ESG becomes mainstream, opening significant opportunities for sustainable businesses

ESG (Environment, Social, and Governance) practices have gained prominence in Vietnam due to the government’s commitment to carbon neutrality by 2050 and growing investor demand for sustainable development. Enterprises are recognizing the need to integrate ESG practices to gain a competitive edge, access new markets, and attract investments in the global trend of responsible business.

Vietnam has actively improved its regulatory framework for ESG, aligning with strategies such as the national green growth plan, climate change strategy, and environmental protection initiatives. Despite awareness and commitments, there are gaps between ambition and action among Vietnamese businesses, as revealed by studies and reports.

The United Overseas Bank’s Business Outlook Study indicates that 94% of surveyed companies in Vietnam are aware of sustainability’s importance, with over half citing improved business reputation and a competitive edge. However, barriers to sustainability implementation include cost concerns, impact on profits, and limited financing options.

While there is progress, many Vietnamese enterprises are at the early stages of their ESG journey. Reports by PwC Vietnam and the Vietnam Institute of Directors highlight gaps in ESG programs, governing structures, board involvement, and ESG reporting among businesses. The lack of understanding of required data for reporting is also prevalent.

The economic stakes are high, with warnings that Vietnam may lose significant revenue if enterprises do not embrace green development. Major export markets are implementing carbon finance tools, such as the EU’s Carbon Border Adjustment Mechanism, making it imperative for businesses to adopt ESG practices.

Experts emphasize that ESG should be viewed as an opportunity rather than a challenge. ESG reporting can enhance competitiveness, attract investment, and create new business opportunities. Every enterprise’s adoption of good ESG practices contributes to building a market attractive to investors and global partners.

The long-term benefits of ESG practices, including sustainable development and increased competitiveness in the global value chain, make it crucial for Vietnamese enterprises. Preparation for ESG reporting is recommended, as global trends indicate increasing regulation in this area.

Energy transition, a key aspect of ESG, is highlighted as a priority for reducing greenhouse gas emissions and achieving net-zero targets by 2050. While there are barriers to investment in energy transition, it is seen as a competitive advantage and a driver of long-term value and sustainable branding for enterprises.

In conclusion, the ESG journey is vital for Vietnamese enterprises to ensure compliance with global standards, access capital, and secure business opportunities. It requires coordination between the government and all economic sectors, with private enterprises playing a key role. Starting with small steps and focusing on key ESG issues relevant to each industry is recommended for businesses, especially family enterprises.

Source: vietnamnews


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