Hanoi (VNA) – Amid growing pressure from trade policies and reciprocal tariffs by major markets, particularly the US and the European Union, Vietnamese sma🌜ll and medium-sized enterprises (SMEs) have been urged to accelerate their shift towards green and sustainable practices. At the core of this transition lies the adoption of ESG (environmental,🎉 social, and governance) standards, which can enhance competitiveness, ensure compliance with international norms, and unlock access to green finance.

According to the International Finance Corporation’s 2023 Country Climate and Development Report, businesses with clear ESG strategies attract 20–25% more investment than those without ESG strategies. ESG practices are also associated with 10–30% improvements in financial performance, reduced legal and operational risks, and strengthened brand reputation. In Vietnam, green finance access is expanding, particularly for SMEs. A key incentive is a 2% annual interest rate subsidy on green loans, introduced under the National Assembly's Resolution No. 198/2025/QH15, which took effect on May 17. The policy aims to lower capital costs for green technologies, circular economy models, and ESG-compliant projects. Banks are increasingly offering green credit, bonds, and equities. As of March, 58 domestic credit institutions had issued over 27 billion USD in green loans, equivalent to 4.3% of total outstanding loans. International banks such as HSBC, BNP Paribas, Standard Chartered, and UOB are also supporting sectors like recycling, organic agriculture, and wood processing. Alongside these efforts, development organisations are financing projects with positive social impact, particularly in gender equality, women and children's welfare, and community development. Many small-scale projects with strong potential for replication are prioritised through open calls. Despite the opportunities, ESG readiness among Vietnamese SMEs remains limited. A 2023 PwC Vietnam report showed that only 29% of businesses understand or apply ESG, while more than 70% lack a sustainable development strategy. ESG helps reduce operating costs, improve resource efficiency, and access preferential capital, Huynh Thanh Trung of Leanwares JSC was quoted by Quan doi Nhan dan (People's Army) newspaper as saying. He also noted that ESG compliance is vital to meet technical and carbon-related export requirements. Delayed action, he warned, could see firms excluded from global supply chains.

To build an effective ESG strategy, Trung recommended starting with greenhouse gas inventories, improving resource use, and aligning reporting with international standards such as the Global Reporting Initiative (GRI). Truong Boi An of Crif D&B Vietnam Ltd pointed to growing regulatory pressure from the EU, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). These require businesses not only to report on ESG performance but to actively mitigate negative impacts across their supply chains. Nguyen Thi Thuy of TÜV Rheinland Vietnam added that global buyers are tightening ESG requirements in labour-intensive sectors such as textiles, footwear, and wood processing. With global demand slowing and green transition costs rising, companies must restructure operations, embrace automation, and boost international cooperation to access technology and resources. As ESG becomes a new global standard, Vietnamese SMEs must move quickly to adapt, align their brands with international expectations, and position themselves to benefit from sustainable green finance./.