A Vinamilk production line. (Photo baodautu.vn) In its Vietnam ESG Readiness Report 2022, PricewaterhouseCoopers (PwC) says 80% of firms in Vietnam have made ESG commitments or planned to do so in the next two to four years.
By company type, 57% of foreign-invested firms have claimed to make explicit ESG commitments. Listed firms, on the other hand, appear to take a 'wait and see' approach as 58% state they have plans to embrace ESG in the near future.
Interestingly, 40% of private family businesses say they have committed themselves to ESG. The figure indicates the strong sense of responsibility among Vietnamese NextGens that family businesses should be at the forefront of sustainable practices.
"82% of respondents across industries choose brand image and reputation as the top reason to pursue ESG while staying competitive is the second cited reason," says the report.
When firms are asked to rank the three ESG elements in order of importance, 62% put Governance at the top of the executive agenda. Environmental and social factors follow with 22% and 16%, respectively.
The focus on Governance comes from the firms' belief that stronger governance will result in better decision-making in both the environmental and social dimensions.
It is also worth noting that the Vietnam Sustainability Index (VNSI) was launched in July 2017 to recognise the best-listed firms on HCM Stock Exchange in terms of ESG practices.
Vinamilk has been among the top 20 VNSI green stocks since then with an ESG score of 90%, far higher than the industry average.
Specifically, the dairy producer earned a Governance score of 96%, a Society score of 91% and an environmental score of 85%, reflecting its effort to incorporate ESG into its operation.
"Sustainable development is no longer a choice but an imperative for firms' viability and growth," said Vinamilk CEO Mai Kieu Lien.
While ESG commitment is at a commendable level, PwC report says that there are still gaps between ambition and action.
Of the 66% of firms having implemented some form of ESG programmes, 22% say they have all-inclusive programmes, 28% have solid programmes that cover some ESG aspects, and 16% have limited plans with a few ESG elements.
Remarkably, 35% of respondents admit having no ESG programme whatsoever.
"In some areas, Vietnamese businesses have made progress while showing room for improvement in others," says the report.
The report also says accurate and timely data is the key to meeting the growing demand from different stakeholder groups for wider ESG assessment.
Unfortunately, a majority of firms (71%) have either not started or are just beginning to understand the required ESG data.
Firms need both ESG targets and metrics to produce the desired outcomes. However, the report shows that less than one-third of respondents have a set of comprehensive risk metrics.
Roughly 31% say they are in the process of developing metrics whereas 41% say they have not got down to it yet.
"The board is a central player in overseeing and integrating ESG risks and opportunities in their organisation," said Dinh Toan Trung, Strategy Director, VIOD Academic Advisory Council.
According to Bloomberg Intelligence, global ESG assets are expected to surpass 41 trillion USD by 2022 and 50 trillion USD by 2025, one-third of the projected total assets under management globally./.
VNA
