Global Sustainable Business Trends and Business Adaptation

10:18:13 AM | 9/6/2023

Mr. Nguyen Quang Vinh, Executive Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), and Chair of the Vietnam Business Council for Sustainable Development (VBCSD), shares his complete views on sustainable development trends and adaptability of Vietnamese businesses as well as the importance of policy tools with Vietnam Business Forum.

Could you tell us about current global sustainable business trends and the adaptability of Vietnamese businesses?

The global business community is increasingly moving toward Net Zero goals to achieve sustainable business practices. One of the key changes in this direction is the redefinition of business success. While revenue, profit, shareholder interest, and financial metrics were once the sole measures of business success, now adaptability, resilience, and response to unprecedented challenges are equally important. Balancing the three pillars of economy, society, and environment is essential for businesses to succeed in today’s era.

This new thinking and redefinition of business success has inspired businesses to transform themselves. Some typical business trends that reflect this transformation include shifting from a linear economy to a circular economy, mainstreaming nature and biodiversity into climate goals, strengthening human capital by building a diverse, equal, and inclusive culture, instilling sustainable management thinking according to the Environmental, Social, and Corporate Governance (ESG) framework from the top, and transparent disclosure of business information by preparing and releasing sustainability reporting and ESG reporting.

At the Vietnam Corporate Sustainability Forum (VCSF) 2023, we introduced these trends to a large number of businesses that attended the forum. Our aim was to raise their awareness and bring Vietnamese businesses closer to contemporary business trends in the world. However, with small and medium-sized enterprises (SMEs) accounting for more than 96% of total enterprises in Vietnam, it is clear that transformation in our business community will be challenging.

Despite the challenges posed by law changes, consumer demands, investor expectations, and export markets, I am optimistic that Vietnamese businesses will adapt to the current context. Moreover, several giant corporations such as PNJ, SASCO, Bao Viet, Traphaco, Vinamilk, PAN Group, TBS, and TNG are leading the way in sustainable development. These corporations are committed to spreading the spirit of sustainable development to SMEs in their value chains and providing support and motivation for transitioning to sustainable business practices.

What are the challenges and opportunities for Vietnamese businesses?

The VCSF 2023 has once again highlighted the challenges and opportunities associated with sustainable development goals in general and Net Zero goals by 2050 in particular. The discussions focused on fostering business initiatives toward a low-carbon economy, building green supply chains, promoting Environmental, Social, and Governance (ESG) practices, and energy transition.

Vietnamese companies face several key challenges, including a lack of knowledge to meet high standards on the environment, social responsibility, corporate governance, and limited resources. They are unlikely to afford new production technologies to replace old ones in use immediately while being weak at corporate governance. Furthermore, the legal framework is inconsistent and does not keep up with current requirements or effectively support businesses in actual implementation.

However, companies that capture sustainable business trends of the world and know how to seize opportunities to transform can turn challenges into opportunities. For instance, green growth investment is shifting to developing countries, including Vietnam. To catch this trend, businesses need to actively grasp opportunities such as the nine low-carbon projects in Vietnam selected to participate in the UK Government-funded £11.8 million Climate Finance Accelerator (CFA). Besides the government’s efforts to create a favorable legal corridor, businesses must also take proactive steps to transform themselves.

The selected areas in the initial stage of sustainable development in Vietnam include renewable energy, resource and energy efficiency, e-mobility, AFOLU (agriculture, forestry, and other land uses), decarbonizing construction, circular economy, and waste management. These areas have the potential to benefit communities across Vietnam.

To seize opportunities from sustainable business practices, Vietnamese companies need to pay more attention to improving sustainable corporate governance. I recommend that they study and apply the Corporate Sustainability Index (CSI), a support tool for sustainable corporate governance tailored for Vietnamese businesses. The CSI has been painstakingly developed and introduced by VCCI since 2016.

Deputy Prime Minister Tran Hong Ha, VCCI President Pham Tan Cong and other delegates at the Vietnam Corporate Sustainability Forum (VCSF) 2023

In addition to the efforts of the business community, policy tools play an important role in fostering the development of the circular economy. What do VCCI and VBCSD recommend?

The market and consumers are exerting strong pressure on businesses and the government to take drastic and stronger actions. Shifting from the current traditional production model to the circular model is an urgent requirement.

The circular economy requires governments and businesses to have a comprehensive, systematic, highly connected, and innovative approach. Therefore, with the pioneering role of VBCSD-VCCI, I believe that policy issues need to be prioritized for improvement to create an enabling legal environment for transformation. The following specific issues should be addressed:

First, the government should launch a national action plan on the circular economy soon. It should assign clear responsibility and accountability to central and local agencies to develop standards, regulations, connection databases, regional plans, and industrial parks. This is possibly one of the most important policy frameworks to foster circular business models adopted by enterprises.

Second, a tax policy for circular products that is competitive and acceptable to consumers should be developed.

Third, standards for classifying green projects and green products should be completed quickly to connect the financial sector with the business sector. This will enable the latter to access preferential funds for investment transformation and technology application.

In general, we need a transformation roadmap for each flow of material, resources, and fuel to conserve and use natural resources and ecosystems effectively.

These recommendations were put forth at VCSF 2023. VCCI and VBCSD will synthesize these recommendations and report them to the government to unlock the legal “flow”. This will facilitate and motivate the business community to pursue a sustainable business strategy in the future.

Thank you very much!

Source: Vietnam Business Forum