ESG

As awareness of climate change, human rights, and other social activism topics takes center stage, there is an increasing demand for sustainable investment among stakeholders. Therefore, the 21st century has witnessed a strong global movement urging businesses to incorporate a new objective into their corporate agenda: making a positive impact on the community and the environment. Financial institutions are driven to develop and enrich their ESG (Environment, Social, and Governance) Investment portfolio and offerings. Although ESG is a relatively novel matter in Vietnam, the drive for socially responsible corporate actions is dominating the global market at a faster rate than ever.

At Corporate Counsels, we recognize that ESG encompasses a wide range of issues related to the environment, community welfare, and corporate governance transparency. As your attorneys, our initial step is to thoroughly investigate your specific themes and intentions. This allows us to develop a highly valuable and tailored risk management program that aligns with your corporate profile.

Furthermore, our law firm offers corporate governance services to foreign companies seeking to enter the Vietnamese market. We ensure that your operations comply with the national ESG regulations in place. With our deep understanding of the financial industry and its emphasis on sustainability, combined with our expertise in Vietnamese law, we are the ideal partner for any firm seeking to fulfill their ESG commitments.

By leveraging our knowledge and fluency in Vietnamese law, we are well-equipped to assist you in navigating the complexities of ESG considerations. Whether you require assistance in developing ESG strategies, complying with regulations, or addressing specific legal challenges, we are dedicated to supporting your journey towards fulfilling your ESG goals and making a positive impact.

Climate Change

The development of laws and regulations involving climate change is a relatively new phenomenon in Vietnam.  In 2020, Vietnam introduced legislation to advance its greenhouse gas reduction goals pursuant to the Paris Agreement. The legislation included a draft Law on Environmental Protection in addition to a provision for waste management, a ban on chemicals that destroy the ozone, and management of surrounding environment quality for local air quality management planning.  However, the legal landscape continues to change and evolve as Vietnam obtains the data it needs to make smart, cost-effective mitigation decisions.

Beyond the regulations, the consequences of business insensitivity to climate change are becoming more critical.  Stakeholder activism, interruption to supply chains and markets, loss of reputation and the potential for litigation are all costs to be considered by a business that ignores ESG trends. On the other side, taking action to combat climate change often creates an opportunity to open up new markets and obtain new customers across the globe.

Corporations in today’s world require mitigation and adaptation strategies to capitalize on the ESG model.  All aspects of the business must be analyzed to determine how their operations affect the environment and, conversely, how the environment affects their business. Not only are variable markets and supply chains a continual consideration, but corporate boards must be flexible and adaptable to changes in the legal landscape they are operating in.

Corporate Counsels advises clients on how to respond to existing climate change regulations and laws, shape the development of new policies, and capitalize on market and investment opportunities. Given our understanding of the market, the prevailing laws and regulations and the major motivations for ESG in the context of climate change, companies operating across a broad range of industries trust Corporate Counsels to help them sustainably meet their business goals.

Sustainable Finance

In Vietnam and across the globe, there has been a rapid development of sustainable finance over the last decade and now accounts for billions of USD in transactions.  Investors and stakeholders are now insisting that corporations, owners of assets and financial organizations have goals beyond profitability and that environmental and socially responsible aims are equally emphasized.  In fact, “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development” was one of the lesser-known goals of the Paris Climate Agreement, of which Vietnam is a signatory.

In order to meet the requirements of sustainability, new modes of finance have been developed within the backdrop of an evolving ESG regulatory landscape. These include sustainability-linked bonds, loans, and social impact investments.  It also encompasses the emerging area of structured products and derivatives such as “green” regulatory capital transactions and synthetic securitizations, notes (including repackaging of sustainable commodities, repackaging of green and blue bonds and structured notes with payouts linked to green benchmarks and funds), and sustainable swaps.  Further, there is also a trend towards “responsible” investment which is an approach to investment utilizing ESG factors.

Corporate Counsels is on the forefront of this acceleration in sustainable finance in Vietnam.  We represent clients in numerous sustainable transactions, navigating the complex and ever-changing regulatory environment, and structuring new products in response to an evolving market.  With our thorough understanding of our clients’ existing organizational and governance framework, we are able provide critical guidance on structuring credit arrangements and other financing sources to successfully support ESG objectives.

Energy Transition

Energy transition generally describes the shifting of energy production and consumption in numerous economic sectors away from fossil fuels and the implementation of clean energy goals. This is being propelled by a number of factors including the development of low carbon electricity generation (i.e. solar, wind, nuclear, hydro, tidal, geothermal, biomass, and hydrogen), digitalization and technology that enables a more flexible mix of electricity generation, an increasing consumer and investor focus on climate change, and corporate responsibility concurrent with new regulatory requirements.

Green energy is a relatively new phenomenon to Vietnam but the future potential appears to be significant. In fact, it is estimated that Vietnam could produce more than 16.5 GW of solar energy, and 11.8 GW of wind energy. The government has already prepared for more onshore and offshore wind projects by 2025, which are projected to produce 12 GW of energy capacity.

Corporate Counsels has a depth of experience in the energy sector and are well-versed in all aspects of energy transition such as infrastructure, carbon capture, carbon trading and investment and renewable energy. We support clients in a wide range of energy transition-related opportunities from project financing and development, regulatory, M&A, joint ventures and construction.  Both international and local clients frequently turn to our Firm as a reliable partner as they develop new and innovative solutions and adapt their businesses toward transformation to low and zero-carbon energy sources.

Corporate Governance

Increasingly, how a business is run, the management of risks and the establishment and maintenance of relationships with stakeholders is under a microscope.  With the recent implementation of laws and regulations as well as the rise of soft law standards, Vietnam is no exception.  Coupled with increasing visibility and pressure from outside forces such as investors, shareholders and financial institutions, multinational and other large businesses face mounting challenges regarding governance, reporting and transparency.

First and foremost, to ensure a successful approach to ESG, good governance at the top is critical.  It involves constructing sustainable corporate strategies, making sound decisions and providing direction to all employees in the company.  An examination of the governing bodies of the company and how decisions are made is indispensable to providing a self-assessment of its effectiveness, flexibility and responsiveness to challenges it faces in the modern world.

Another concern is transparency and disclosure related to sustainability-related topics.  Corporations need to determine which information is required to be disclosed by the laws and regulations, which matters “should” be disclosed in the interests of the business, and which facts need to be classified as confidential or restricted.  In the ESG/sustainability field, are many instances where the line for disclosure versus non-disclosure is untested or not well-defined.

Within the ESG context, another important issue related to corporate governance is effectively managing and engaging with investors and stakeholders. In today’s digitalized and globalized world, investors are highly informed and face increasing pressure to scrutinize and hold corporations accountable for their actions concerning sustainability matters. In the modern business world, this commonly takes the form of an open letter to CEOs from institutional investors or threats of withdrawal of support by key shareholders.  Establishing a communication strategy as well as active lines of engagement with stakeholders is often critical to the long-term success of the organization to avoid major reputational and financial damage.

Corporate Counsels has over a decade of experience with corporate governance in a wide range of industries.  We advise clients across the full-spectrum of stakeholder governance-related opportunities, risks and compliance issues. Further, Corporate Counsels works collaboratively with clients in preparing for and making effective use of engagement opportunities with investors and stakeholders who are active in seeking to hold boards to account on their ESG or sustainability obligations.