Investors can take measures to ensure true sustainability

June 02, 2024 | 18:00
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Vietnam is enhancing its appeal to both domestic and international investors in line with its long-term green goals. Emily Hamblin, British Consul General in Ho Chi Minh City, and Tiong Hooi Ong, partner at PwC Vietnam, shared insights on the prospects and challenges of climate finance with VIR’s Luu Huong.

The Climate Finance Accelerator (CFA) is part of a UK government initiative. What are the primary objectives of the scheme, particularly in the context of Vietnam?

Investors can take measures to ensure true sustainability
Emily Hamblin, British Consul General in Ho Chi Minh City, and Tiong Hooi Ong, partner at PwC Vietnam

Hamblin: The CFA programme is active in 10 countries globally, with the primary objective of removing barriers that inhibit the flow of climate finance to where it is most needed. This is achieved by focusing on three key stakeholder groups to address specific challenges.

Firstly, we work with project developers to make their projects more attractive to investors by building their capacity and capability. This involves creating a strong pipeline of bankable, low-carbon projects that align with Vietnam’s ambitions and commitments to achieving net-zero emissions.

Secondly, we bridge the gap between project developers and investors, ensuring that projects can attract the right financing, and investors can find viable projects to support. This matchmaking process is crucial for both parties to succeed.

Finally, we engage with policymakers and government authorities to create an enabling environment that supports climate finance and the green transition. This includes fostering policies and regulatory frameworks that are conducive to sustainable investments.

What is your outlook for venture capital and private equity investing in sustainable projects in Vietnam over the next few years?

Ong: The outlook for private equity and venture capital in green and sustainable investments in Vietnam is highly promising. This optimism is based on the Vietnamese government’s ambitious targets. To achieve these aggressive goals, significant investment is required. Public funding alone cannot cover this enormous need.

Several sectors show significant potential for sustainable development and are likely to receive robust government support. Renewable and clean energy projects, focused on energy transition and energy efficiency, are in high demand. The push to phase out coal and embrace renewable sources like wind, solar, and hydropower will drive investments in this sector. The transportation sector, agricultural projects, and green building funding also present ample opportunities.

Despite the positive outlook, low-carbon projects are often considered high-risk and costly. What steps are being taken to make Vietnamese companies more attractive to investors?

Hamblin: To make Vietnamese companies more appealing to investors, the CFA programme focuses on key areas. Firstly, we assist project developers in improving their investment readiness by clearly communicating their climate impacts and integrating gender and social inclusion impacts into their business plans. This ensures projects meet the expectations of international investors, prioritising strong climate and social impacts.

Additionally, we work with various stakeholders to create an investor-friendly environment. This includes clear government signalling of commitment to the green transition, supportive regulatory frameworks, and relevant incentives like subsidies.

Given the rising concerns about greenwashing, what measures should investors take to ensure that the green projects they invest in Vietnam are genuinely sustainable?

Ong: Investors can take several measures to ensure the green projects they invest in are genuinely sustainable. Firstly, conducting thorough due diligence on the projects is essential. This involves assessing their environmental and social impacts, and ensuring they adhere to international standards and certifications.

Secondly, investors should seek advice from sustainability consultants with expertise in evaluating green projects. These consultants can provide an independent assessment of the project’s environmental and social impacts.

Finally, employing effective and ongoing monitoring and evaluation of project implementation is crucial. This can be done through regular assessments of the project’s progress towards sustainability goals.

Given that the legal framework is a core pillar for attracting investors, what steps is Vietnam taking to ensure its regulatory environment is conducive to climate finance?

Hamblin: Ensuring a strong legal framework is indeed crucial for attracting climate finance. Vietnam is actively developing and refining its regulatory environment to make it more conducive to investments. There is a need for signalling and commitment from Vietnam that investors can trust, which must be underpinned by the law.

One significant initiative is the development of a domestic carbon market. This has the potential to accelerate Vietnam’s emission reduction efforts. Developing a carbon market will help the country integrate emissions objectives within its broader economic goals.

Additionally, the UK government supports Vietnam through the Just Energy Transition Partnership (JETP), which brings in over $15 billion in financial and technical assistance. We are proud to be co-chairs of the JETP, partnering with Vietnam to accelerate the transition to renewable energy.

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By Luu Huong

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