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The confectionery production line of Bibica, a member of PAN Group – a pioneer in ESG practices with many positive results. Photo: TL

“ESG is both a tonic and a remedy”

Speaking at a recent seminar on ESG (environmental, social, and governance) in HCM City, Dr. Le Thai Ha, Executive Director of the VinFuture Foundation and the Green Future Fund, noted that traditionally, business governance has been seen as a cost-generating activity. If not done properly, it can be "more harm than good," potentially impacting profitability. However, current views suggest that ESG-oriented governance can actually create profits. Effective governance not only reduces costs but also lays the foundation for sustainable profit.

Agreeing with Ha, Dr. Bui Thanh Minh, Deputy Director of the Private Economic Development Research Board (Board IV), pointed out that governance was a major concern for business owners. Vietnam’s economy relies heavily on labor, environment, and resources, and many businesses suffer losses due to poor governance. Governance, one of the three pillars of ESG, helps businesses address their weaknesses and optimize costs and resources.

According to Minh, consumers today are willing to pay more for green products, giving businesses the opportunity to replace products and expand into markets where competitors are not green. Following ESG principles also allows businesses to access green financing, which, though not cheap, offers medium to long-term capital based on trust. This provides an opportunity for businesses to resolve capital structure issues in an environment dependent on credit.

“With the internal governance issues and the global ESG trend, managing businesses with an ESG focus is both a tonic and a remedy. The key is how to use the ‘medicine’ effectively and in the right dosage so the business becomes healthy,” emphasized Minh.

From a business perspective, Nguyen Van Khoa, CEO of FPT Group, affirmed that ESG was a strength that enabled businesses to leverage their core values. "When negotiating with foreign partners, Vietnamese businesses are always asked about ESG. Without ESG-focused governance, there’s no opportunity for collaboration. ESG is the power for businesses to promote their core values," said Khoa.

PAN Group is a prime example of the benefits of ESG practices, having risen to lead in sectors such as seed production, agricultural chemicals, pest control, and ranking third in shrimp exports, while being a leading player in the domestic confectionery market. By adopting ESG, PAN's member companies quickly transitioned to safer and more environmentally friendly production technologies. The group also opened several modern, clean-energy factories. ESG has also helped PAN access capital from international organizations such as IFC, TAEL Partners, GIC (Singapore's sovereign wealth fund), PYN Elite Fund, and Sojitz Corporation. According to Nguyen Thi Tra My, CEO of PAN Group, over the past 10 years, the company has raised about US$200 million from foreign investors through various forms.

How to Start?

Despite the many benefits, implementing ESG-oriented governance is not simple. Many businesses, especially small and medium enterprises (SMEs) in Vietnam, are struggling with the process.

Nguyen Duc Minh, Vice Chairman of the Hanoi Industrial Products Manufacturing Association, noted that based on practical experience, businesses implementing ESG must first identify their priorities. ESG implementation requires a roadmap, and ESG evaluation units also assess businesses based on their roadmap. In the initial phase, businesses can focus on raising awareness at senior and mid-management levels. Later stages can involve financial and production aspects.

Minh acknowledged that businesses were currently overwhelmed by a "maze" of information, with numerous standards and perspectives on ESG. Thus, companies need to analyze their business model and assess how ESG trends will impact it. “If the goal is to access ESG funds, businesses should consider the requirements of these funds. If the goal is market expansion, they can learn from pioneering businesses. The most critical factor in ESG implementation is data, as businesses must build statistical data to demonstrate their progress,” said Minh.

Sharing FPT’s experience, Pham Thi Quynh Vi, Quality Director at FPT Group, said that when the company began its ESG journey five years ago, they had to learn extensively, primarily from large customers. Every customer evaluation was an opportunity for FPT to learn and improve. “From what we learned, we identified the key issues we could address and built an ESG framework to implement,” she shared.

Ha also emphasized that each business had its own characteristics in terms of industry, scale, and development orientation, meaning there is no universal ESG formula. Therefore, hiring consultants in the early stages is crucial if the company lacks the internal resources and knowledge to implement ESG.

The key is for businesses to work closely with consultants so that they fully understand the company’s operations and culture. Consultants can quickly provide knowledge on ESG, global trends, and lessons from businesses with similar models. Business owners must then select the most suitable model based on this information. "Hiring consultants helps businesses save time on research, but consultants are only companions—the business itself is the one making the decisions and taking full responsibility," Ha emphasized.