Accelerating Mindset and System Transformation to Optimize Sustainable Corporate Governance

Mr. Nguyen Quang Vinh, Executive Vice President of VCCI and Chair of VBCSD

Access to ESG standards

At the Workshop on "Accelerating Mindset and System Transformation to Optimize Sustainable Corporate Governance" organized by the Vietnam Chamber of Commerce and Industry (VCCI) and the Vietnam Business Council for Sustainable Development (VCCI - VBCSD), Mr. Nguyen Quang Vinh, Executive Vice President of VCCI and Chair of VBCSD, said: “Nonfinancial factors like ESG can be financially productive as a company that invests in ESG, or in other words, invests for scientific and professional corporate governance, is a company that is committed to sustainable development and will surely achieve the long-term success of all aspects. However, to practice ESG as well as effective corporate governance requires investment and, especially, a comprehensive mindset change from the top.” From 2016 to date, VCCI, with the core being VBCSD, has actively fostered sustainable corporate governance practices in the business community through an introduction to the Corporate Sustainability Index (CSI) to businesses and the Program on Benchmarking and Announcing Sustainable Businesses in Vietnam, he added.

Workshop on "Accelerating Mindset and System Transformation to Optimize Sustainable Corporate Governance"

Speaking of the importance of sustainable corporate governance, Ms. Ha Thi Thu Thanh, Chair of the Board of Directors of Deloitte Vietnam, Vice Chair of VBCSD, said the keys that drive ESG are consumers, regulatory agencies and investors. ESG integration is a challenging issue but once the government makes a commitment to net emissions, ESG is no longer a responsibility but a factor to sustain business continuity and an opportunity for sustainable corporate development in a new context. This is not only the story of public companies and listed companies, but also for all.

Representing the World Business Council for Sustainable Development (WBCSD), Mr. Joe Phelan, Executive Director, Asia Pacific for WBCSD, said WBCSD's research results show that businesses are facing difficulty in identifying ESG risks in their annual risk management, even though ESG is included in their annual sustainability report. To propose a solution for this, WBCSD introduced a new Three-Lines model, whereby ESG is integrated through three main pillars: Governing body (including the development of governance and reporting mechanisms under the ESG framework and attaching close stakeholder engagement), Management (including development of a multi-resource approach, substantive ESG risk assessment, and ESG reporting/data quality monitoring), and finally Internal Audit (playing a role in controlling and assuring the accuracy of ESG data in the business, promoting reporting on economic and social impacts of the business according to the ESG framework, and closely interacting with the other two pillars).

In a representation on ESG practices sharing, Ms. Do Hoang Anh, Legal and External Affairs Director, British American Tobacco (BAT) in East Asia, gave a message “Creating shared business values from ESG practices”. She said ESG is now integrated in all business activities of BAT to create common values for consumers, employees, communities and stakeholders. Through its goals of being carbon neutral, using renewable energy, saving water and maintaining zero landfilled waste in addition to waste recycling waste and using sustainable sources, BAT can contribute to efforts to combat climate change, conserve biodiversity and plant forests. BAT also ensures that there is no child labor in its supply chain in Vietnam. It provides better livelihoods for farmers, and strives to build a culture of diversity and inclusion, empowers women, and complies with international business ethics and marketing principles.

Toward sustainable business

VBCSD partners with IDH Vietnam, PepsiCo Vietnam and Nestlé Vietnam to research and assess the current situations of some industrial parks in Vietnam according to the Economic - Environment - Social and Governance (EESG) Framework. The study was carried out from January to June 2022 within the framework of the Sustainable Industrial Parks Initiative - SIP. The number of implemented samples accounted for 30% of the total 397 industrial parks in operation in the country.

Mr. Pham Hoang Hai, Head of VBCSD Partnerships Department, said Vietnam currently does not have a database on the operational status of industrial zones and their tenants. The research report also points out the loose coordination among stakeholders in industrial park management such as authorities, investors, tenants and brands to implement sustainable corporate development in industrial parks. The "enabling community" and "stakeholder connected" element is the difference of the SIP Initiative.

According to the research, the rate of policies on sustainable economic, social, environmental and corporate governance is low (only 39% have policies on environmental risk management, 10% have policies on promoting circular economy, and 13% have policies on digital transformation); industrial parks are more concerned with risk management policies (or complying with the law) than policies that bring about sustainable development for them and other stakeholders. Among surveyed IPs, only 22% have management system certificates and 76% do not have enterprise-level audit information. Their operational values are not fully assessed and widely shared.

According to Mr. Pham Hoang Hai, following this study, VBCSD and IDH will coordinate with members of the Initiative Steering Committee to build an Industrial Park Sustainability Index based on the ESG framework and conduct its compatibility and suitability testing in Vietnam.