Faced with the strong fluctuations of global Politics, Economy and Climate in recent years, businesses are facing challenges to maintain operations and development. In this context, ESG (Environmental, Social, Governance) becomes a powerful support tool that can help businesses better prepare to adapt and turn challenges into opportunities.
Global volatility
In the past 6 months, Net Zero Banking Alliance has witnessed a strong “disintegration” when a series of big names such as JP Morgan, Wells Fargo, Citibank, Goldman Sachs announced their withdrawal from this “trillion dollar” alliance. This was due to an investigation from the US House of Representatives under the participation of the Republican Party. This incident has caused a significant erosion of trust in ESG! But we need to clearly see the nature of this phenomenon as a manifestation of the “unpredictability” in policy under the Trump administration. Looking back at the first term, the Trump administration made decisions that went against sustainable development such as: Withdrawing from the Paris Agreement, restarting fossil fuel projects, changing some progressive regulations of the US Environmental Protection Agency...
JP Morgan has just announced its withdrawal from NZBA in the first days of the new year 2025
All of these moves have indeed created significant concerns for businesses and financial institutions committed to sustainable development. However, this “turning away” has slowed down but not prevented the Green development trend that has been taking place vigorously in the United States in particular and globally in general in recent times. In the United States, the industry group related to renewable energy or clean technology has witnessed remarkable growth, attracting huge investment and creating many jobs.
As a country with a special position both in terms of geopolitics and in the process of restructuring the global supply chain, Vietnam is facing new opportunities and challenges from global economic and political fluctuations in recent years. Typhoon Yagi, saltwater intrusion or rising sea levels... are all natural problems that we need to adapt to and find solutions for.
In such a volatile context, we can only focus on controlling what can be controlled, and therefore ESG is a tool to help Vietnamese businesses look deeply into their own internal environment to best prepare for external fluctuations. In addition, based on ESG, businesses can participate in projects to manage disaster risks caused by climate change or fluctuations.
Policy Changes: Pressures and Opportunities
In recent years, Vietnam has made great strides in improving its environmental protection policies, making significant commitments to reducing greenhouse gas emissions, such as the Net Zero target by 2050. During the COP29 Conference, Vietnam is also one of the countries highly appreciated for its open policies for rooftop solar power after many years of neglect.
Looking internationally, in Vietnam’s key export markets such as the EU, policies related to climate change (CBAM) and sustainable development (CSRD) are also increasingly tightened. They create new barriers that reduce the competitive advantage of Vietnamese goods.
Faced with this situation, businesses around the world in general and in Vietnam in particular are making efforts to keep up with this trend so as not to be left behind. Moreover, they are facing the pressure of complying with strict domestic and international environmental regulations while still ensuring stable growth.
Policy changes are also an opportunity for businesses to gain a competitive advantage by becoming a sustainable supplier that is highly valued by partners. Proactively applying ESG is the key to helping businesses not only meet compliance requirements, but also improve competitiveness through initiatives on internal process improvement, clean technology, green supply chains and transparency in governance. At this time, proactive and drastic internal improvement is the biggest driving force for businesses to grow and stand firm in the market.
Market Volatility: Risks and Drivers
The global marketplace is changing rapidly, with consumers and investors increasingly demanding sustainable products and services. At the same time, economic crises, supply chain disruptions and the COVID-19 pandemic have demonstrated that adaptability and market diversification are critical to business survival.
ESG provides a framework to help businesses assess and manage risks and vulnerabilities from market volatility. By transparently disclosing environmental, social and governance activities, businesses can attract investors, expand markets and maintain competitive advantage.
ESG: Tools to help businesses adapt
Substantial application of ESG not only helps businesses better prepare for adaptation, but also opens up opportunities from appreciation from investors, customers to partnerships. ESG helps businesses:
- Comply and respond promptly to policy changes: ESG helps businesses have a checklist to check their compliance with regulations and standards.
- Enhance brand reputation: Transparency in ESG reporting creates trust from investors and customers.
- Cost-saving: Applying green processes helps reduce energy and material costs.
- Improve labor productivity: improving processes helps employees work more efficiently, enhancing their capacity to help them stay more committed to the business
- Effective risk management: Monitor and develop timely response plans.
Many entrepreneurs today choose the path of sustainable development because they believe it is the only way to ensure business viability and create a positive impact on society. But above all, it is seen as a moral responsibility to the planet and future generations.
We cannot develop stable business in a shaky world and on a planet that is not safe for life... ESG is an important tool to help businesses shape strategies to deal with long-term challenges and form a foundation for sustainable development, build internal strength to withstand all external storms, bringing value not only to the business but also to the surrounding community.