Enabling Vietnamese Businesses to Adopt ESG Strategies

2:34:09 PM | 10/11/2023

Environmental, social and governance (ESG) factors have become increasingly important for businesses around the world, as they reflect their commitment to sustainability and responsible practices. However, many private businesses in Vietnam are still lagging behind in their ESG awareness and readiness, according to a recent report by PwC Vietnam. To address this gap, PwC Vietnam, in collaboration with Vietnam Young Entrepreneurs Association (VYEA) and Phuc Khang Corporation, organized a seminar on “Vietnamese businesses and ESG revolution” on September 29, 2023, in Ho Chi Minh City.

Speakers at the seminar “Vietnamese Businesses and ESG Revolution”

As the global paradigm shifts toward sustainability and responsible business practices, many countries, including Vietnam, have started the move to embrace ESG goals. This transition necessitates enterprises having the right perspective and taking proactive actions on their ESG journey.

However, PwC’s ESG Readiness Report on private businesses in Vietnam indicates an urgent need to enhance awareness of this matter, as 60% cite a lack of knowledge. Additionally, they are facing a significant gap when it comes to ESG governance and reporting, in comparison with the general state in Vietnam. 60% have an informal governance structure or no structure on ESG matters and only 29% establish well-defined ESG targets and metrics, while the country’s figures are 51% and 47%, respectively.

Leveraging inbuilt strengths to embark on the ESG journey

PwC’s report also highlights the imperative for ESG leadership within private businesses. Among those surveyed, 34% reveal that their Board is currently not engaged in ESG matters and 48% mention the absence of a clearly defined ESG leader within their organization. These figures surpass the national averages of 32% and 38%, respectively. On a positive note, PwC’s NextGen report shows a potential shift towards a greater ESG focus in the future, as the next generation takes on leadership roles. 68% of Vietnamese NextGens believe that they have a responsibility to combat climate change and 45% see an opportunity for private businesses to lead the way in sustainable practices. Additionally, 77% expect to be involved in increasing their business’s focus on investments for sustainability in the future, which strongly reflects their ESG ambitions.

“NextGens are considered one of the core catalysts that propel the growth of private businesses and they indeed play a key role in building the ESG narrative. With their innovative spirit and passion for sustainability, NextGens should be encouraged to take a leap forward and forge their own paths through upskilling and driving ESG initiatives. Moreover, compared to public listed companies, private businesses have more flexibility in their operational structure, which will help accelerate the decision-making process and the progress of integrating ESG principles,” said Johnathan Ooi, Entrepreneurial & Private Business Service Leader, PwC Vietnam.

Energy transition to be high on the agenda

Energy transition is of paramount importance in implementing ESG and is seen as making the largest contribution to reducing emissions towards the goal of NetZero by 2050. In this context, the seminar also discussed the barriers presented to businesses when investing in energy transition, one of which is the substantial upfront cost for renewable energy infrastructure and energy-efficient technologies. Smaller businesses may struggle to secure the necessary capital.

Energy transition can provide a competitive edge in the market and foster long-term value creation for businesses. This includes enhancing brand image and attracting investors who are increasingly interested in sustainable investments. Adopting green energy can also help businesses comply with relevant international and national regulations and avoid the costs of carbon emissions in the near future. Experts at the seminar suggested a step-by-step business transformation roadmap for private enterprises to consider. The evaluation involves assessing carbon management options and enablers to reduce emissions throughout the business value chain.

Ms. Luu Thi Thanh Mau, Vice President of VYEA, CEO of Phuc Khang Corporation, stated: “A strategic direction for successful ESG implementation will be one of the core foundations for sustainable development - which will bring greater value not only to businesses, entrepreneurs and the economy, but also to our community and stakeholders. Phuc Khang Corporation has always been committed to aligning its business with the 17 sustainable development goals of the United Nations. Building on a strong foundation of vibrant CSR strategies for the community that have been developed over time, Phuc Khang Corporation continues to enhance ESG strategies on environmental, social and governance aspects, with a clear goal: Creating green buildings, a green community and a green future.”

Source: Vietnam Business Forum