IDEAS home Printed from https://ideas.repec.org/a/bjw/econen/v15y2025i5p150-168.html

Geopolitical Risk and Environmental, Social, and Governance (ESG) practices of listed companies in Vietnam

Author

Listed:
  • Nghia Nguyen Trinh

    (Kalamazoo College, Michigan, US)

  • Nghia Dang Nguyen

    (Ho Chi Minh City University of Technology (HCMUT), Ho Chi Minh City Vietnam National University Ho Chi Minh City, Ho Chi Minh City, Vietnam)

Abstract

The intensifying geopolitical risk (GPR) across major countries has raised concerns about how firms can navigate the uncertainties that arise from it. This paper is the first effort to provide evidence that companies in Vietnam engage in Environmental, Social, and Governance (ESG) practices to mitigate GPR. Utilizing a unique dataset of ESG performance of publicly listed companies on the Vietnam stock markets from 2018 to 2023, the study demonstrates that increasing levels of GPR, both globally and in eight major economies, lead to heightened ESG activities among firms. Specifically, the result shows that a one-unit increase in GPR is associated with an increase in ESG by 4,895 units. While GPR significantly influences environmental and social initiatives, governance activities show insignificant influence. Moreover, firms categorized as high-risk exhibit a more pronounced increase in ESG efforts in response to GPR compared to their low-risk counterparts, suggesting that these companies strategically use ESG to manage GPR. This study offers crucial insights for firms in Vietnam, highlighting the benefits of adopting ESG practices to safeguard against potential shocks stemming from geopolitical instability.

Suggested Citation

  • Nghia Nguyen Trinh & Nghia Dang Nguyen, 2025. "Geopolitical Risk and Environmental, Social, and Governance (ESG) practices of listed companies in Vietnam," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 15(5), pages 150-168.
    • Handle: RePEc:bjw:econen:v:15:y:2025:i:5:p:150-168
    DOI: 10.46223/HCMCOUJS.econ.en.15.5.3839.2025
    as

