Factors to take into account for ESG implementation

These conferences bring opportunities for businesses to align their strategies with international standards and benefit from a coherent regulatory environment.

Alexander Falter, board member, British Chamber of Commerce Vietnam

Environment, social, and governance (ESG) principles are inherently tied to COP summit objectives. ESG focuses on sustainable and ethical practices, aligning with climate action, reducing carbon footprints, and fostering environmental stewardship – all key subjects at these meetings. The integration of ESG strategies within businesses can support broader COP goals by driving corporate commitments to sustainability.

Vietnam is positioned to play a significant role in green initiatives due to its rapid economic growth, increasing energy demand, and susceptibility to climate change impacts. The country is making legislative progress towards sustainability, which enhances its global standing and provides opportunities for ESG frameworks to take root.

Our members exhibit a growing interest in such strategies. Many businesses in Vietnam are recognising the long-term benefits of adopting ESG principles, such as enhanced brand reputation, operational efficiencies, and improved stakeholder trust. They see it as not only a regulatory requirement but also a path to innovation and competitive advantage.

Businesses view ESG implementation as a strategic priority. They acknowledge the risks associated with climate change and environmental degradation and see it as a way to mitigate these risks. Additionally, embracing ESG can provide access to new markets, attract and retain talent, and ensure compliance with international standards.

The push for green development is driven by the urgent need to address climate change and social inequalities, along with the recognition that sustainable practices enhance economic resilience.

Countries engaging in ESG development can reap rewards such as improved natural resource management and reduced environmental degradation; enhanced public welfare and social equity; diversified economies and reduction in resource dependency; and an enhanced image on the global stage.

In addition to attracting foreign investment, ESG can foster innovation, drive efficiencies, and lead to sustainable economic growth, which are crucial in today’s economy.

There are five key factors for a country to succeed in ESG implementation: government support through favourable policies and a transparent legal framework; a strong commitment fromtop management to invest in green initiatives; raising public awareness; adopting advanced technologies to drive innovation and enhance sustainable operational efficiency; and collaborating with the international community to develop common standards.

A green economy is a long-term strategy to help the United Kingdom maintain its global competitive edge, while protecting the environment sustainably. The transformation of the global economy is happening faster than ever before, with the UK – once considered the birthplace of the industrial revolution – now leading the way in the green revolution.

The green economy is a new economic model that focuses on sustainable development, minimising negative impacts on the environment. In this economy, natural resources are used intelligently, enabling the development without sacrificing the future.

The UK is strongly committed to reducing greenhouse gas emissions, with a target of being carbon-neutral by 2050. The figure of 302.8 million tonnes of CO2 emitted in 2023, a reduction of 6.6 per cent compared to 2022, is a testament to the country’s continued efforts. These results come not only from the policies of the UK government but also from a change in the society’s awareness.

The shift from fossil fuels to renewables has produced impressive results. By 2022, renewable energy accounted for 13.9 per cent of the UK’s total energy use. This is not just a technological achievement, but also a triumph of thinking. Green businesses have demonstrated that economic and environmental benefits can coexist and support each other.

With a solid foundation, the UK has been quick to seize the opportunity in green exports. In 2022, the export value of green products and services continued to grow strongly, helping the country affirm its global position.

From the UK’s success, there are six lessons Vietnam can learn from to develop a green economy. The first is setting clear and long-term goals. Just as the UK has set ambitious targets for emissions reduction, Vietnam needs a specific strategy and roadmap with targets for each five-year plan. The commitment to net-zero emissions by 2050 needs to be materialised in strong and specific policies.

Second is encouraging investment in green projects. The UK’s green investment incentive mechanism has created an investment wave of billions of pounds in renewable energy and green technology. Vietnam needs to develop tax incentives, subsidies and investment incentives to entice capital for green projects.

The third factor is developing green industries. Vietnam has to take advantage of the potential in areas like organic agriculture, recycling and renewable energy to develop green industries.

Fourth is promoting green exports. The opportunities in green exports are endless. Vietnam can become a supplier of green products and services to the international market by developing sustainable products and building an environmentally friendly supply chain.

The fifth aspect is promoting international cooperation in developing green technology, which is the key for Vietnam to quickly catch up with advanced countries. International cooperation will help Vietnam accelerate the energy transition and develop a sustainable economy.

The final lesson to look at is focusing on education and human resource development. There is a need for a plan to train high-quality personnel in green industries such as renewable energy and recycling, to meet the growing needs of the sustainable labour market.