Promoting ESG practices helps businesses develop green and sustainably

80% of businesses plan to practice sustainable development early

More and more businesses are showing interest in ESG criteria - a set of standards on environment, society and corporate governance - as an effective method to attract foreign investment, as well as convince consumers to use products and services.

However, integrating and combining these criteria into the business brand development process is still difficult.

Sharing at the seminar “ESG: Turning commitment into action” on November 9, Mr. Nguyen Quang Vinh, Vice President of the Vietnam Federation of Commerce and Industry (VCCI) said that since 2016, VCCI has introduced to businesses the Corporate Sustainability Index (CSI) and it is updated annually to suit changes in current domestic legal policies and international regulations. When looking at the CSI Index, businesses will be able to assess their overall “health” in terms of governance, economy, society, and environment, thereby discovering gaps that need to be overcome as well as development potentials that need to be exploited soon.

However, according to the report on the level of readiness to practice ESG in Vietnam in 2022 conducted by PwC Vietnam and the Vietnam Institute of Directors (VIOD) with 234 enterprises, 80% of enterprises have made commitments or are planning to practice ESG soon.

On the other hand, when asked to rank the three ESG factors, 62% of companies selected governance (G) as the top priority in their implementation program. Meanwhile, environmental (E) and social (S) factors ranked second at 22% and 16%, respectively. The focus on governance may be due to the belief that stronger governance will lead to better decision-making in the other two aspects.

esg dam.jpg — Promoting ESG practices helps businesses grow green and sustainably.

In addition, this report also points out some challenges and barriers in businesses practicing ESG in Vietnam. Specifically, 71% of businesses lack understanding of the data required for reporting, 70% of businesses do not have or have limited ESG reporting, and only 36% of businesses use external partners to verify published ESG information.

Therefore, Mr. Vinh emphasized, the term “system transformation” is gradually being used more and more widely as a key requirement to realize sustainable development goals.

“Transformation means a comprehensive change in thinking, including renewing, recreating and creating completely new ways of thinking and doing things based on new thinking platforms and new sources of value. Because doing business the way we used to know and do is no longer a suitable choice to achieve sustainable growth goals and bring businesses good resilience as well as effective competitiveness. The remaining time until 2030 is a decisive period,” said Mr. Vinh.

Despite the challenges, ESG is an opportunity to help businesses grow

Ms. Trinh Thi Huong, Deputy Director of the Department of Enterprise Development (Ministry of Planning and Investment) said that ESG is a concept that appears more frequently, many Vietnamese enterprises have also published ESG reports and have certain achievements in this work.

Accordingly, pioneering enterprises in ESG are all large-scale companies, FDI enterprises and export-oriented enterprises, interested in the requirements of the market related to sustainable development.

However, according to Ms. Huong, with 97.8% of Vietnamese enterprises being micro, small and medium-sized, ESG is still a fairly new concept.

In recent surveys, businesses said that the first challenge in practicing ESG is lack of information and knowledge. Most businesses wonder where to start, how to do it, whether it is expensive to practice or not...?

The Deputy Director of the Department of Enterprise Development emphasized that businesses need to see ESG not as a cost burden, but as an investment, and invest to reap benefits.

According to Ms. Huong, practicing ESG will help businesses not only comply with legal regulations but also meet market requirements, leading to higher competitiveness of businesses and thereby having easier access to green capital sources.

Mr. Pham Hoang Hai, Head of Partnership Department, Vietnam Business Council for Sustainable Development (VBCSD), said that ESG is a quantification tool to achieve sustainable development goals.

According to Mr. Hai, accessing information to have a full understanding and mastery of tools is a challenge not only for small and medium enterprises but also for large-scale enterprises.

To help businesses integrate ESG criteria into their production and business activities, VBCSD has provided specific guidelines on incorporating ESG into their development strategies. Accordingly, businesses can apply a set of indicators to quantify ESG criteria and apply them to business practice.

In addition, to support businesses, Ms. Huong said that in early 2021, the Prime Minister signed Decision 167 approving the program to support private enterprises to do sustainable business in the period 2022 - 2025. There are two groups of policies and solutions to support businesses.

Create an ecosystem to accompany businesses through building toolkits and consulting teams to accompany businesses.

Support solutions, especially for small and medium enterprises; state capital is the seed capital to mobilize social resources to accompany and share with enterprises. Along with that, there are training activities, consulting, market connections, technology connections... The government allocates resources from the implementation source to support small and medium enterprises to help them practice sustainable business models.

Nguyen Le

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