Green Transformation Breakthroughs: Sustainable Future for Vietnamese Businesses

SMEs play an important role in Vietnam's private sector, contributing over 40% to GDP, but they haven't fully leveraged their potential for sustainable development. What steps should they take to address this limit ation?

In my view, there are two key areas where Vietnamese SMEs can “transform” themselves toward sustainable development.

First, there must be a shift in mindset and business thinking within the enterprises, starting with the leadership. Strategic thinking determines action. Strategic thinking drives action, and SMEs must transition from profit-driven to sustainable, nature-oriented approaches.

This transformation does not imply that pursuing profit is wrong, as profit is certainly the lifeblood of any enterprise. Companies naturally aim to generate profit, which is a legitimate and fundamental desire of every entrepreneur and business, whether it’s among the 98% of SMEs or the remaining 2% of large corporations in Vietnam. However, short-sighted, opportunistic strategies are outdated. With the growing demand for sustainability, the market will favor companies committed to responsible practices. SMEs must balance economic benefits with environmental protection and social responsibility to achieve sustainable development. That is the correct business mindset and the only path to sustainable development in the current era.

Secondly, businesses need to invest in and focus on enhancing sustainable corporate governance. However, Vietnamese SMEs often have limit ed resources and have not yet sufficiently prioritized or invested in corporate governance, which creates barriers for businesses pursuing sustainable development strategies or accessing green finance.

To remove these barriers, VBCSD-VCCI established the Corporate Sustainability Index (CSI) in 2014 and has organized the annual Sustainable Businesses Benchmarking Program in Vietnam since 2016, following the Government’s directive.

The CSI program not only recognizes outstanding sustainable businesses in Vietnam but also promotes sustainable practices and accountability in corporate governance. It includes indicators on governance, environment, labor, and society, compliant with local laws and international standards. By using the CSI, businesses can assess their performance and impacts, enabling them to develop appropriate action plans. The CSI helps enterprises prepare and disclose corporate information, facilitating access to investors and international markets to achieve their sustainable development goals.

Prime Minister Pham Minh Chinh attends the celebration of Entrepreneurs’ Day, presenting certificates and trophies to the top ten outstanding Vietnamese entrepreneurs 2022

In the context of global integration, what competitive advantages do Vietnamese businesses have, and how can they seize opportunities for sustainable development and long-term success?

Vietnamese businesses benefit from being latecomers, allowing them to learn from earlier successes and adopt new trends more readily. This enables them to adopt new trends and implement sustainable development more easily. For instance, in the context of a circular economy, we can fully utilize technology, digital transformation, and green transition to shift business models from brown to green.

Moreover, sustainable development is a strategic direction and top priority in the policies of the Party and the Government of Vietnam. Over 11 years of the Vietnam Corporate Sustainability Forum (VCSF) since 2014 and the National Conferences on Sustainable Development in 2018 and 2019 organized by VCCI, many policy recommendations have been submitted to the government, serving as inputs for key policies including Directive 13/CT-TTg on Sustainable Development, Decision 1362/QD-TTg for the sustainable development of private sector enterprises by 2025, and Resolution 136/NQ-CP on Sustainable Development.

The important role of the business community in economic and social development, contributing to the nation’s long-term prosperity, was reaffirmed in Resolution 41 on promoting the role of entrepreneurs in the new era, issued by the Politburo at the end of last year. Therefore, I believe that in the coming period, there will be more favorable policies to support the business community in practicing sustainable and responsible business. These are advantages for Vietnamese businesses to pursue sustainable development.

The CSI program, initiated and developed by VBCSD-VCCI, recognizes outstanding sustainable businesses in Vietnam and 
promotes sustainable practices and accountability in corporate governance

Vietnam is an open economy with 16 implemented free trade agreements (FTAs) and three currently under negotiation. While these agreements foster business collaboration and growth, they also pose challenges as companies must adapt to global standards and regulations by transforming towards green, sustainable and responsible practices.

On the other hand, Vietnamese businesses face challenges like limit ed awareness of sustainable development, insufficient understanding of high environmental and social standards, outdated technologies, weak management and limit ed resources.

To overcome these barriers and leverage their advantages to "leap through the dragon’s gate" towards sustainable development and long-term prosperity, in addition to shifting business mindset and enhancing corporate governance and accountability as mentioned earlier, Vietnamese businesses can explore transforming their value chains. It is important to note that businesses can only achieve sustainable development goals by building a resilient ecosystem through increased engagement and capacity building for their suppliers and stakeholders along the value chain. Furthermore, businesses should also focus on investing in dual transformation, specifically digital transformation and developing new technological solutions that complement and support the green transition.

How are VCCI and the business community promoting the Net Zero goal through innovation, transformation and cooperation?

For years, VCCI has partnered with ministries to support businesses by facilitating dialogue with authorities and sharing sustainable development models. The Vietnam Corporate Sustainability Forum (VCSF) is a prime example of this.

In addition, through a series of persistent training, education and communication activities over the years, VCCI has introduced new concepts and trends in sustainable business to the business community while also enhancing corporate capacity in areas such as the circular economy, carbon emission reduction across all three scopes (Scope 1, 2, and 3), nature-oriented business models, sustainable human capital development and the preparation of sustainability reports.

VCCI has also developed and announced several indices to promote sustainable transformation for different stakeholders. For example, the Provincial Green Index (PGI) encourages provinces and cities in Vietnam to focus more on economic development in conjunction with environmental protection, while the CSI helps promote sustainable corporate governance among the business community, thus enhancing the competitiveness of enterprises and guiding them toward responsible business practices. Currently, VCCI, through VBCSD, is collaborating with IDH Vietnam to promote sustainable industrial park development by deploying the Sustainable Industrial Park Index (SIP Index).

Notable recognition awarded to businesses that have demonstrated exceptional sustainability practices 

However, the efforts of VCCI or any organization depend on strong business commitment to sustainable development. Beyond financial resources, businesses can influence consumption trends, create sustainable livelihoods, preserve biodiversity, and protect the environment through nature-oriented models. A notable example is the initiative to raise awareness and train supply chain partners on Net Zero, jointly implemented by VBCSD, Nestlé Vietnam and various ministries in April, which has been positively received by the business community.

Following the 11th VCSF with the theme 'Net Zero 2050: Nurturing Trust—Creating Transformation,' successfully organized by VCCI on September 10, we have gathered many valuable recommendations from the business community regarding green transformation, promoting sustainable governance and building long-term human capital. These recommendations will be submitted to the Government and the National Council for Sustainable Development as soon as possible, with the aim of improving the regulatory framework and creating a favorable business environment that supports the sustainable development of enterprises.

With the joint efforts of the Government, regulatory bodies, social organizations, the business community, consumers and other stakeholders, I believe we can accelerate the comprehensive transformation and move toward a green, equitable and inclusive future.

Thank you very much!