Panelists at the discussion session of the seminar "ESG Commitment - We walk the talk". — VNS Photo Trương Vị
Enterprises should consider Environment, Social and Governance (ESG) practices as an investment for longer-term payoffs rather than a liability as sustainability is taking centre stage, experts said.
Speaking at the discussion session of the seminar themed “ESG Commitment: We walk the talk” held by Việt Nam News on Thursday, Trịnh Thị Hương, Deputy Director of the Enterprise Development Agency under the Ministry of Planning and Investment (MPI), said that ESG has become increasingly popular in Việt Nam in recent years with a number of enterprises beginning their journeys with ESG practices integrated into their operation and reporting.
Most pioneers in embracing ESG were large scale, foreign invested, listed or export companies, while sustainability remained strange to micro, small and medium sized enterprises which accounted for 97.8 per cent of firms in Việt Nam.
Hương said greater attention must be paid to promoting ESG practices for SMEs.
She cited findings of a survey by the MPI that 83 per cent were aware that ESG was vital and would play an important role in leveraging the brand, prestige and competitiveness of enterprises.
Addressing limitations of SMEs, including the shortage of capital, the lack of science and technology, weak governance capacity, limited access to capital and market information, Hương said enterprises remained confused when it came to ESG because their understanding of ESG practices was limited.
Besides, the shortage of resources for implementing ESG, including financial and human resources, posed a significant challenge to SMEs, she said.
“ESG should not be considered a cost burden but an investment for long-term benefits and new values,” Hương said, adding that embracing sustainability would help enterprises meet market requirements and have better opportunities to expand markets.
Phạm Hoàng Hải, Head of Partnership Department, Việt Nam Business Council for Sustainable Development, said more than a decade ago, the story was about corporate social responsibility and sustainable development, but now ESG moved towards centre stage, providing a tool for sustainability assessment.
Hải pointed out a problem that enterprises still did not have a complete and thorough understanding of ESG, making it a challenge for enterprises, not only SMEs but also big ones.
He said greater support and instructions must be provided to enterprises so that they could integrate ESG in their operation.
Lê Thị Hồng Nhi, Head of Communications and Corporate Affairs of Unilever Việt Nam, said ESG practices were not a cost but an opportunity.
Highlighting that no enterprise could develop prosperously in an environment which lacks sustainability, Nhi said that going sustainable became vital for enterprises. ESG would bring long-term benefits, including business opportunities and consolidated consumer confidence, she said.
As a pioneer in ESG practices in Việt Nam, Unilever has taken drastic steps towards sustainable development, including emission reduction in the company’s operation and its entire supply chain, she stressed. With more than 500 partners, Unilever was making an effort to change the leadership mindset within its supply chain towards green growth and net zero.
Hương from MPI stressed the importance of a mechanism which would encourage enterprise to move towards sustainable development.
Koen Soenens, General Sales and Marketing Director of DEEP C Industrial Zones, which was among first embracing eco-industrial parks in Việt Nam, said ESG practices significantly help attract quality foreign direct investment.
“In the case of DEEP C, ESG enables us to attract a different level of investors who align with DEEP C in terms of sustainability and ESG,” he said.
He expected Việt Nam’s legal framework would be further improved together with additional effort in terms of improving infrastructure systems and workforce training, to remain attractive to investors and climb the value chain.
Emphasising that improving the investment climate and policies remained the first priority of the Vietnamese Government, Hương said that the Government would accompany enterprises in ESG journey. She also called on enterprises to take actions towards ESG, adding that ESG is not a liability but an asset.
“There are challenges. There are opportunities. However, challenges will turn into opportunities with ESG practices,’’ said Võ Trí Thành, Director of the Institute for Brand and Competitive Strategy. Many enterprises are embarking on their ESG journey with green and compassionate values.
Strong commitments from foreign enterprises
Trần Anh Quý, Head of State Credit Policy Division under the Department of Credit Policy for Economic Sectors, State Bank of Việt Nam, said Việt Nam has received significant financial commitments for ESG, with huge investments such as US$12 billion from HSBC, $6 billion from Standard Chartered Bank.
“All of the investment sources are huge, stable with long-term commitments to the Vietnamese market,” he said.
Michele Wee, Chief Executive Officer at Standard Chartered Bank Vietnam said the bank has three major priorities. The first is to accelerate net zero.
The second is to lift participation of the community they serve and accelerate female participation, she said, citing statistics that in the world one billion women do not receive financial support. In Việt Nam, the number is also very high.
The third priority is to research globalisation - our commitment to provide bank products and services that will help global corporates expand and build sustainable businesses, she said. “As a bank, we have committed as a net zero institution by 2030 and our finance activity by 2050."
“Five years ago, we committed $75 billion globally to support infrastructure financing as well as transitioning financing. Two and a half years ago, we further committed $300 billion to transition financing and green tech.”
“We need to commit this money to the countries that can really impact 2050 COP targets,” she said, adding that the bank wants to be able to allocate as much as over $300 billion to the Vietnamese market.
“As a bank it is a very exciting opportunity for us to invest in ESG. All finance of foreign bank institutions here in Việt Nam is just exciting. We want to extend money but we all want it to harmonise global and local standards to be able to release financing,” she said.
She emphasised that not only frameworks but also investment in hiring experts and building expertise play a significant role.
Poovathungal Itteera Roy, Vice President of Power Systems at Schneider Electric Vietnam, said one the challenges of ESG enterprises in Việt Nam is the availability and access to ESG data and information.
Another challenge comes from how to standardise frameworks for ESG, he said, raising the question: If you have many companies with different standards, how do you actually measure and compare the performance of these companies?
He said: “We have committed by 2025, we will be carbon neutral in our operations and in 2030 we will be net zero in our operations. By 2040, we want to be carbon neutral. And by 2050, we want to be a net zero value chain.”
“One of the steps that we have taken is actually not just to enable our customers to go through the decarbonisation journey, but actually to implement many of the ESG commitments within our own operations,” he said.
He shared that ESG commitments are taken very seriously in how the products are developed. "When we actually start designing a product, we think about the lifecycle of the product. How can the product be recycled? What is the carbon footprint that goes into the manufacturing of this product? What are the components that are used and what are the associated carbon footprint? Most of the products that we sell to our customers in the market are all green products," he said. — VNS