Do businesses have to suffer losses from ESG practices?

May 31, 2024 | 11:27

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Environmental, social, and governance (ESG) transformation requires large investments, and it is not easy to reap the benefits quickly. That's why ESG criteria were once thought to hinder the revenue growth of businesses in the globalisation process.

In early 2024, Phuc Sinh Corporation, a pepper and coffee exporter, said it became interested in ESG in 2013. After more than 10 years of building an ESG-oriented working process, Phuc Sinh has begun to reap the "sweet fruit" of capital from an investment fund in Europe with a valuation of $320 million.

Do businesses have to suffer losses from ESG practices?

Phan Minh Thong, chairman of Phuc Sinh Corporation

Although he did not disclose detailed information about this investment, Phan Minh Thong, chairman of Phuc Sinh Corporation, noted, "Investment funds only consider funding ESG-compliant businesses. We should not wait until we need to raise capital to practice ESG because this is a long process."

On April 12, United Overseas Bank Vietnam (UOB Vietnam) also signed a green trade finance agreement with Ben Tre Import-Export JSC (Betrimex).

Representatives of UOB Vietnam and Betrimex at the signing ceremony

This credit will help Betrimex import or purchase raw materials and domestic goods to produce goods with organic certifications, including Fairtrade certification. As of the fourth quarter of 2023, UOB Vietnam has granted credit for 17 renewable energy and clean energy projects, along with seven green industry projects.

Jason Yang, chief sustainability officer and country head of transformation at UOB Vietnam, said that UOB has supported Vietnam's priority industries such as IT, manufacturing, healthcare, and agriculture.

“Aiming to become the leading sustainable bank in Southeast Asia and committed to achieving net-zero emissions by 2050, UOB doesn't stop at just reducing greenhouse gas (GHG) emissions, it also helps to ensure that the lives and livelihoods of individuals and communities continue to improve,” he said.

In addition to the story of investment capital and green credit, companies with a sustainable development orientation from the beginning are also seeing improved revenue.

In the energy industry, Indochina Import Export Investment Industrial JSC (DDG) is one of the businesses reporting revenue growth in the first quarter of this year.

In 2024, DDG plans to inaugurate waste treatment plants in Long An, a waste power plant in Binh Duong, followed by silica production plants extracted from rice husk ash in Tien Giang and Can Tho.

With the advantage of available technology and human resources, DDG aims to develop in-depth green technology and effective waste treatment technology to generate electricity, and strive to accompany businesses to create a green environment by 2030.

The above cases show that businesses that grasp market dynamics, and perceive and practice ESG early can achieve long-term benefits. Not only thanks to the right strategy and business acumen, the success of the above companies is also supported by the timing factor, specifically the initiation of market mechanisms such as carbon credits has been widely applied in recent years.

Associate Professor. Dr. Nguyen Dinh Tho, director of the Institute of Policy Strategy, Natural Resources and Environment, Ministry of Natural Resources and Environment, commented, "The Vietnamese government has appropriate policies and mechanisms to encourage and promote domestic businesses to reduce emissions, thereby being able to sell carbon credits to earn profits during the green transition process."