    Download full text from publisher

    File URL: https://journalofscience.ou.edu.vn/index.php/econ-en/article/view/3839/2466
    Download Restriction: no
    File URL: https://libkey.io/10.46223/HCMCOUJS.econ.en.15.5.3839.2025?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dario Caldara & Matteo Iacoviello, 2022. "Measuring Geopolitical Risk," American Economic Review, American Economic Association, vol. 112(4), pages 1194-1225, April.
    2. Le, Anh-Tuan & Tran, Thao Phuong, 2021. "Does geopolitical risk matter for corporate investment? Evidence from emerging countries in Asia," Journal of Multinational Financial Management, Elsevier, vol. 62(C).
    3. Loc Dong Truong & H. Swint Friday & Tan Duy Pham, 2024. "The Effects of Geopolitical Risk on Foreign Direct Investment in a Transition Economy: Evidence from Vietnam," JRFM, MDPI, vol. 17(3), pages 1-14, March.
    4. Remmer Sassen & Anne-Kathrin Hinze & Inga Hardeck, 2016. "Impact of ESG factors on firm risk in Europe," Journal of Business Economics, Springer, vol. 86(8), pages 867-904, November.
    5. Alexandre Clément & Élisabeth Robinot & Léo Trespeuch, 2022. "Improving ESG Scores with Sustainability Concepts," Sustainability, MDPI, vol. 14(20), pages 1-15, October.
    6. Tim Verheyden & Robert G. Eccles & Andreas Feiner, 2016. "ESG for All? The Impact of ESG Screening on Return, Risk, and Diversification," Journal of Applied Corporate Finance, Morgan Stanley, vol. 28(2), pages 47-55, June.
    7. Cerqueti, Roy & Ciciretti, Rocco & Dalò, Ambrogio & Nicolosi, Marco, 2021. "ESG investing: A chance to reduce systemic risk," Journal of Financial Stability, Elsevier, vol. 54(C).
    8. Bouoiyour, Jamal & Selmi, Refk & Hammoudeh, Shawkat & Wohar, Mark E., 2019. "What are the categories of geopolitical risks that could drive oil prices higher? Acts or threats?," Energy Economics, Elsevier, vol. 84(C).
    9. Bradford Cornell & Alan C. Shapiro, 2021. "Corporate stakeholders, corporate valuation and ESG," European Financial Management, European Financial Management Association, vol. 27(2), pages 196-207, March.
    10. Chairani Chairani & Sylvia Veronica Siregar, 2021. "The effect of enterprise risk management on financial performance and firm value: the role of environmental, social and governance performance," Meditari Accountancy Research, Emerald Group Publishing Limited, vol. 29(3), pages 647-670, June.
    11. Salma Mefteh-Wali & Hassen Rais & Guillaume Schier, 2024. "Is CSR linked to idiosyncratic risk? Evidence from the copula approach," Annals of Operations Research, Springer, vol. 334(1), pages 799-814, March.
    12. Jun Li & Di (Andrew) Wu, 2020. "Do Corporate Social Responsibility Engagements Lead to Real Environmental, Social, and Governance Impact?," Management Science, INFORMS, vol. 66(6), pages 2564-2588, June.
    13. Afesorgbor, Sylvanus Kwaku, 2019. "The impact of economic sanctions on international trade: How do threatened sanctions compare with imposed sanctions?," European Journal of Political Economy, Elsevier, vol. 56(C), pages 11-26.
    14. Goretti Cabaleiro-Cerviño & Pedro Mendi, 2024. "ESG-driven innovation strategy and firm performance," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(1), pages 137-185, March.
    15. Sohag, Kazi & Hammoudeh, Shawkat & Elsayed, Ahmed H. & Mariev, Oleg & Safonova, Yulia, 2022. "Do geopolitical events transmit opportunity or threat to green markets? Decomposed measures of geopolitical risks," Energy Economics, Elsevier, vol. 111(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hille, Erik & Angerpointner, Cian, 2025. "Did geopolitical risks in supplier countries of fossil fuels lead to reduced domestic energy consumption? Evidence from Europe," Energy Policy, Elsevier, vol. 198(C).
    2. Chen, Zhuoyi & Liu, Yuanyuan & Zhang, Hongwei, 2024. "Can geopolitical risks impact the long-run correlation between crude oil and clean energy markets? Evidence from a regime-switching analysis," Renewable Energy, Elsevier, vol. 229(C).
    3. Pham, Linh & Hsu, Kuang-Chung, 2025. "Metals of the future in a world in crisis: Geopolitical disruptions and the cleantech metal industry," Energy Economics, Elsevier, vol. 141(C).
    4. Elsayed, Ahmed H. & Hoque, Mohammad Enamul & Billah, Mabruk, 2025. "Multilayer connectedness across geopolitical risks, clean, and dirty energy markets: The role of global uncertainty factors and climate surprise," Energy Economics, Elsevier, vol. 144(C).
    5. Faroque Ahmed & Kazi Sohag, 2025. "Spillover effects of separated oil price shocks on regional financial stress amidst Russia–Ukraine and global geopolitical tensions: a novel GVAR approach," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 15(3), pages 593-639, September.
    6. Liu, Jiahao & Zhu, Bo & Hu, Xin, 2024. "Systemic risk spillovers among global energy firms: Does geopolitical risk matter?," Energy Economics, Elsevier, vol. 140(C).
    7. Niu, Zibo & Wang, Chenlu & Zhang, Hongwei, 2023. "Forecasting stock market volatility with various geopolitical risks categories: New evidence from machine learning models," International Review of Financial Analysis, Elsevier, vol. 89(C).
    8. Tao, Miaomiao & Roubaud, David & Tiwari, Aviral Kumar & Silva, Emilson, 2025. "How do systematic risk spillovers reshape investment outcomes?," Finance Research Letters, Elsevier, vol. 75(C).
    9. Ahmed, Faroque & Gurdgiev, Constantin & Sohag, Kazi & Islam, Md. Monirul & Zeqiraj, Veton, 2024. "Global, local, or glocal? Unravelling the interplay of geopolitical risks and financial stress," Journal of Multinational Financial Management, Elsevier, vol. 75(C).
    10. Wu, Jie & Zhao, Ruizeng & Sun, Jiasen & Zhou, Xuewei, 2023. "Impact of geopolitical risks on oil price fluctuations: Based on GARCH-MIDAS model," Resources Policy, Elsevier, vol. 85(PB).
    11. Saadaoui, Jamel & Smyth, Russell & Vespignani, Joaquin, 2025. "Ensuring the security of the clean energy transition: Examining the impact of geopolitical risk on the price of critical minerals," Energy Economics, Elsevier, vol. 142(C).
    12. Faheem Aslam & Paulo Ferreira & Haider Ali & Ana Ercília José, 2022. "Application of Multifractal Analysis in Estimating the Reaction of Energy Markets to Geopolitical Acts and Threats," Sustainability, MDPI, vol. 14(10), pages 1-23, May.
    13. Lee, Chi-Chuan & Lee, Chien-Chiang, 2024. "Not all are alike: Assessing the effect of geopolitical risk on regional renewable energy development in China," Renewable Energy, Elsevier, vol. 222(C).
    14. Mustafa Almabrouk Abdalla Alfughi & Asil Azimli, 2025. "The Impact of Geopolitical Risk on the Connectedness Dynamics Among Sovereign Bonds," Mathematics, MDPI, vol. 13(15), pages 1-36, July.
    15. Sohag, Kazi & Karass, Vsevolod & Alam, Khorshed, 2025. "European industrial production in the face of energy dynamics and geopolitical shocks," Energy, Elsevier, vol. 316(C).
    16. Tamilselvan, M. & Halder, Abhishek & Kannadhasan, M., 2024. "Exploring the ingredients, mixtures, and inclinations of geopolitical risk," International Review of Economics & Finance, Elsevier, vol. 90(C), pages 187-206.
    17. Fiorillo, Paolo & Meles, Antonio & Salerno, Dario & Verdoliva, Vincenzo, 2024. "Geopolitical turmoil and investor green preference: Evidence from the corporate bond market," Journal of International Money and Finance, Elsevier, vol. 149(C).
    18. Sakhr Bani-Khaled & Graça Azevedo & Jonas Oliveira, 2025. "Environmental, social, and governance (ESG) factors and firm value: A systematic literature review of theories and empirical evidence," AMS Review, Springer;Academy of Marketing Science, vol. 15(1), pages 228-260, June.
    19. Cao, Jie & Zhu, Yingxin & Yin, Zhujia & Li, Jing & Chang, Chun-Ping, 2025. "Resilience of energy market under geopolitical risks: What’s the policy implications?," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 1706-1724.
    20. Xia, Mingli & Zhu, Guangfeng, 2024. "The importance of intellectual property: Analyzing the impact of resource efficiency improvements in the mineral sector," Resources Policy, Elsevier, vol. 91(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bjw:econen:v:15:y:2025:i:5:p:150-168. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vu Tuan Truong (email available below). General contact details of provider: https://journalofscience.ou.edu.vn/index.php/econ-en .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.