Launching ESG Handbook: A Tool to Help Businesses Access Sustainable Finance

Launching ESG Handbook: A Tool to Help Businesses Access Sustainable Finance

• Businesses are facing numerous challenges in implementing sustainable practices and disclosing ESG information.
• Integrating ESG into their strategies and investments will enable Vietnamese businesses to better meet the demands of international financial institutions.
• The first ESG Handbook in Vietnam will equip businesses with the necessary tools to address challenges and seize opportunities arising from climate change.

October 4, 2024. The Handbook on Environmental, Social, and Governance (ESG) Implementation and Disclosure has officially been launched to the Vietnamese business community. Through this handbook, businesses can access guidelines and reference materials to integrate ESG into their governance, strategy and operations, thereby helping businesses respond to risks and seize opportunities pertaining sustainability.

This is part of the information presented at the workshop "Introduction to the handbook on ESG implementation and disclosure", held in Hanoi and Ho Chi Minh City on 2 and 4 October 2024. The event was attended by representatives from the State Securities Commission of Vietnam (SSC), British Embassy, British Consulate General, the Asia Foundation, and Ernst & Young Vietnam Limited (EY Vietnam).

Overview of the conference

Speaking at the event, Mr. Vu Chi Dung, Director General of the International Cooperation Department at SSC stated: "Businesses who want to maintain and affirm their position domestically and internationally, and access sustainable finance must integrate ESG into their governance, strategy and operations. Hence, SSC hopes the ESG Handbook will serve as a useful guide for businesses to implement and develop ESG reports."

According to recent EY studies on sustainability, regulators, investors, employees, and other stakeholders are demanding that businesses implement and disclose more information. This is a decisive factor for the future sustainability of businesses. Notably, 90% of global institutional investors revise investments if companies do not at least consider ESG criteria within their business model.

Mr. Vu Chi Dung, Director of the International Cooperation Department at SSC delivered his speech.

Mr. Fergus McBean, first secretary for Climate and Nature at the British Embassy in Vietnam, emphasized the urgency of prioritizing the implementation of ESG by Vietnamese businesses. He affirmed that the swift integration of ESG into the strategies and investments of Vietnamese businesses will ensure better compliance with the requirements of international markets, especially in the United Kingdom and Europe, thereby bringing significant benefits.

ESG investment is rapidly increasing as a tool to build resilience and mitigate risks in investments. Alongside non-financial reporting, ESG reports will assist investors in identifying potential risks in environmental and social aspects that were previously overlooked by traditional mechanisms.

Fergus McBean, first secretary for Climate and Nature at the British Embassy in Vietnam delivered his speech

Mr. Michael Digregorio, the Asia Foundation’s country representative in Vietnam, observed an increase in the importance of climate-related risks for organizations and businesses globally, including financial institutions. These risks include physical risks – such as Typhoon Yagi – and transition risks such as the increasing carbon tax or carbon border adjustment mechanism costs. Additionally, Mr. Michael believes that businesses should also take advantage of opportunities such as sustainability-linked loans with lower interest rates.

The implementation and quality enhancement of ESG disclosure present an opportunity for businesses to communicate and demonstrate the effectiveness and impact of their projects and business operations on the environment, society, and governance. However, a survey conducted by EY in collaboration with the SSC, involving listed companies on the HNX and HOSE in 2021, revealed that over 50% of the surveyed companies admitted to facing difficulties in integrating ESG into their corporate frameworks. Some challenges in implementing and disclosing ESG information include: (1) identifying the ESG materiality for the business; (2) ensuring the consistency of solutions aimed at addressing these material topics and aligning with the strategic direction of the business; (3) ensuring that the information disclosed is accurate and reliable; and (4) managing and meeting the changing and increasing needs of stakeholders for ESG disclosure according to domestic and international frameworks and standards. Additionally, small and medium-sized businesses with limited resources often encounter issues such as lack of time, knowledge, capacity, or capital to address the new and complex ESG issues.

