Game-changing ESG initiatives expected

Lon Taranaki, country director, Vietnam Blackstone Minerals

Blackstone Minerals is an Australian company, listed on the Australian stock exchange. In Vietnam, we are progressing our vision as a future focused business that produces battery precursor products for the growing lithium-ion battery industry. This will be complemented by a large concentrator, refinery, and precursor facility, called Ta Khoa, to support integrated production in-country.

A globally relevant, strategically located nickel sulphide mineral resource, the Ta Khoa project involves mining nickel sulphide deposits and processing the mined ore to produce a concentrate suitable for the downstream part of the project, the refinery.

This vertically integrated mining and refining business model is being developed with environmental, social, and governance (ESG) performance integrated into our overarching Green Nickel strategy.

Our strategy sits at the heart of the business and sets our course. From ambition, to goal, to strategy, Green Nickel drives our focus at each stage of development to deliver a project and a product with the highest possible ESG credentials.

These include technical studies validating our low-carbon credentials, an enhanced ESG governance structure, progress on environmental and social baselines, and a commitment to sustainability.

Through partnering with stakeholders that are aligned with our vision to produce green products for the EV market, we seek to lead the industry in producing low carbon products for our downstream partners.

Jordan Lee, manager, Government Advisory Tony Blair Institute for Global Change

We often hear companies state that their boards and customers are demanding that they adopt more sustainable practices, indicating that taking a more environmentally friendly approach to business does create a significant competitive advantage for a company.

While companies may incur addition costs to adopt these more sustainable practices, some of these initiatives (for example energy efficiency upgrades) can incur minimal cost or even save money over the long term. In addition, governments can reduce the additional financial burden that companies face to become more sustainable by introducing incentives and other mechanisms to encourage green business operations.

Green finance is a very broad area, so the tools needed to access specific green finance sources differ significantly across the field. However, there are two steps that companies can take to improve their ability to access nearly all types of green finance sources.

Firstly, companies can invest in improving their capabilities to measure and report sustainability information, such as energy use, greenhouse gas emissions, and waste management processes.

Many green finance initiatives require companies to show improvements in various sustainability metrics, so it is important that companies be able to access this data.

Secondly, it is also important that businesses communicate clearly to the government about what types of green finance tools are most important to them.

For example, fiscal incentives for energy efficiency improvements are one of the most common types of green finance initiatives used globally, and consistent messaging from companies expressing interest in this kind of programme could encourage Vietnam to explore it.

We engage regularly with various ministries in Vietnam, and we plan to share with the Ministry of Planning and Investment our findings regarding the development of an International Financial Centre (IFC) in Vietnam, which is likely to address several green finance and ESG topics.

After engaging with the ministry, we are keen to explore how it can engage with the business community on how its stakeholders can effectively contribute to and eventually access the green finance capabilities that are planned to be part of Vietnam’s IFC.

Kaushik Sriram, managing director of Performance Improvement, A&M

From our extensive experience with clients, we have observed that adopting ESG practices and circular economy models is an investment with strong positive returns.

Examples exist across sectors including localisation of steel production (instead of import) through electric arc furnaces, and scrap metal input creates good quality input at competitive prices, while reducing carbon emissions in production and logistics. Another is the adoption of solar rooftop models by smaller enterprises replacing diesel generators, which has been shown to have long term positive impact on costs.

We work with our clients on building ESG and EPR into core business activities to improve their opportunities to gain access to green financing. Key areas of focus in Vietnam include 4-walls energy efficiency and waste reduction, clear governance and reporting across the value chain, and management key performance indicators (leaders to plant managers) incorporating ESG-related metrics.

Three opportunities for Vietnamese businesses to enhance their ability to access green finance are operational quick-win changes around energy and water efficiency, waste segregation and hazardous material treatment, internal waste reduction through yield improvement.

Second is regular audits around carbon, energy, and resources. Third is reporting alignment to global ESG standards and transparent disclosures. It is important though to have a balanced return-on-investment-based approach to this, to avoid low value-adding initiatives, and high investments which might not make economic sense.

However, the ecosystem for recycling and waste treatment is not well-developed in Vietnam. This will put short-term pressure on organisations as they rush to invest in capabilities and facilities to enable proper recycling waste disposal, and potentially increase costs as well as require capital investments.

The recommendations to contribute to the drafting of the guidelines aimed at reducing pressure and difficulties for businesses in complying with the new regulations starting from 2025 are potentially an interim transition penalty-free period to help gradually build required capabilities and identify right outsourcing partners for such activities.

Guido van Rooy, executive director Dutch Business Association Vietnam

Our members experience that implementing ESG and extended producer responsibility practices present challenges, particularly for small- and medium-sized enterprises. However, we perceive these practices as investments rather than costs.

By embedding sustainability into the core business model, Dutch businesses create long-term value and resilience. Moreover, countrywide ESG compliance would enhance Vietnam’s reputation, making Vietnam more attractive in the international markets.

Sustainability is no longer a choice. Vietnamese companies should start by integrating ESG principles into their core strategies, demonstrating a clear commitment to sustainability.

This involves rigorous sustainability reporting and adopting international standards, which makes them more attractive to green investors. By showcasing their ESG impact, Vietnamese businesses will become more competitive and secure their stable place in the international supply chains.

Green financing is crucial for sustainable growth. The recently founded Dutch investor, Invest International, is instrumental for many Dutch businesses, offering funds focused on Dutch solutions for global challenges. Their investments have been very effective, providing capital that stimulates innovation and sustainable practices.

Douglas Jackson, former co-founder Boston Consulting Group Vietnam

Digitalisation is important, and for many institutions it has become an additional distribution channel with growing distribution costs.

However, there is a downside as digitalisation grants the clients the ability to interact directly with their accounts. They can easily switch accounts thanks to e-verification and, as a result, customers are free to choose banks that benefit them most, leaving the previous accounts empty.

Development of digital capabilities is critical, but I would say that most companies are not great at it. Some are outstanding, but the vast majority are following a trend and are not sure how to materialise value out of the investment they are making in digital.

The government is increasingly gaining speed on adopting digital policies, or policies favourable to digital development, but it is still a little behind some of the other markets in jurisdiction. Singapore and Thailand have been very advanced and aggressive in developing policies in accordance with digitalisation.

Companies that are at the first stage of digitalisation must identify client groups clearly, and be clear on the value proposition they are trying to convey.

Rajeev Garg, general director Net Vision Vietnam

Digitalisation increases efficiency in terms of customer experience. That’s why many corporates are sparing no effort to put digitalisation in use. Not only is digitalisation customer-friendly, it is also a handy tool for businesses when it comes to payment. Payment technology like payment gateway, which is appreciated worldwide, is reducing cost of operation for many companies.

Moreover, digitalisation is not only corporate-centric, there is also digitalisation in the government sector. The Vietnamese government is doing better in terms of coming up with more online services for the corporates and companies to use to make their operation more effective.

Take my home country, India, for example. India is world leading in implementing digitalisation because our government is putting lots of focus on digitalisation. Most services in the Indian government’s departments are using online platforms and, as a result, citizens and companies can get their services online easily.