The Corporate Sustainability Reporting (PTBV) Directive, referred to as the CSRD directive, was issued by the European Union (EU) in December 12 and officially takes effect for reports issued from fiscal year 2022 (except for some sectors and non-EU-based businesses that will need to comply from 2024).
Accordingly, the CSRD Directive received a lot of attention in the global business community. One of the main reasons is because the CSRD Directive is mandatory instead of voluntary like current sustainable development reporting standards and frameworks such as: Global Reporting Initiative (GRI), Task Force responsible for Climate-Related Financial Reporting (TCFD), Sustainable Accounting Standards Board (SASB)... More importantly, the CSRD Directive will have an impact on businesses around the world, not just within en Europe.
According to PwC, one of the big steps of the CSRD Directive in promoting sustainable development practices is that instead of focusing only on the environmental footprint of the business itself, CSRD emphasizes the value chain of the business. , which is a key factor contributing to business impacts on the environment and society.
In addition, the CSRD Directive promotes transparency in disclosing sustainable development information. Specifically, the CSRD Directive requires limited assurance of data reported by independent third parties. In the future, the CSRD Directive will move towards requiring reasonable assurance, equivalent to the level of assurance for financial reporting.
“Given the complexity and multi-dimensionality of topics related to sustainable development, this requirement helps improve the accuracy, completeness and objectivity of information included in a business's sustainable development report. , avoid reporting only positive aspects (cherry-picking), omitting information or over-emphasizing”, PwC said.
Also according to PwC, the introduction of the CSRD Directive also requires the attention of the tax department in businesses. With new and strict reporting requirements, the CSRD Directive will put pressure on businesses as well as the entire value chain to change the way they operate, leading to tax and legal implications...
Impact on Vietnamese businesses
According to PwC, the CSRD Directive is and will have a strong impact in Vietnam. Because in the current context, two-way trade turnover between EU and Vietnam is seeing more and more positive changes. Since EVFTA Agreement signed, 25/27 EU member countries have invested more than 22 billion USD in more than 2.000 FDI projects in Vietnam. On the contrary, Vietnam is the EU's 16th largest trading partner and ranked 11th among the largest suppliers of goods to this market.
“With a large number of Vietnamese businesses located in the value chain of businesses operating in Europe, the introduction of the CSRD Directive will require these businesses to step up data preparation and reporting. sustainable development to provide to parent companies or partner businesses in Europe upon request", PwC's report stated.
PwC also analyzed the impacts of the CSRD Directive on businesses in the value chain of European partners in Vietnam, and proposed preparation steps for these businesses. Specifically, in PwC's opinion, based on current reporting requirements in Vietnam, Vietnamese businesses belonging to the value chain of European partners should pay attention to three reporting requirements under the CSRD Directive:
First, is the issue of greenhouse gas emissions: According to PwC, despite understanding the importance of green transition, in general, Vietnamese businesses (including listed businesses) are not ready for inventory and deflation. greenhouse gas emissions. Among the enterprises in the VN100 index basket, only 12 enterprises have conducted inventory at emission scopes 1 and 2, and only 7 enterprises have fully mentioned emissions in emission scopes 1, 2 and 3. XNUMX.
“Where greenhouse gas emissions under emission scope 3 are a key issue for European businesses that need to comply with the CSRD Directive, supply partners in Vietnam will have to compile emissions data and make efforts to Reduce greenhouse gas emissions within a business as well as its supply chain. In addition to the CSRD Reporting Directive, Europe has also implemented the Carbon Border Adjustment Mechanism to impose carbon taxes on goods imported into the EU market based on the intensity of greenhouse gas emissions in the process. produced in the host country. These two laws will make inventorying and reducing greenhouse gas emissions an indispensable condition for entering the EU market." PwC stated in the report.
Regarding greenhouse gas emissions, PwC analyzes proposed roadmaps for businesses. Specifically, businesses need to improve awareness and capacity in management, inventory and mitigation of greenhouse gas emissions for personnel within the business. At the same time, establish decarbonization policies and processes, implement low-carbon production methods to reduce emissions during production, focus on energy and transportation. Transportation because these are the two sectors that cause the most greenhouse gas emissions in Vietnam.
In addition, Vietnamese businesses need to set emission reduction goals consistent with climate science, that is, limit global warming to 1,5°C. In addition, it is necessary to research requirements for reporting greenhouse gas emissions, develop internal processes, emissions inventory systems and systematic data management to serve the process of ensuring the numbers. data in the report.
