ESG – inevitable development trend for enterprises

DNHN - ESG (Environmental, Social and Governance) has become an important tool for evaluating a company's social responsibility. ESG is seen as a commitment to the capacity and culture of the enterprise for capital raising and borrowing.

The seminar "ESG Practices and Green Finance Innovation for Sustainable Growth" was organized by the Vietnam Economic and Securities Journal in collaboration with the Vietnam Industrial Real Estate Association (VIREA).

The seminar provides knowledge and a legal framework for practicing ESG - aiming at developing green industrial parks - green factories, to enhance the position of each industrial park, each enterprise inside and outside the industrial park through practicing ESG criteria for sustainable development, international economic integration is a hot, practical, and important issue that VIREA will focus on and accompany members in the future."

According to Mr. Tran Thien Long, Vice Chairman of the Vietnam Industrial Real Estate Association, currently, the country has 428 industrial parks established in 61/63 provinces and centrally-run cities, (including 4 export processing zones) with a total area of nearly 128,684 hectares, and a total industrial land area of about 86,208 hectares. According to the planning of provinces and cities across the country, by 2030, Vietnam will have 558 industrial parks with a total land use area of 205,800 hectares and 1,500 industrial clusters, with a total area of about 50,000 hectares. It is forecasted that by 2050, the area of industrial zones and clusters across the country will stabilize at 300 - 350,000 hectares.

According to data published by the Ministry of Planning and Investment: By the end of 2022, industrial parks and economic zones have attracted more than 11,200 FDI projects with a total registered capital of over 231 billion USD, the implemented investment capital is about 221.3 billion USD and more than 10,400 domestic enterprise investment projects with a total registered capital of 2.54 million billion VND. In 2020, enterprises in industrial parks contributed an export value of 138 billion USD, equivalent to 55% of the total export turnover of the country, contributed to the budget 137 thousand billion VND, creating jobs for nearly 4 million workers.

However, the net-zero commitments of countries are one of the barriers to attracting FDI to Vietnam. Mr. Nguyen Vo Truong An - Deputy General Director of ASEAN Carbon Credit Trading Joint Stock Company (CCTPA - CT Group) said: A Japanese corporation wanted to invest in Vietnam but due to Vietnam's net-zero commitment by 2050, while Japan committed by 2035, the criteria were not compatible and we have not legalized it yet, so they did not invest in Vietnam. Another current challenge is the BEPS policy affecting investment incentive policies. According to new regulations, countries are no longer allowed to offer zero tax or tax exemptions to attract FDI and the common tax rate is 15%. Therefore, Vietnam does not create a competitive advantage compared to other countries and that is also a point that reduces the attraction of FDI.

Following the ESG roadmap and practical policies is the guideline for investment enterprises, especially export enterprises. The sustainable development model ESG is the three pillars of sustainable development for enterprises to apply when building and operating green factories in line with global trends.

Mr. Huynh Thanh Trung – CEO of LeanWares Joint Stock Company said, solving the ESG problem is a matter of energy. Currently, all factors are related to green and green factories are factories that reduce carbon emissions to an allowable level. A green factory usually involves three factors: building architecture, materials used, and equipment operated in the factory. If a factory is designed green from the beginning, it will save costs compared to converting an old factory to green.

Mr. Trung said that Vietnamese enterprises are currently under a lot of pressure to "green" to have export orders. However, enterprises will face issues of production infrastructure, capital, and raw materials.

Mrs. Pham Minh Chau - Deputy Director of Wholesale Product Policy Department, Wholesale Banking Division, BIDV Bank shared about how to access green credit sources. Enterprises or individuals can borrow for several green fields: electric motorcycles, textiles, green buildings, green credit packages for KHCN...

With solutions to access green financial resources: Regular financial reports, greenhouse gas inventory reports, and disclosure of information on resource efficiency and pollution reduction must be made. Build digital tools, store, and exploit data; Reporting standards: GRI, SASB, CDSB, ISO, IR, TCFD... And requirements when publishing reports: Public, easy to access and search. 

Thu Hien