Vietnam Embraces Green Technology to Dominate ESG Trends
This week’s article is based on the research of two noted scientists, Dr. Kim Anh Nguyen and Do Vuong Phong.
ESG (Environmental, Social, and Governance) has increasingly become an essential element in the development strategies of global enterprises. According to Bloomberg, global ESG investments are projected to reach USD 50 trillion by 2025, accounting for more than a third of total assets under management. In Vietnam, the push for ESG is driven not only by international pressure but also by the government’s commitment to sustainable development, including its goal of achieving net-zero emissions by 2050.
Despite a growing awareness of ESG’s importance, implementation in Vietnam still faces numerous challenges. This article examines the current ESG landscape in Vietnam, the obstacles businesses face, and how technological solutions like GreenSwift from TPIsoftware can be instrumental in achieving ESG goals.
Increasing Awareness
Businesses in Vietnam are at a tipping point as ESG gradually becomes a decisive factor in maintaining and enhancing competitiveness in the global market. A PwC survey reveals that most businesses now recognize ESG's role, with 80% committed to or planning to implement ESG programs in the coming years. This is particularly evident in foreign-invested enterprises, where ESG requirements from parent companies are strongly transferred to their Vietnamese subsidiaries.
However, in practice, ESG implementation in Vietnam remains limited. Only a small number of businesses fully embrace ESG across all three elements—environmental, social, and governance. Most efforts are still isolated initiatives, lacking integration and long-term strategies. Notably, around 20% of small and medium enterprises (SMEs) have no concrete plans for ESG, partly due to a lack of knowledge, resources, and external support.
ESG Reporting Challenges
Few businesses in Vietnam produce high-quality ESG reports, which are crucial for attracting investment and maintaining stakeholder trust. A 2023 study by Sustainalytics shows that only 30% of Vietnamese companies have complete ESG reports, while 70% either don’t report or provide fragmented, non-compliant information. Alarmingly, only 36% undergo independent ESG audits, compared to the global average of 58%.
Challenges for ESG in Vietnam
Adopting ESG is not just a commitment but also a complex challenge for Vietnamese businesses. Implementing ESG requires significant resource allocation to improve operational processes, deploy new technologies, and train staff. According to the World Bank, SMEs in Vietnam face high startup costs for ESG, particularly in investments for technology, new processes, and employee training. With slim profit margins, implementing ESG is often viewed more as a burden than an opportunity.
The diversity of ESG standards and metrics, such as the GHG Protocol, ISO 14064, and IPCC methodologies, also makes it challenging for businesses to select the most appropriate approach. Without clear, unified guidance, companies can easily get lost in the plethora of standards and varying requirements from domestic and international organizations.
Lack of Tools and Knowledge
A PwC report indicates that 66% of businesses in Vietnam have not yet integrated ESG into their business strategies or have only just begun. One reason is the lack of effective tools for managing and tracking ESG data.
"Vietnamese businesses are aware of the pressure from ESG but often face challenges in transitioning from ideas to actionable steps. Technology plays a crucial role in bridging this gap, especially in managing data and planning sustainability,” claims Dr. Nguyễn Kim Anh, a senior researcher at the Vietnam Institute of Geography.
The Potential of Technology: Breakthrough Opportunities for ESG in Vietnam
Technology is seen as a key to overcoming major obstacles in ESG implementation. According to a McKinsey survey, companies that use technology for ESG can improve the efficacy of sustainability initiatives while cutting management and reporting expenses by 15% to 30%.
In this regard, GreenSwift stands out as an all-inclusive AI-powered Carbon Management Platform made to assist companies in implementing ESG effectively and smoothly. The platform focuses on sustainable IT management, offering carbon footprint verification, carbon management, as well as data collection, calculation, analysis, and verification for effective ESG data management.
GreenSwift empowers businesses to achieve sustainability with its innovative ESG management platforms:
Automating Data Collection and Analysis: Real-time monitoring of emissions, energy use, and environmental metrics.
Transparent Reporting: Compliance with international standards (e.g., GHG Protocol, ISO 14064-1) and a roadmap for ISO 14067/1408 certifications to support net-zero goals.
Strategic Planning Tools: Advanced features for task management, impact analysis, and carbon reduction planning, fostering seamless cross-department collaboration.
Businesses can use GreenSwift's AI-powered carbon management to turn ESG challenges into growth opportunities, improve their reputation, and actively support global sustainability goals. For Vietnamese enterprises, these tools are the bridge to a greener, more sustainable future.
Government and International Push
In the near future, ESG will no longer be a choice but a mandatory standard for all Vietnamese businesses, especially as international integration deepens. The Vietnamese government has committed to achieving the United Nations' sustainable development goals. Additionally, major export markets such as the EU and the US are increasingly stringent on ESG requirements, particularly for agricultural, textile, and electronics products. This will exert greater pressure on the domestic business community.
To meet these goals, close collaboration between the government, businesses, and international organisations is necessary. The government must introduce supportive policies, such as tax reductions or green financing, for companies adopting ESG. International organisations can serve as bridges, sharing experience and technology while helping Vietnamese businesses access green capital and markets.
Businesses that adopt ESG practices early can gain a competitive edge and ensure sustainable growth. These methods and resources are necessary for Vietnam to fight climate change and maintain its competitiveness on a worldwide scale.