### Climate Change and Business Opportunities in Vietnam
Climate change isn’t just an environmental issue; it presents a dual challenge and opportunity for businesses, especially in Vietnam. As global markets increasingly prioritize sustainability, local enterprises have the unique chance to innovate and thrive by embracing environmentally friendly practices.
### Sustainability Insights from Experts
Phạm Minh Hương, the Director of Sustainability & Climate Change Advisory Services at Deloitte Việt Nam, highlights how companies can unlock potential by shifting towards greener products and enhancing energy efficiency. For instance, if Vietnam elevates its energy efficiency rate from 1.8% to 2%, the result would be akin to halving emissions from the country’s primary carbon-producing source: coal.
### Pioneering Sustainable Practices
Leading the charge in sustainable initiatives are companies like Hòa Phát, which have begun investing in green steel technologies. By incorporating renewable energy sources, they not only comply with regulatory standards but also position themselves to expand their market share, especially in developed economies. Such innovations showcase the tangible benefits of adopting sustainable business models.
### Current Challenges in ESG Adoption
Despite these promising advancements, the integration of Environmental, Social, and Governance (ESG) principles across Vietnamese enterprises remains limited. Lê Hoàng Hải from the State Securities Commission of Vietnam (SSC) reports that only 14% of over 700 listed companies on the Ho Chi Minh Stock Exchange (HOSE) publish standalone sustainability reports. This number falls below 5% for those with audited reports, revealing a significant gap in ESG transparency.
### Addressing Regulatory Barriers
One of the principal barriers to greater ESG adoption is the absence of a comprehensive legal framework. In response, the SSC is collaborating with the International Finance Corporation (IFC) to establish a national set of ESG standards, anticipated for rollout by 2026. This initiative aims to support small and medium-sized enterprises (SMEs), which constitute 97% of Vietnam’s total businesses, in aligning with international regulations.
### The Role of Auditors in ESG
Trần Khánh Lâm, Vice Chairman and Secretary-General of the Vietnam Association of Certified Public Accountants (VACPA), perceives ESG assurances as not just mandatory compliance, but also as avenues for enhanced corporate governance. In 2023, over 500 auditors attended training programs on IFRS S1 and S2, but the sector faces challenges due to a shortage of experts skilled in environmental and technological areas.
### The Need for Training and Expertise
A recent report from PwC Vietnam reveals that only 20% of auditors possess foundational knowledge in ESG criteria. This underscores the urgent need for long-term training and development of resources to build a workforce proficient in sustainable practices and auditing.
### Economic Implications of Climate Inaction
International governance expert Simon C.Y. Wong warns that without urgent action, climate-related economic losses could soar to $38 trillion by 2049 globally. This stark statistic emphasizes the necessity for robust corporate governance that takes into account environmental and social risks.
### Exemplifying Success: Vinamilk and PAN Group
Companies like Vinamilk and PAN Group exemplify the potential for success in the realm of sustainability. Vinamilk has established Global GAP-certified dairy farms and integrated ESG practices throughout its supply chain to minimize emissions. Concurrently, PAN Group has embraced international governance standards, enhancing its operational sustainability.
### Governance as a Foundation for Success
Phạm Minh Hương emphasizes that good governance transcends mere compliance; it lays the groundwork for achieving both environmental and social goals. Implementing international standards such as IFRS S1 and S2 not only promotes transparency but also enhances credibility in competitive global markets.
### Meeting Global Standards: The Seafood Sector
Vietnamese seafood exporters are utilizing these frameworks to adhere to stringent ESG requirements for access to the EU and US markets, where sustainability has become a pivotal evaluation criterion. Understanding these global standards is critical for businesses aiming to succeed internationally.
### Evolving Regulatory Frameworks
Lê Hoàng Hải also notes that Vietnam’s regulatory landscape is progressively developing. Corporate governance obligations are enshrined in the 2019 Securities Law and Decree No. 155/2020/NĐ-CP. The SSC has ramped up its scrutiny of ESG disclosures, enforcing strict penalties for companies that fail to comply.
### Increased Regulatory Enforcement
In 2023 alone, 15 listed companies faced fines for delayed or insufficient sustainability reporting. This trend indicates a heightened focus on enforcement, prompting enterprises to adapt to climate risks and be prepared to seize opportunities emerging in a greener global economy.