Mr. Michael Digregorio, the Asia Foundation’s country representative in Vietnam delivered his speech

According to Mr. Long Viet Nguyen, Partner, Consulting, EY Vietnam – the technical delivering partner of the ESG Handbook, Vietnamese businesses can leverage ESG opportunities to create and protect long-term value for the business and its stakeholders. Through embracing sustainability, businesses can access new markets and expand existing ones, capitalize on consumer trends towards sustainability, and optimize costs by minimizing environmental and social impacts and implementing a circular economy model in their supply chains.

The first-ever introduced in Vietnam ESG Handbook is the first output within project “Unlocking Green Finance through Disclosure of Climate-Related Financial Risks”, funded by the UK Government's Partnering for Accelerated Climate Transitions (UK PACT) - Green Recovery Challenge Fund, in cooperation with the State Securities Commission of Vietnam.

Mr. Nguyen Viet Long, Partner, Consulting, EY Vietnam

BOX:

The project "Unlocking Green Finance through Disclosure of Climate-Related Financial Risks " falls under the scope of the UK Government's Partnering for Accelerated Climate Transitions (UK PACT) program, Green Recovery Challenge Fund, with cooperation from the State Securities Commission (SSC). The project is implemented to support the enhancement of capabilities for Vietnamese businesses, aiming to increase their access to sustainable finance.

The project framework also ensures consistency with the agreement between Vietnam and the United Kingdom on cooperation in implementing the United Nations Sustainable Development Goals and agreements and treaties on climate change and environmental protection. The Asia Foundation, in coordination with EY Vietnam, has been selected as the Delivery Partner for the entire scope of the project within the UK PACT program.

The project is carried out to support the acceleration of the low-carbon transition and sustainable development in Vietnam, contributing to the goal of achieving net-zero emissions by 2050 through enhancing the access of domestic businesses to sustainable finance and improving policy planning capabilities. The primary beneficiaries of the project will be provided with technical support and capacity building. The secondary beneficiaries of the project have additional opportunities for responsible investment.

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Note to readers

About the State Securities Commission

The State Securities Commission is an agency under the Ministry of Finance, performing the function of advising and assisting the Minister of Finance in state management of securities and the securities market; directly managing and supervising securities activities and the securities market; managing service activities in the securities and securities market sector according to legal regulations.

About the British Embassy and Consulate General

The British Embassy and Consulate General promote bilateral relations between Vietnam and the United Kingdom in various fields such as: Political-diplomatic cooperation; Global and regional issues; International trade; Sustainable economic and social development; Education, training, science, and technology; Security and defense; and People-to-people relations.

About the UK PACT Program

UK PACT (UK Partnering for Accelerated Climate Transitions) is a technical assistance program valued at £260 million aimed at supporting ODA-eligible countries with significant potential in emissions reduction and accelerating a fair transition towards clean growth. The program is jointly funded by the Foreign, Commonwealth & Development Office (FCDO) and the Department for Energy Security and Net Zero (DESNZ) and managed by FCDO. The program started in 2018 and is implemented until March 2026.

About The Asia Foundation

The Asia Foundation is a non-profit international development organization committed to improving lives and expanding opportunities across Asia and the Pacific. With 70 years of experience and deep local knowledge, the Foundation's work focuses on governance, climate action, gender equality, education and leadership, inclusive growth, and international cooperation. The Asia Foundation operates in over 20 countries through 17 offices and ongoing national programs across Asia and the Pacific, supported by its headquarters in San Francisco and an office in Washington, DC. The Foundation's funding comes from a variety of bilateral and multilateral development agencies, corporations, and individuals.

In Vietnam, The Asia Foundation is promoting fair, inclusive, and transparent governance, enhancing the resilience and readiness of the Vietnamese economy, mitigating the causes and managing the impacts of climate change, supporting learning and educational achievements, empowering women, and promoting peace and prosperity through regional and international cooperation.

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