Climate change, inequality, and other social issues have fueled the trend of investing using ESG criteria. This is especially true now that the pandemic is in full swing, and traditional financial criteria are becoming increasingly constrained. In the context of the new normal, solar energy investment is also one of the trends that meet ESG standards for interested investors to consider.
1. What is the ESG Investment Standard? Capital market according to ESG standards in the world
1.1 What is the ESG Investment Standard?
ESG standards are assessed using three major criteria: E – Environmental (environmental), S – Social (social), and G – Governance (political). These three factors represent the enterprise’s social vision and mission.
Sustainable funds are investment funds that are concerned with environmental, social, and governance (ESG) issues.
Current social issues of concern include: environmental protection, climate change mitigation, epidemic response, and so on. Countries or businesses that demonstrate an interest in and desire to change based on ESG criteria will earn the trust, support, and investment of other developed countries, organizations, and enterprises.
1.2 Global capital investment situation according to ESG standards
In the United States, ESG investment now accounts for more than 20% of all professionally managed assets, totaling more than $11 trillion.
In Europe, this figure exceeds 17 trillion USD. Numerous surveys show that institutional investors and professional asset managers seek to use ESG primarily to compete for risk-adjusted returns and manage risk.
In Asia-Pacific, ESG is also causing a new wave. According to MSCI, 79 percent of investors in Asia-Pacific increased their investment in ESG significantly in 2020 in response to the uncertainties of the COVID-19 pandemic, and 57 percent plan to incorporate ESG into their analysis and investment decision process to a greater extent by the end of 2021.
The pandemic has accelerated this trend, causing investment strategies to shift away from traditional financial metrics and toward ESG. According to a BarclayHedge survey, nearly 60% of hedge fund assets were tied to ESG criteria in 2019, up from 42% in 2018.
2. According to ESG standards, solar energy investment in Vietnam is on the rise
As one of the world’s most affected countries by climate change, Vietnam joined the wave of sustainable finance in 2019, with a total value of green bonds reaching $27 million and the potential for more in the future.
Green credits are becoming more focused on investment, such as a USD 186 million green credit granted by the Asian Development Bank (ADB) to a private company to build and operate a factory. Phu Yen solar energy plant with a capacity of 257 MW.
Furthermore, according to HoSE results, Vinamilk currently achieves a total ESG score of 90% in 2020, which is 58 percent higher than the industry average score and one and a half times higher than businesses in the VN100. Vinamilk’s ESG practice has also been recognized by investment firms Dragon Capital and Mobius Partners.
Vinamilk also invests heavily in community development activities, such as using solar energy to reduce CO2 emissions and biogas systems, as well as the circular economy (3REs: Reduce, Recycle, Reuse) to reduce waste. Green energy will account for 89.17 percent of total energy consumed in the company’s business and production activities by 2020.
As a result, it demonstrates that the wave of financial investment based on ESG standards in Vietnam is gradually attracting the attention of foreign investors. Solar power, in particular, is regarded as the least expensive form of investment that still ensures efficiency and meets all green criteria to improve ESG indexes to assist businesses in attracting investment capital. his professional career