While many businesses in Vietnam now consider environmental, social, and governance goals as crucial in the journey to sustainable development, lack of knowledge and resources will remain a barrier for some time.
CME Solar currently consults and installs rooftop solar power systems for factories and other business establishments that wish to save energy, costs, and protect the environment. Vice president Bui Trung Kien said that environmental, social, and governance (ESG) practices have become increasingly popular in Vietnam, primarily due to the government’s promotion of them, and to investors’ growing demand for sustainable investment. “Including ESG criteria will help a company control risks that may arise related to environmental factors, contribute to environmental protection, optimise operating costs, and support to attract capital or loans from financial institutions,” Kien said.
CME Solar is not the first enterprise in Vietnam to face difficulties when starting to apply ESG. Many other enterprises such as Nestlé Vietnam, AEON Vietnam, IPEI, TUI Blue, and more have also shared that lack of knowledge about ESG and related financial resources have been their biggest barriers when implementing ESG measures.
According to the Vietnam ESG Readiness report published by PwC at the end of October, 80 per cent of Vietnamese enterprises have committed or are planning to practice ESG in the next two or four years.
|At the VIR event last week, participants discussed the importance of ESG for enterprises in the near future, photo Dung Minh |
However, the report also shows that the majority of businesses in Vietnam are just starting their ESG journey and there is a big gap between expectations and actions. While 57 per cent of foreign-invested firms have established clear commitments on ESG, 58 per cent of listed companies in Vietnam are taking a “wait and see” approach.
In Vietnam, committing to and implementing ESG goals is not simply a brand risk management solution for businesses, but also an opportunity to create value for society and optimise business models.
Although the country has committed to net-zero carbon emissions by 2050, few enterprises currently issue sustainability reports in Vietnam.
“With Vietnam’s recent commitments and actions on ESG issues, we believe that it will become one of the mandatory conditions in the near future,” said the report.
At the seminar “ESG – A key to Sustainable Development” on November 29 held by VIR, experts on sustainability and green growth said that ESG is an inevitable approach of all businesses as Vietnam is promoting green growth for the next few decades.
To facilitate and support enterprises to apply ESG in operation, the Ministry of Planning and Investment developed Decision No.167/QD-TTg, which approves the programme on support for private enterprises in sustainable business until 2025, and has coordinated with relevant ministries and branches to support enterprises to implement it.
This helps to orient and widely spread the values of ESG to the business community in Vietnam, especially as it is still widely considered a game of large enterprises. More than 97 per cent of enterprises in Vietnam today are small- and medium-sized enterprises and lack the necessary financial resources and knowledge to apply ESG standards to their operations.
Despite many difficulties in terms of resources, many businesses in Vietnam have studied and learned from experience to find the right direction with regard to ESG. With 28 years left to reach the government’s net-zero goals, many businesses in Vietnam are eager to begin developing their strategies immediately.
| ||Listed companies lean into ESG conventions |
The mounting acceleration of sustainability and ESG-related criteria have been among the major concerns among financial markets, and Vietnamese organisations are allocating more resources towards improving their resilience.
| ||Hospitality industry joins ESG |
Environmental, social, and governance criteria are still a new concept for most tourism and hotel businesses in Vietnam, but the success stories of a number of pioneering brands have contributed to inspiring businesses to embrace them more, with several companies picking up awards at a seminar organised by Vietnam Investment Review last week.
| ||Determination on show by businesses to be ESG ready |
Many businesses in Vietnam are advised to use environmental, social, and governance criteria as soon as possible as an effective tool for their sustainable development and improve their competitiveness. However, numerous challenges are facing them ahead.
| ||AEON Vietnam promoting sustainable consumption |
Building a sustainable distribution system and promoting sustainable consumption have become the key goals of Japanese retailer AEON Vietnam as a bridge between manufacturers and consumers.
| ||The proactive pursuit of sustainability |
The Vietnamese business community is pursuing sustainable development. Patrick Haverman, deputy resident representative of the United Nations Development Programme in Vietnam, talked to VIR’s Thanh Tung about how this will help it improve competitiveness and expand performance.