The “Vietnamese Businesses and ESG Revolution” seminar, organized by PwC Vietnam in cooperation with the Vietnam Young Entrepreneurs Association (VYEA) and the Phuc Khang Corporation, took place on September 29, focusing on environmental, social, and governance (ESG) transformation and energy transition in private enterprises.

As the global paradigm shifts towards sustainability and responsible business practices, many countries, including Vietnam, have started the move to embrace ESG goals. This transition necessitates enterprises having the right perspective and taking proactive measures on their ESG journey.

However, PwC’s ESG Readiness Report on private enterprises in Vietnam indicates an urgent need to enhance awareness about the concept, as 60 per cent cited a lack of knowledge. They are also facing a significant gap when it comes to ESG governance and reporting, compared to Vietnam overall. Sixty per cent have an informal governance structure or no structure on ESG matters, and only 29 per cent have established well-defined ESG targets and metrics, while Vietnam’s figures are 51 per cent and 47 per cent, respectively.

The ESG seminar served as a platform for business leaders to acquire a comprehensive understanding of ESG and discuss effective strategies for incorporating it into their operational frameworks. The Phuc Khang Corporation shared its experience on the topic and offered insights into the potential benefits and challenges private enterprises may encounter when implementing their ESG endeavors.

Leveraging strengths to embark on the ESG journey

A PwC report also highlights the imperative for ESG leadership within private enterprises. Among those surveyed, 34 per cent revealed that their Board is currently not engaged in ESG matters and 48 per cent said there is no clearly-defined ESG leader within their organization. Such figures surpass the national averages of 32 per cent and 38 per cent, respectively.

On a positive note, PwC’s NextGen report shows a potential shift towards a greater ESG focus in the future as the next generation takes on leadership roles. Sixty-eight per cent of Vietnamese NextGens believe they have a responsibility to combat climate change, and 45 per cent see an opportunity for private enterprises to lead the way in sustainable practices. Additionally, 77 per cent expect to be involved in increasing their business’s focus on investments for sustainability in the future, which strongly reflects their ESG ambitions.

Mr. Johnathan Ooi, Entrepreneurial & Private Business Service Leader at PwC Vietnam, said NextGens are considered one of the core catalysts to propel growth in private enterprises and indeed play a key role in building the ESG narrative. With their innovative spirit and passion for sustainability, NextGens should be encouraged to take a leap forward and forge their own paths through upskilling and driving ESG initiatives. “Moreover, compared to publicly-listed companies, private enterprises have more flexibility in their operational structure, which will help accelerate the decision-making process and progress in integrating ESG principles,” he added.

Energy transition high on the agenda

Energy transition is of paramount importance in implementing ESG and is seen as making the largest contribution to reducing emissions towards the goal of net-zero by 2050. In this context, the seminar also discussed barriers for businesses when investing in energy transition, one of which is the substantial upfront cost for renewable energy infrastructure and energy-efficient technologies. Smaller businesses may struggle to secure the necessary capital.

Energy transition, nevertheless, can serve as a competitive advantage in the market and is expected to foster long-term value creation, including improving brand image and attracting investors, given their increasing interest in sustainable investments. Adopting green energy will also ensure compliance with related international and national regulations, as well as help businesses avoid the costs associated with carbon emissions in the near future. A step-by-step business transformation roadmap was suggested by experts at the seminar for private enterprises to take into consideration. The evaluation involves assessing carbon management options and enablers to decrease emissions throughout the business value chain.

Ms. Luu Thi Thanh Mau, Vice President of VYEA and CEO of the Phuc Khang Corporation, said a strategic direction for successful ESG implementation is a core foundation for sustainable development, bringing greater value, not only to businesses, entrepreneurs, and the economy but also to the community and stakeholders. “During the process of building the company’s strategic framework, the Phuc Khang Corporation has been committed to orientating its business on the 17 Sustainable Development Goals from the United Nations,” she said. “With a strong foundation in vibrant CSR strategies for the community that has been developed over time, the Phuc Khang Corporation continues to enhance its ESG strategies, clearly defining the goal of creating green buildings, a green community, and a green future.”