US and Vietnam launch initiative on private sector sustainable growth

November 21, 2022 | 21:27

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The United States Mission to Vietnam, through the US Agency for International Development (USAID), and Vietnam’s Ministry of Planning and Investment (MPI) has announced the launch of a new initiative to spur private sector-driven sustainable and inclusive growth.

The new initiative promotes the adoption of socially-conscious business behaviour -- Environmental, Social, and Governance (ESG) standards -- used by investors to measure how a company safeguards the environment, manages its relationships with people, and employs transparent and accountable corporate governance.

The announcement took place at a USAID-supported business forum attended by USAID assistant administrator for Asia Michael Schiffer, ambassador Marc Knapper, and MPI vice minister Tran Quoc Phuong on Monday.

US and Vietnam launch initiative on private sector sustainable growth

In April 2022, USAID and MPI signed an amendment to their bilateral partnership agreement to expand efforts to strengthen private sector competitiveness

“Small and growing businesses are a major job creator in Vietnam, yet they face obstacles to their sustained growth,” said USAID Assistant Administrator Schiffer.

“USAID is expanding its partnership with the Ministry of Planning and Investment to help these businesses overcome constraints and seize opportunities to improve their competitiveness, including through this new initiative we are launching today.”

This first-ever ESG initiative for Vietnam targets small and growing businesses (SGBs). SGBs account for roughly 97 per cent of Vietnam’s private sector, employ 85 per cent of the workforce and contribute roughly 40 per cent of GDP. As such, they play a critical role in Vietnam’s socioeconomic development and environmental sustainability.

Conversely, how businesses interact with society and the natural environment can impact their market reach and success. ESG recognises that business sustainability extends beyond environmental issues to people, resources, and systems.

Businesses that invest in more energy-efficient technology, are mindful of their impact on communities, and lead with consideration of stakeholder input tend to achieve consistent growth with a higher degree of resilience.

The new initiative focuses on improving the legal framework for promoting the adoption of ESG practices in the private sector, providing SGBs with access to capacity building for the adoption of ESG, and strengthening a network of ESG-minded SGBs to promote and exchange best practices.

By 2025, the initiative will deliver ESG technical assistance packages to 300 SGBs, of which 10 will receive additional assistance to pilot, implement or scale their innovative ESG business concepts. The effort is in alignment with Vietnam’s Green Growth Strategy 2021-2030, and the prime minister’s Decision 167 on supporting private enterprises in sustainable business.

The new initiative is part of USAID’s $36 million Improving Private Sector Competitiveness (IPSC) project. IPSC removes policy, market, and firm-level constraints inhibiting the growth of SGBs, including those owned by women and vulnerable populations, to foster an innovative and dynamic private sector that can compete globally and expand economic opportunities domestically.