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COVER STORY

and benefits of integrating ESG criteria in
general, including a desire for business to
see a sustainable recovery from Covid-19;
improved access to capital and investment
in response to the ESG requirements of
creditors and investors; political prioriti-
zation of sustainability and corporate
responsibility; better operational efficiency
and lower costs; response to customer or
client pressure; and concerns about attract-
ing, motivating, and retaining employees.
There is a strong trend for high-quality
FDI to look for developing economies that Mr. Nguyen Chi Trung,
have sufficient ESG requirements and CeO & managing Partner, Grant Thornton Vietnam
adoption. Consumers are increasingly ask-
ing for products made in countries that
take ESG seriously. Therefore, Vietnam best measurement frameworks; and a lack to stay on track. The second is educating
will be more competitive in attracting such of internal knowledge and capability. And the workforce on the need to embed ESG
investment if it can fully prepare and meet the leading barrier making enterprises delay across all operations. The third is proper
these expectations. However, our survey ESG adoption is the cost of taking action. tracking of progress and reporting of ESG
results reveal that Vietnamese enterprises In order to effectively integrate ESG performance. The fourth is regularly review-
are facing barriers when promoting ESG criteria into the business, the first task ing and updating the ESG strategy to
criteria, such as concerns about the cost of enterprises should focus on is determining ensure the enterprise remains aligned with
taking action; a lack of clarity around new ESG priorities with associated objectives, business and stakeholder expectations.
regulations or requirements; a lack of man- time-bound targets, and key performance Incentive policies on tax and related invest-
agement time and attention; too much indicators to evaluate ESG performance. ment to be introduced by the government
time still being spent on dealing with issues Afterward, ESG priorities need to be embed- would also be a good tool to encourage
linked to the pandemic; confusion around ded into an enterprise’s corporate strategy enterprises to apply ESG criteria. %

V ietnam will have a better chance of capital from sustainable investment funds. in 2022, will be a challenge for businesses
attracting FDI if the country quickly
in developing and setting out environmental
A large number of Vietnamese enter-
introduces policies to promote a prises have announced their commitment indicators, objectives, and tools in their
strong shift to investment under Environ- to pursuing sustainable development goals ESG report. The novelty of ESG also makes
mental, Social, and Governance (ESG) cri- and shared their ESG strategy and the it difficult to find support from social
teria. According to Morningstar, many ESG responsibility of the Board of Directors for mechanisms and counseling services.
funds attracted record cash flows in 2020, sustainable business operations. Many also Therefore, businesses still face difficulties
double that of a year earlier, and net money have plans on training for their Boards on in formulating, implementing, and report-
from investors pouring into sustainability ESG matters. In order to successfully inte- ing on strategies under the ESG framework.
funds reached $51 billion. Banks, financial grate ESG criteria into business activities, Another aspect is that the Law on Anti-
institutions, and private investment funds enterprises need to take some basic steps Corruption in Vietnam is currently only
are shifting their investment strategies to include ESG thinking into risk assess- applied to the public sector, making policy
through ESG. Specifically, commitments ment, decision making, and identifying development on business transparency and
to ESG factors are changing the way busi- the resulting opportunities. The process of the independence of the Board of Directors
nesses are valued and their attractiveness integrating ESG sustainability begins with unavailable. Requirements on diversity,
in the eyes of investors. Pursuing ESG thinking, planning, and understanding inclusivity, gender equality, and anti-dis-
criteria is not only a solution for businesses what is important for the enterprise. crimination, etc., in the ESG framework
to manage image risks but also an oppor- New and existing laws on climate change are also new factors that have not been
tunity to optimize the business model and in Vietnam, such as the Law on Environ- approached too much by businesses. Secu-
develop the brand and receive investment mental Protection 2020, which took effect rity in database construction and customer
privacy assurances are also big challenges.
What businesses need now is for laws
and regulations on environmental factors
to be updated and renewed with specific
and approved targets, so that they have a
basis to develop new indicators correspon-
ding to environmental objectives in their
strategy. In addition, a wider Law on Anti-
Corruption or a transparent business law,
and regulations and requirements on
reporting and Board independence, are
also needed. We can see that an important
Mr. Nguyen Tien Huy, factor in ESG integration and implemen-
General director of the Office for Business tation is planning and reporting, so laws
sustainable development, Vietnam Chamber
of Commerce and industry (VCCi) creating a reporting basis for businesses
are needed to support them. %

www.en.vneconomy.vn JULY 2022 | VIETNAM ECONOMIC TIMES | 9