Hanoi (VNS/VNA) - As Environmental, Social and Governance (ESG)standards have become mainstream and widely recognised as crucial forbusinesses, Vietnamese firms have been ready to embark on the ESG journey.

In its Vietnam ESG Readiness Report 2022, PricewaterhouseCoopers (PwC) says 80%of firms in Vietnam have made ESG commitments or planned to do so in the nexttwo to four years.

By company type, 57% of foreign-invested firms have claimed to make explicit ESGcommitments. Listed firms, on the other hand, appear to take a 'wait and see'approach as 58% state they have plans to embrace ESG in the near future.

Interestingly, 40% of private family businesses say they have committedthemselves to ESG. The figure indicates the strong sense of responsibilityamong Vietnamese NextGens that family businesses should be at the forefront ofsustainable practices.

"82% of respondents across industries choose brand image and reputation asthe top reason to pursue ESG while staying competitive is the second citedreason," says the report.

When firms are asked to rank the three ESG elements in order of importance, 62%put Governance at the top of the executive agenda. Environmental and socialfactors follow with 22% and 16%, respectively.

The focus on Governance comes from the firms' belief that stronger governancewill result in better decision-making in both the environmental and socialdimensions.

It is also worth noting that the Vietnam Sustainability Index (VNSI) waslaunched in July 2017 to recognise the best-listed firms on HCM Stock Exchangein terms of ESG practices.

Vinamilk has been among the top 20 VNSI green stocks since then with an ESGscore of 90%, far higher than the industry average.

Specifically, the dairy producer earned a Governance score of 96%, a Societyscore of 91% and an environmental score of 85%, reflecting its effort toincorporate ESG into its operation.

"Sustainable development is no longer a choice but an imperative forfirms' viability and growth," said Vinamilk CEO Mai Kieu Lien.

While ESG commitment is at a commendable level, PwC report says that there arestill gaps between ambition and action.

Of the 66% of firms having implemented some form of ESG programmes, 22% saythey have all-inclusive programmes, 28% have solid programmes that cover someESG aspects, and 16% have limited plans with a few ESG elements.

Remarkably, 35% of respondents admit having no ESG programme whatsoever.

"In some areas, Vietnamese businesses have made progress while showingroom for improvement in others," says the report.

The report also says accurate and timely data is the key to meeting the growingdemand from different stakeholder groups for wider ESG assessment.

Unfortunately, a majority of firms (71%) have either not started or are justbeginning to understand the required ESG data. 

Firms need both ESG targets and metrics to produce the desired outcomes.However, the report shows that less than one-third of respondents have a set ofcomprehensive risk metrics.

Roughly 31% say they are in the process of developing metrics whereas 41% saythey have not got down to it yet.

"The board is a central player in overseeing and integrating ESG risks andopportunities in their organisation," said Dinh Toan Trung, StrategyDirector, VIOD Academic Advisory Council.

According to Bloomberg Intelligence, global ESG assets are expected to surpass 41trillion USD by 2022 and 50 trillion USD by 2025, one-third of the projectedtotal assets under management globally./.