The key to opening new doors for agricultural enterprises

Capital from the investment fund will help Phuc Sinh improve the quality and value of Vietnamese coffee. Photo: TL

Receving foreign capital thanks to ESG

A few days ago, Phuc Sinh Joint Stock Company, with more than 23 years of development and affirming its position in the field of coffee and pepper export, announced that it received a capital grant worth US$ 25 million from the &Green investment fund - an investment fund established to protect forests from destruction in tropical regions. Accordingly, a commitment, high standards of environmental, social and governance (ESG) practices and financial transparent are the criteria that helped Phuc Sinh be selected by the &Green investment fund. It is known that in addition to the &Green investment fund, Phuc Sinh is also working with 2 other foreign funds with very positive prospects.

This enterprise is also one of the pioneers in digital transformation in the agricultural sector, with 18 consecutive years of being audited by the world's leading auditing companies (Big4) such as: EY, KPMG, PwC... In addition, Phuc Sinh is also one of the first enterprises in Vietnam to achieve Rainforest Alliance certification in 2014. With more than 14 years of experience in sustainable development, Phuc Sinh has achieved more than 20 certificates related to sustainable development.

Mr. Phan Minh Thong, Chairman of the Board of Directors of Phuc Sinh Joint Stock Company, shared that the investment from &Green Investment Fund was an important step in Phuc Sinh's sustainable development strategy. The cooperation with &Green Investment Fund would help Phuc Sinh go further on the path of sustainable development, thereby bringing long-term value to both the company and society. Specifically, Phuc Sinh committed to promoting the transformation of Vietnam's coffee industry towards traceable, deforestation-free supply chains. The company would focus on improving the quality and value of Vietnamese coffee through expanding production and reaching customers worldwide, thereby promoting Vietnamese products produced sustainably on a global scale. By applying responsible agricultural practices, Phuc Sinh aimed to set a standard for the industry, contributing to protecting the ecosystem and promoting a sustainable economy in Vietnam and beyond.

Previously, another Vietnamese agricultural and food company, Ben Tre Import-Export Joint Stock Company (Betrimex), also received a trade finance loan from UOB Vietnam. Similar to Phuc Sinh, to reach this cooperation agreement, Betrimex had to pass UOB Vietnam's extremely strict green credit review process, focusing on assessing compliance with ESG principles.

As a leading company in the production and export of coconut products with an impressive output of nearly 40 million liters/kg (2023) and presence in 70 countries, Betrimex focuses on business activities, developing raw material areas, production and green supply chains towards the goal of "zero-waste". In the coming years, this company always plans to double its production output each year, prepares to directly confront competitors in the international market and can be listed on the stock exchange in 2025.

Opening the big door

The 16 Free Trade Agreements (FTAs) that Vietnam has signed, with several others under negotiation, have created many advantages for agricultural exports. This also creates a special attraction for Vietnam’s agricultural sector to international organizations and investment funds. In particular, ESG is an increasingly important criterion in the capital investment decisions of international organizations.

On the positive side, Vietnam’s agricultural sector has made many positive changes. Mr. Surajit Rakshit, Country Head of Global Payments and Supply Chain Finance, HSBC Vietnam, assessed that agricultural companies had become more proactive and serious in developing and implementing sustainable strategies - from circular economy to sustainable supply chains, as well as other environmental and community support programs. “Focusing on green agriculture not only helps Vietnam reduce carbon emissions in agricultural production, but also meets the increasing demands from export markets such as the US or Europe”, said Mr. Surajit Rakshit.

In addition, agricultural enterprises are also actively developing solutions to manage cash flows, shifting from cash transactions to online platforms. Enterprises are also looking for digitizing their internal operations, and improving and further optimizing their working capital.

A recent study by UOB Vietnam Bank showed that 94% of Vietnamese enterprises were aware of the importance of sustainability and 45% of enterprises implemented sustainable activities in 2023. In particular, attracting investors was one of the goals that enterprises aimed for when implementing sustainable development activities. Other goals included enhancing reputation and building a positive brand image, creating competitive advantages, easily cooperating with multinational corporations, building a sustainable future in terms of environment and society…

It can be said that sustainable development is a new land with full of potential for agricultural and food enterprises, and capital from investment funds is an important support for enterprises to have solid progress on the journey to conquer this new land.

Mr. Surajit Rakshit also said that HSBC had supported many clients in different sectors such as farming, seafood export, animal feed companies, sugar exporters, dairy and dairy products companies, on their journey towards net zero emissions. At the core of this sustainability strategy was a commitment to support clients in understanding and acting on the transition to lower emissions and help them achieve their broader sustainability ambitions.