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| A wind energy farm in the province of Bac Lieu (South). |
| Photo : VNA/CVN |
SMEs now represent more than 95% of total businesses in Vietnam. They also recruit 51% of the social workforce, contributing more than 40% of GDP and 30% of total state budget revenues.
Chairman of the Asia-Pacific Commercial Dispute Resolution Arbitration Center Tran Minh Son said that many SMEs that paid attention to the implementation of ESG activities said that business profits and returns on investment must be considered in a broader context. This includes socio-economic issues and corporate social responsibility.
These companies said they voluntarily pursue social and environmental concerns, ranging from labor and employment practices to environmental issues such as biodiversity, climate change, pollution prevention, anti-corruption and participation active in community activities, said Tran Minh Son.
CEO of Viet Truong Co. in Hai Phong, Ngô Minh Phuong, said that a company can ensure sustainable business performance when it records corporate growth and development targets without having a negative influence on the social development and the environment. Integrating ESG practices into their operations could help companies increase profits, outperform competitors and assert their reputation in the business environment, said Ngô Minh Phuong.
ESG has become mainstream in Vietnam in recent years, driven by the Vietnamese government’s strong signal to promote ESG-related practices, particularly with a strong commitment to transitioning to a carbon-neutral economy by 2050 at the 2021 United Nations Climate Change Conference (COP26), coupled with growing investor demand for sustainable development.
According to the “From Ambition to Impact” report on Vietnam’s ESG preparedness, jointly developed by PwC Vietnam and the Vietnam Institute of Directors (VIOD), most Vietnamese companies are just beginning their ESG journey. Although 80% of them have made ESG commitments or plan to do so in the next two to four years, there is a gap between ambition and action.
PwC’s report showed that only 66% have ESG programs in place, 24% have a clear governance structure, 5% have active board involvement on ESG issues and 28% have strong sustainability measures. ESG risk to track progress, while 71% do not understand the data required for reporting and 70% have no or very little ESG reporting.
Experts said consumers are increasingly concerned about the environmental and social footprint of the products and services they consume. At the same time, investors tend to look for environmental, social and governance criteria when making investment decisions.
VNA/CVN
