Emerging hopes in ESG-driven investing

Foreign direct investment has long been a cornerstone of Vietnam's economic growth, propelling industrialisation, job creation, and export expansion.

- By Salvatore Banco Head of Ho Chi Minh City & South China Offices D'Andrea & Partners

Yet the nature of foreign direct investment (FDI) is evolving. Investors have been increasingly scrutinising sustainability, resilience, and compliance with global environmental, social, and governance (ESG) standards.

This shift reflects broader global currents: climate change imperatives, the rise of responsible finance, and the demand from multinational corporations that their suppliers meet ESG benchmarks. For Vietnam, this transformation is both a challenge and an opportunity.

Vietnam's attractiveness as an FDI destination has been reinforced by its resilience during global disruptions, from the pandemic to supply chain realignments. This is not incidental. Vietnam's deepening integration into major free trade agreements has created a framework where ESG compliance is essential for market access. Investors view Vietnam not simply as a low-cost manufacturing hub but as a potential leader in sustainable industrial ecosystems.

Renewable energy stands at the forefront of this shift. Vietnam's rapid economic growth has driven surging energy demand, historically met by coal and hydropower. Yet, the government's Power Development Plan VIII signals a decisive pivot towards renewables, targeting significant expansion in solar, wind, and biomass capacity.

International investors are responding. Facilities powered entirely by renewable energy are emerging, reflecting both investor sustainability goals and Vietnam's readiness to accommodate such projects. This is more than a technical transition; it is a redefinition of Vietnam's industrial identity. By embedding renewable energy into its FDI narrative, Vietnam positions itself as a credible partner in global decarbonisation efforts.