A Vinamilk organic farm in Da Lat city that uses solar panels to power its operation. (Photo: vnfinance.vn) Hanoi (VNS/VNA) - In the era of growing environmentaland social concerns, Environmental, Social, and Governance (ESG) standards haveemerged as a game-changer for firms seeking to improve their customerengagement and financial access.
Chairman of the Vietnam Textile and Apparel Association Vu DucGiang revealed that many firms in the industry had suffered asignificant drop in order volume by between 40-50 % because they werereluctant to embrace ESG.
He said ESG is the key to gaining competitiveadvantages as it enhances firms' internal governance andpromotes their public image. It also improves their access to funds asESG-oriented loans have become abundant in recent years.
IMF data shows that ESG loans tripled in value in 2021,accounting for 18% of the total loans available to emerging markets (notincluding China). Global ESG assets, in Bloomberg Intelligence'sestimation, could reach 50 trillion USD by 2025.
One of the noteworthy companies benefiting greatly from ESG was BAFVietnam Agriculture JSC, which was granted 900 billion VND (38million USD) of loans last year from the International FinancialCorporate to build sustainable farms.
Vinamilk, a leading company in terms of ESG maturity, estimatedthat seven years of ESG implementation, from 2014 to 2021, hadsaved the company 274 billion VND in costs.
This financial benefit was big, butESG's non-financial benefits were much bigger, including bettermanagement structure, higher brand value, higher employee satisfaction, easieraccess to referential loans, and improved resilience against shocks.
Notably, Vinamilk's brand value rose from 1.6 billion USD in 2019to 2.8 billion USD in 2022 on the back of its commitment to ESG. Its level ofemployee satisfaction stood at over 84% during the period.
The Siam Cement Group, a Thai corporation owning over 20affiliated companies in Vietnam, has expanded its production ofenvironmentally-friendly products to deal with the recent global weakeningdemand.
Thanks to its effort to embrace ESG, the company saw itsrevenue grow by 7% in 2022, with green products contributing to 51% of itssales.
According to a PwC report last year, about 80% of firms in Vietnamhave made ESG commitments or plan to do so soon. This move is primarilydriven by the demands of consumers, employees, and investors.
About 61% of the yet-to-embrace-ESG firms cited lack of knowledgeas the key barrier to ESG commitments, 48% cited financial capability, 46%cited company size, and 28% cited lack of transparency in ESG data.
As ESG is not free of charge, many firmswilling to embrace ESG are finding themselves stuck in avicious circle – they need funds to adopt ESG, yet without ESG in place,they remain in a weak position to access funds and gain sales.
Chairman of the European Chamber of Commerce in Vietnam GaborFluit remarked that ESG rules in Vietnam lack coherence, and theallocation of responsibilities among stakeholdersis poorly regulated.
This legal incompleteness could discourage foreign investments inthe green sector and incur additional costs related to environmental assessment.
He called for more legal documents to legislate for thecountry's carbon-neutral commitments in COP26 and more measures toraise the awareness of ESG among firms./.
Chairman of the Vietnam Textile and Apparel Association Vu DucGiang revealed that many firms in the industry had suffered asignificant drop in order volume by between 40-50 % because they werereluctant to embrace ESG.
He said ESG is the key to gaining competitiveadvantages as it enhances firms' internal governance andpromotes their public image. It also improves their access to funds asESG-oriented loans have become abundant in recent years.
IMF data shows that ESG loans tripled in value in 2021,accounting for 18% of the total loans available to emerging markets (notincluding China). Global ESG assets, in Bloomberg Intelligence'sestimation, could reach 50 trillion USD by 2025.
One of the noteworthy companies benefiting greatly from ESG was BAFVietnam Agriculture JSC, which was granted 900 billion VND (38million USD) of loans last year from the International FinancialCorporate to build sustainable farms.
Vinamilk, a leading company in terms of ESG maturity, estimatedthat seven years of ESG implementation, from 2014 to 2021, hadsaved the company 274 billion VND in costs.
This financial benefit was big, butESG's non-financial benefits were much bigger, including bettermanagement structure, higher brand value, higher employee satisfaction, easieraccess to referential loans, and improved resilience against shocks.
Notably, Vinamilk's brand value rose from 1.6 billion USD in 2019to 2.8 billion USD in 2022 on the back of its commitment to ESG. Its level ofemployee satisfaction stood at over 84% during the period.
The Siam Cement Group, a Thai corporation owning over 20affiliated companies in Vietnam, has expanded its production ofenvironmentally-friendly products to deal with the recent global weakeningdemand.
Thanks to its effort to embrace ESG, the company saw itsrevenue grow by 7% in 2022, with green products contributing to 51% of itssales.
According to a PwC report last year, about 80% of firms in Vietnamhave made ESG commitments or plan to do so soon. This move is primarilydriven by the demands of consumers, employees, and investors.
About 61% of the yet-to-embrace-ESG firms cited lack of knowledgeas the key barrier to ESG commitments, 48% cited financial capability, 46%cited company size, and 28% cited lack of transparency in ESG data.
As ESG is not free of charge, many firmswilling to embrace ESG are finding themselves stuck in avicious circle – they need funds to adopt ESG, yet without ESG in place,they remain in a weak position to access funds and gain sales.
Chairman of the European Chamber of Commerce in Vietnam GaborFluit remarked that ESG rules in Vietnam lack coherence, and theallocation of responsibilities among stakeholdersis poorly regulated.
This legal incompleteness could discourage foreign investments inthe green sector and incur additional costs related to environmental assessment.
He called for more legal documents to legislate for thecountry's carbon-neutral commitments in COP26 and more measures toraise the awareness of ESG among firms./.
VNA
