Sustainable development presents opportunities and challenges for businesses

Friday, Mar 22, 2024 10:36

Speakers answered questions raised by participants at the event on March 21. — VNS Photo Viet Thang

A forum was held in Hà Nội yesterday afternoon (March 21) with an aim to bring together experts and enterprises to discuss the objectives and explore ways to achieve sustainable transformation in Việt Nam.

The forum was co-held by the Agency for Enterprise Development (AED), and the United States Agency for International Development (USAID), the initiative seeks to leverage the expertise and resources of various stakeholders to drive sustainable growth in the country.

With an expectation of promoting sustainable growth led by the private economic sector, increasing competitive advantages for businesses and contributing to the implementation of Việt Nam's Green Growth Strategy for the period 2021-2030 and the Decision 167/QĐ-TTg 2022 of the Prime Minister on the Programme to support sustainable private sector enterprises, the Agency for Enterprise Development and USAID announced the Vietnam ESG Initiative.

Speaking at the event, Nguyễn Thị Bích Thủy, the Deputy Head of Small and Medium Enterprises Department under the AED emphasised that businesses in Việt Nam were facing challenges in meeting the requirements for green and sustainable development, which came from various stakeholders such as investors, partners, international markets, and consumers. As Việt Nam integrated further into the global economy, there was a growing demand for businesses to adopt environmentally friendly practices and pursue sustainable development.

Mark Birnbaum, the Director of the USAID Project on Strengthening the Competitiveness of Vietnam's Private Sector (USAID IPSC), added that green transformation was not just a future requirement but an ongoing process that was already happening. With this transformation, the business community faced even greater challenges.

He stated that the traditional measure of evaluating business performance solely based on financial profits was no longer sufficient. Instead, a more comprehensive approach is necessary, which includes the consideration of environmental, governance, and social factors alongside conventional indicators.

Mark said that businesses that prioritise environmentally sustainable development, implement social responsibility, and actively apply corporate governance measures can have more opportunities to achieve sustainable success.

He noted that businesses with higher ESG ratings achieve better financial performance, aligns with a growing body of research supporting the link between ESG and financial outcomes. Several studies have found a positive correlation between strong ESG performance and indicators such as profitability, return on equity, and stock market performance.

According to Mark, integrating ESG principles acts as a catalyst, enabling businesses to minimize risks, enhance resilience, and gain competitive advantages in a dynamically changing global environment. Vietnamese businesses are encouraged to understand and embrace ESG principles. By prioritizing the application of ESG practices, businesses can align their operations with sustainable development goals and contribute to a more environmentally and socially responsible future.

Also, at the event, Phạm Thị Ngọc Thủy, the Director of the Office of the Private Economic Development Research Board emphasised the importance of ESG practices for businesses noting that ESG practices represented a set of standards that guide businesses to operate sustainably and add value to their production and business activities.

According Thủy, ESG practices not only contribute to sustainable development but also serve as a channel for businesses to identify risks and opportunities that can impact their long-term value creation.

In the context of businesses exporting to the European Union (EU), Thủy highlighted that within a short period of two years, failure to make progress in implementing ESG practices could result in the elimination of many businesses in the supply chain to Europe. This elimination would pose a significant financial risk to these businesses. Thủy specifically mentioned that the market side, represented by the letter "E" in ESG, was related to the environment.

Regarding the letter “S” in ESG, Germany has implemented a law related to the German supply chain, specifically addressing various criteria related to labour, female workers, and the working environment. This law aims to ensure that companies operating within the German supply chain adhere to certain standards and regulations. She noted that it was important for businesses that were or wanted to be part of the German supply chain to familiarise themselves with the specific requirements outlined in this law.

Thủy's statement also underscored the importance of understanding and adapting to the evolving landscape of corporate governance. By recognising the different levels of management progress, enhancing management capacity, and ensuring compliance with policy developments, businesses can mitigate risks and foster a culture of effective governance.

Thủy highlighted the escalating issue of climate change, energy crises, and geopolitical conflicts. She noted that addressing these issues would require international cooperation, innovative solutions, and sustainable policies to ensure a more stable and resilient future.

She concluded that technology and digital transformation, along with sustainable development, were reshaping the business landscape. Proactive businesses that embrace digital and green capabilities can gain a competitive advantage, while those slow to adapt face risks. Sustainable development represents both an opportunity for innovation and growth, as well as a pressure to meet evolving expectations. — VNS

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