Firms urged to promote ESG for their sustainable development

Hanoi (VNS/VNA) - The adoption of environmental, social and governance (ESG) considerations in private investments is evolving from a risk management practice to a driver of innovation and new opportunities that create long-term value for business and society.

Patrick Haverman, Deputy Resident Representative, UNDP in Vietnam made the statement at the ESG – a key for sustainable development conference held in Hanoi on November 29. The seminar organised by Vietnam Investment Review (VIR) newspaper attracted the participation of about 100 guests from State management agencies, experts, speakers and representatives of nearly 40 enterprises in Vietnam to discuss opportunities and challenges in applying ESG, as well as sharing innovative solutions and new applications to promote and spread sustainable values in each business.

“Promoting ESG adoption throughout the investment value chain can encourage greater private investment in sustainable development, resulting in greater impact,” he added.

He said that the various actors in the investment value chain, including investors, banks and companies, had been increasing including ESG and sustainability information in their reporting processes. It would be important to create an enabling environment for sustainability and integrated reporting to flourish.

He also cited the Business Commission on Sustainable Development (BCSD) saying: “There is no reason to see real alignment with the SDGs as anything else than good business. 

"Contributing to and achieving the SDGs offer a compelling growth strategy for businesses and for the world economy as a whole."

And on the Council on Foreign Relations he said: “Achieving gender equity alone could increase the size of the global economy by 26%” and 12 trillion USD annual business opportunity could be unlocked if the SDGs were pursued in just four major sectors or investment systems - food and agriculture, cities, energy and materials, and health and well-being.” 

The ESG efforts by the various private actors are consistent with the Sustainable Development Goals (SDGs), but need to be leveraged further to achieve stronger outcomes.

Sharing the ideas, Le Trong Minh, the newspaper’s editor-in-chief said in the context of the economy entering a period of recovery and acceleration, the sustainable development orientation not only focused on the social aspect but also became urgent for policymakers and the business community.

He said that it was impossible to underestimate any of the three pillars: economic, social and environmental in sustainable development, especially in the context of a fast-moving world with increasingly strong commitments. With strict criteria, the business community needed to promote its role in the process of sustainable development.

Businesses would become more reliable and attractive in society and their partners if they pay attention and pursue ESG criteria, he added.

However, attendants also said that businesses still faced challenges to implement sustainable development targets though they had been aware of the issue.

The lack of human resources, finance and the necessary knowledge to meet the high standards of ESG and the increasing commitments to the international community, including the goal of net zero by 2050 would require the highest effort from each enterprise.

In addition, businesses would also need open legal corridors and a more favourable environment, as well as incentives and priorities from the State to be able to overcome these barriers.

Removing obstacles

Nguyen Chi Hieu, Director, ESG Consulting, KPMG in Vietnam and Cambodia said that to implement ESG integration, businesses often faced difficulties to start the process when ESG was still a new trend for Vietnamese firms. In addition, they also faced a lack of experienced personnel to implement this strategy not to mention the cost of implementation.

To solve these problems, businesses needed to re-evaluate their capabilities and immediately start integrating ESG, which encourages the selection of appropriate criteria, he added.

Environmental risk criteria in Vietnam still have many differences compared to other countries, according to Hieu. If businesses know how to choose, they can find commitments that can be implemented immediately or apply frameworks prescribed by the Government.

Bui Trung Kien, Deputy Chairman of CME Solar Investment JSC said: “In addition to businesses’ determination and efforts, the policy foundation is very important, especially in the initial stages when enterprises apply ESG.”

Appropriately policies along with the timely removal of obstacles will be the foundation and legal framework for businesses to feel secure and boldly invest in applying ESG and new solutions, meeting requirements on the environment, society, corporate governance.

Nguyen Thi Thanh Nga, an expert on Sustainability and Green Growth at the Department of Science, Education and National Resources under the Ministry of Planning and Investment said: “ESG is the approach that businesses need to take in sustainable development, promoting green growth and reducing emissions.”

Since 99% of Vietnamese enterprises are small and medium-sized enterprises, she proposed to promote the creation of value chains linking FDI enterprises with domestic SMEs to achieve the Net Zero goal.

“In addition, energy transition is also an important issue for Vietnam in the future," she added.

"Therefore, it is necessary to promote efficient and sustainable energy use, save energy, and reduce consumption in sustainable development. That is also promoting sustainable, green and ESG development for businesses.”

From a business aspect, Nguyen Thi Ngoc Hue, Director of Corporate Communication & External Affairs at AEON Vietnam said AEON Vietnam annually conducted activities to connect, accompany and support Vietnamese businesses to promote and introduce local products to consumers. The firm also supported local suppliers to meet export standards to international markets, especially Japan, through AEON's retail system. By the end of 2022, the proportion of domestic goods in AEON Vietnam's retail system would reach 80%.

“With persistent and consistent efforts over the years, AEON Vietnam has spread sustainable consumption habits to millions of Vietnamese consumers and will continue to accompany partners to promote green consumption, contribute to building a sustainable Vietnamese retail market,” she added./.