Businesses need new thinking in implementing sustainable business models

February 23, 2024 - 00:00
The green transformation is a vital trend, even as it puts real pressure on businesses, acting as a driving force pushing businesses to seize market opportunities. ESG practices and sustainable business models have become a common development pattern globally.
Mark Birnbaum, Chief of Party for USAID Improving Private Sector Competitiveness project. — Photo of USAID

The green transformation is a vital trend, even as it puts real pressure on businesses, acting as a driving force pushing businesses to seize market opportunities. ESG practices and sustainable business models have become a common development pattern globally. Việt Nam News talks with Mark Birnbaum, Chief of Party for USAID Improving Private Sector Competitiveness project, implemented by Deloitte Consulting LLP, about these issues.

Could you tell us why Vietnamese enterprises should adopt ESG to achieve long-term success?

In today's rapidly transforming business world, understanding Environmental, Social and Governance (ESG) principles is imperative. It is evident that ESG integration is resulting in a fundamental shift in how businesses operate and define success. Recognising the importance of ESG, Vietnamese enterprises should make ESG adoption a priority. Evidence shows that companies that prioritise environmental sustainability, social responsibility and good governance practices are more likely to achieve long-term success than those that do not.

According to a recent study, companies with high ESG ratings attained better financial performance than those with lower ESG ratings, with a 35 per cent higher return on equity and a 20 per cent higher valuation. Furthermore, ESG initiatives can also help Vietnamese enterprises mitigate risk and improve their resilience in the face of global challenges, such as climate change and resource scarcity. By addressing these issues proactively, Vietnamese enterprises can avoid negative impacts on their operations and reputation, set themselves apart from their competitors, and attract more investment.

In your opinion, what are the challenges for Vietnamese enterprises in adopting ESG and what should they do in order not to lag behind this worldwide trend?

One of the major challenges is low awareness of ESG among Vietnamese enterprises, since businesses still focus mainly on economic aspects, sometimes ignoring environmental and social issues. The second challenge is actually starting their ESG adoption journey, since this concept is quite new in Việt Nam. The third challenge is that businesses usually consider ESG a burden because of the investment in technology and data management processes for ESG measurement and compliance to adopt ESG in their business practices.

Before making any investments, I encourage Vietnamese enterprises to utilise the certified toolkit to evaluate their level of sustainable business practices according to the ESG framework. In 2023, the U.S. Agency for International Development (USAID) Improving Private Sector Competitiveness project supported the Agency for Enterprise Development under the Ministry of Planning and Investment to develop a complementary toolkit with online access for all enterprises across Việt Nam. This toolkit, developed based on commonly recognised standards with adjustments for Vietnamese businesses, can be accessed easily via the specialised page on sustainable business applications from AED’s business information portal at

In addition, to raise the business community’s awareness and actions toward sustainable practices, and amplify the lessons learned and experiences in the journey of ESG adoption, on November 22, 2022, USAID and the Ministry of Planning and Investment, through the USAID Improving Private Sector Competitiveness project, announced the Việt Nam ESG Initiative. This initiative aims to spur private sector-driven sustainable and inclusive growth across Việt Nam and help Vietnamese enterprises, especially the SME community, improve their competitiveness and innovation, overcome challenges, chart a path for sustainable growth and job creation, and continue to contribute to Việt Nam’s prosperity.

Recently, we kicked off the 2024 Việt Nam ESG Initiative. I encourage Vietnamese SMEs, cooperatives, and business households that intend and commit to taking action toward ESG adoption to participate in this program. With this year's theme “Seizing the Transformation Opportunity”, we encourage Vietnamese enterprises to actively seize new market opportunities in the context of green transformation and strengthen their competitiveness to participate in global value chains. Adopting sustainable business models such as ESG practices will help them meet the requirements of the market, partners and investors; access green investment capital sources; and enhance their branding in domestic and international markets. In particular, this is an excellent opportunity for them to turn their liabilities into competitive advantages and create added value ​​for their businesses.

Could you share with us some prominent benefits for Vietnamese enterprises when signing up for the 2024 Vietnam ESG Initiative?

The 2024 Vietnam ESG Initiative will sponsor the pilot, implementation, or replication of innovative initiatives to stimulate sustainable business practices with a total value of technical support of up to VNĐ2 billion for the top three winners. Technical support includes capacity building on ESG and green transition, strategic consulting, and developing action plans on sustainable business, developing sustainable development reports, conducting a greenhouse gas inventory, and developing an emissions reduction plan. In addition, the top 10 finalists will receive in-depth one-on-one training and consulting to update new trends in sustainable business practices and green transformation, develop an ESG implementation plan, and establish a sustainable development report based on international standards.

In December 2023, in collaboration with the Agency for Enterprise Development, we organised training on Sustainable Reporting with the Global Reporting Initiative (GRI), a worldwide recognised standard. This customised training is a special award, exclusively designed for the top 10 finalists of the 2023 Vietnam ESG Initiative to help them start their reporting processes using standard benchmarks to evaluate their ESG performance against industry peers and gain insights into the competitive landscape.

We are also supporting the top 3 winners of the 2023 Vietnam ESG Initiative, including HHP GLOBAL, Vinasamex and Vietnam Food, to implement or scale up their ESG initiatives such as conducting a greenhouse gas emissions inventory, developing an emissions reduction plan, preparing ESG reports, and scaling up the inclusive business models. They are champions of change to inspire the business community to embrace ESG practices for sustainable and inclusive growth, fostering a prosperous Việt Nam. — VNS