Choosing people, environment, and financial return for investors

Ellen Van, the fund’s investment principal

What motivated Mekong Capital to pay attention to sustainability investments, and what opportunities do you see in this sector?

Mekong has 22 years of experience in developing entrepreneurs and helping them increase their business operations. Now, we want to take that opportunity further and contribute to the wellbeing of the whole ecosystem.

As we’ve been leveraging our strength in helping entrepreneurs articulate their vision and partnering with them to achieve their goals, it’s become clearer that this doesn’t only require financial development. It’s also about how we develop and make life better for people and the environment.

Some say sustainable development is a more risky investment than others. What’s your take?

Firstly, let’s talk about how we assess risks. What’s important is that Mekong Capital is a regional fund, which means we are here on the ground. I can go to Son La province and visit the coffee plantation, or go to Ca Mau province and see the mangroves. We are here witnessing and assessing the risks ourselves. In addition, we rely heavily on our partnerships with other non-governmental organisations, experts, and research centres that already exist in the region. With over 20 years of experience in this space, we ask ourselves if the risk is manageable. As a fund, we have a very comprehensive risk management system.

However, it’s vital that, as a country and as a fund, we can share the risks that are involved, the lessons learned, and the success cases with each other authentically. This is to avoid misleading investors into a perception of risk that perhaps does not exist.

All the business models that we look at have to both contribute to the wellbeing of the social and natural environment, and also be financially sustainable. There is no sustainability unless the company itself is financially sustainable. As a private equity firm, we make this assessment obvious early on, before we make any investment.

How does Mekong Capital define the impact of sustainable investments beyond financial returns?

Mekong Capital has clear financial and impact targets. There are three impact goals: people, environment, and financial return. Every single business model that we choose to invest in has to contribute to them, and offer a financial return for our investors. Another certainty is that there is no tradeoff between financial results and impact.

How do you find authentic green firms instead of businesses engaging in greenwashing?

The biggest enemy of the green movement right now is greenwashing. For Mekong Capital, the first vital consideration is that we invest in the leader. We need to see clearly that their vision and their commitment are in line with the fund’s, and they have to be able to provide the necessary leadership for their team to execute on that vision and achieve it.

Secondly, we assess their business model and whether there is an authentic impact that is in line with the three goals I shared earlier.

For greenwashing, it depends on where the baseline is. There must be clear measurements of the baseline to know exactly where we are now and where we will be in five or 10 years. It is essential we get that baseline measurement done accurately, and that it is verified.

Either we have a very strong system to verify it, or we rely on external verification to see what real impact we can have on a company, on a community, and on the environment in five years’ time.

Greenwashing is when the impact is exaggerated or the data is not trustworthy. For us, that’s why it’s critical to have clear impact measurements. What are we measuring? How are we measuring it? How are we going to communicate it? If we do all those three things right, greenwashing is not a concern.

Personally, my view is that any step above the baseline is good. Anyone who’s doing any good is still better than nothing or the reverse. We need everyone to be in this together. If there is an oil company that wants to do 1 per cent better, we will still celebrate that.

Mekong Capital fully exits investments in three private equity funds By completing the divestment from Minh Hoang Garment, the first three funds of Mekong Capital have made a complete exit from their investments.

Vietnam's largest cosmetics retailer HSV Group secures investment from Mekong Capital Mekong Capital announced that Mekong Enterprise Fund IV (MEF IV) has completed an investment into HSV Group, which is the cosmetics retailer in Vietnam with the highest number of stores.

Rever raises $10.2 million from Mekong Capital Online-to-offline real estate brokerage company Rever has bagged $10.2 million from Mekong Enterprise Fund IV (MEF IV).

Gene Solutions secures $15 million from Mekong Capital Mekong Capital has announced that Mekong Enterprise Fund IV (MEF IV) invested $15 million into Gene Solutions to make genetic testing affordable and accessible to millions of Vietnamese.