said, stemming from investment manager Dynam Capital’s active management style in sector allocation and selection of companies.
“VNH is nimble and can navigate small to large companies and maintain the high-level of engagement with investee companies on progressing their own ESG journeys too,” the company added.
“Foreign multinationals have continued to set up operations in the country partly given its strategic location at the cross point of Southeast and Northeast Asia and as the government carries on with its privatisation process and the freeing up of state capital.
“Foreign investors can also play an increasingly essential part of the ESG story in Vietnam, which now makes up 30% of the MSCI Frontier Market.
“As Vietnam's listed companies begin to raise their game on reporting on sustainability and other issues, and as capital market reforms continue to be implemented, the prospect of an eventual inclusion in the MSCI Emerging Market index may whet appetites further.”
The company also noted that the VNAS index set another record high in October as cities in the country's southern provinces gradually started to reopen and with nearly 60% of the population having now received at least one jab.
VNH sustained its outperformance of the VNAS index with NAV up 7.3% for October, with gains stemming mainly from real estate investee companies as well as steelmaker HPG, IT group FPT and brokerage VND.