ESG is vital for exporters

May 24, 2024 | 20:11

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Businesses, especially exporters, must embrace environmental, social, and governance (ESG) policies or face losing out on trade, according to Nguyen Dinh Tho, general director of the Institute of Strategy and Policy on Natural Resources and Environment (ISPONRE).

Nguyen Dinh Tho, general director, ISPONRE

Tho was speaking at an ESG conference held by VIR in collaboration with WBS Solution and System Co., Ltd. on May 23.

In January 2022, the government issued a list of sectors and emissions-producing facilities that must carry out a greenhouse-gas (GHG) inventory in accordance with Decision No.01/2022/QD-TTg. This list includes over 1,900 facilities across six sectors and will be updated every two years.

Meanwhile, the EU's Carbon Border Adjustment Mechanism will levy a carbon tax on imported goods, which will likely increase costs for Vietnamese exporters and reduce profitability. As a result, exporters will either have to absorb these costs or pass them on to consumers, potentially making their products less competitive.

"The United States, Japan, Australia, Hong Kong and New Zealand, among others, have specific emission mitigation schedules for their partners. Vietnamese businesses will be forced to change if they want to participate in trade and investment activities in these markets," said Tho.

Although ESG has become a compulsory requirement, state management agencies still find themselves having to encourage businesses to practice it.

"Businesses implementing ESG need support from the state management authorities, but they also need to have the right market tools," Tho added.

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By Kim Oanh

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