PwC’s ESG Progress Tracker Unveils Vital Insights into Vietnam’s Corporate Transformation
On September 23, 2023, in Hanoi, PwC Vietnam launched its highly anticipated “ESG Progress Tracker in Vietnam” publication. This significant report sheds light on the evolving attitudes of Vietnamese enterprises towards Environmental, Social, and Governance (ESG) commitments. With mounting global compliance pressures and defined national sustainable development goals, businesses in Vietnam are making a crucial transition from mere pledges to tangible actions.
Understanding ESG Maturity in Vietnam
The publication presents a comprehensive analysis based on feedback from 174 corporate representatives, highlighting a marked improvement in ESG maturity since 2022. Notably, 89% of businesses have either made or plan to make ESG commitments within the next two to four years, a substantial increase from 80% just three years prior. The report reveals an encouraging trend: only 11% of companies reported having no ESG plans, while over half have already begun implementing their commitments.
Leadership Engagement on the Rise
One of the most promising insights from the survey is the increased involvement of senior leadership in ESG matters. Over two-thirds of participating companies stated that their boards are actively engaged in ESG strategies, signifying a shift in corporate governance perspectives. This aligns with broader trends in the Asia Pacific region, where 45% of CEOs believe transformation is crucial for long-term viability.
The Compliance Dilemma
Despite positive strides, the report underscores existing disparities in ESG adoption. Foreign-invested enterprises lead the charge, with 71% having implemented ESG commitments, likely due to adherence to global standards. Meanwhile, listed companies are not far behind, with 57% deploying their own ESG strategies, primarily influenced by investor expectations and regulatory requirements. In contrast, private, unlisted businesses lag significantly, with only 27% practicing ESG principles and 23% lacking any concrete plans.
Compliance as a Primary Driver
The report points out that compliance remains the dominant factor driving ESG adoption in Vietnam. According to survey results, 70% of companies cited legal requirements as their primary motivation for action. This is followed by stakeholder pressure at 40% and senior leadership direction at 39%. Surprisingly, only 16% of firms consider cost reduction as a motivator. Additionally, 25% see access to green finance as influential, suggesting that many companies have yet to understand the full potential of ESG beyond mere compliance.
Internal Barriers to Implementation
For those still at the initial stages of ESG integration, PwC identified significant internal barriers. A staggering 70% of companies reported lacking a clear ESG strategy, while 60% cited insufficient expertise and 54% referred to underdeveloped measurement systems. Such internal obstacles present considerable challenges for businesses aiming to enhance their ESG practices.
Conversely, more advanced companies face external hurdles, including regulatory gaps (45%) and economic uncertainty (38%). This dual-layer of challenges indicates a complex landscape for organizations striving to improve their ESG profiles.
The Call for a Strategic Shift
Nguyen Hoang Nam, ESG Leader and Partner at PwC Vietnam, highlighted the transition Vietnamese businesses are making towards deeper ESG maturity. “The shift from planning to action is evident,” he stated. However, he emphasized the necessity for businesses to adopt smarter data strategies and foster stronger collaboration. Nam noted, “ESG is not only about meeting standards; it’s about building businesses that are prepared for the future.”
A Platform for Collaboration and Growth
The launch event also featured a panel discussion entitled “Accelerating ESG for Growth,” creating a space for dialogue among business leaders and policymakers. This discussion aimed to explore how ESG practices could enhance competitiveness, unlock long-term value, and elevate the global standing of Vietnamese enterprises in an era marked by uncertainty.
As businesses navigate the ESG landscape, the insights derived from PwC’s Progress Tracker provide a roadmap for the evolving corporate ecosystem in Vietnam. It remains clear that while significant progress has been made, there is still a journey ahead for many enterprises in integrating ESG principles into their core strategies.