“Businesses can refer to relevant laws in Vietnam, including Decree No. 06/2022/ND-CP regulating greenhouse gas emissions mitigation and ozone layer protection,” PwC points out.
Monday, is a matter of biodiversity and ecosystems. According to PwC, although Vietnam has a number of businesses practicing conservation and restoration of biodiversity in production and business, overall business participation is relatively limited, mainly in a spontaneous manner. voluntarily and according to the mobilization of resources by environmental organizations instead of businesses proactively assessing impacts and implementing implementation. Meanwhile, the report "Assessment of biodiversity in Vietnam" by the International Union for Conservation of Nature (WWF) shows that the economic activities of businesses have been greatly affecting biodiversity. biodiversity in Vietnam. In addition, Vietnam's laws currently do not have many specific instructions and clearly state the responsibilities of businesses in assessing impacts and minimizing impacts on biodiversity and ecosystems.
According to the requirements of the CSRD Directive, businesses or manufacturers in Vietnam will need to conduct an assessment of the impact of their business on the ecosystem surrounding their operations and production areas, and collect relevant information. information related to biodiversity to support the dual materiality assessment of the partner enterprise in Europe, as well as the preparation of reports on this topic if it is identified as one of the material topics of partner businesses.
PwC proposes a roadmap for businesses to implement this criterion: Improve awareness and capacity on biodiversity conservation for personnel within the business; Assess the impact of the business on the ecosystem surrounding the business's operating and production area and the associated risks and opportunities; have a systematic measurement and data collection process and data management system to serve the process of ensuring data in the report. Vietnamese businesses can refer to relevant laws in Vietnam, including: Law on Biodiversity 2008; Decision No. 149/QD-TTg of the Prime Minister dated January 28, 01 approving the National Strategy on Biodiversity to 2022, vision to 2030.
Tuesday, social issues and human rights. PwC said that many Vietnamese businesses have a sense of respecting and protecting the rights of workers, customers' rights and implementing responsibilities to the community. However, human rights violations by businesses in Vietnam also tend to increase in number, severity and scope of impact. Some outstanding violations include businesses discriminating, using child labor, not ensuring safe working conditions, rest time, minimum wage, social insurance, and human rights. Trade union activities of workers...
PwC cites the following data: The average monthly income of male workers is currently 1,35 times higher than the average monthly income of female workers (8,3 million VND compared to 6,1 million VND). Or in Vietnam, there are more than 1 million children between the ages of 5 and 17 participating in labor, accounting for 5,4% of the total number of children in this age group.
“With the advent of the CSRD Directive, businesses and manufacturers in Vietnam need to collect information related to ensuring human rights in production and business to support the assessment of dual materiality. of partner enterprises in Europe, as well as for that enterprise to prepare a report on this topic if this is identified as one of the key topics", the PwC report stated.
PwC also proposed an implementation roadmap for businesses: Need to improve awareness and capacity to ensure human rights for personnel within the business; Promote the assurance of labor standards and production and business environment; At the same time, tighten the internal control system, establish a risk management system in business processes and comply with accountability requirements; Establish partnerships and participate in support programs of international cooperation organizations such as ILO (International Labor Organization), UNDP (United Nations Development Program) ... on creating activities worker-friendly businesses; have a systematic measurement and data collection process and data management system to serve the process of ensuring data in reports and evaluating human rights issues. Vietnamese businesses can refer to relevant laws in Vietnam, including: Law on Enterprises 2020 (Article 8 on Obligations of enterprises); Labor Law 2019.
“The CSRD Directive has a profound impact on a global scale, requiring the participation of all links in the value chain of businesses operating in the European market. Relevant Vietnamese businesses therefore need to closely monitor and soon grasp compliance requirements with the CSRD Directive to maintain competitiveness and develop partnership relationships with businesses in Europe, as well as have timely implementation plans. This is also an opportunity for Vietnamese businesses to consider converting production and business models towards more sustainable ways and be ready to meet increasingly strict requirements for sustainable development practices from large markets such as the EU. ”, PwC confirmed.
PwC has an article analyzing the impacts of this Directive on Vietnamese businesses. Please read more at: https://www.pwc.com/vn/vn/insights-hub/perspective-blog/csrd-vietnam.html#:~:text=Ch%E1%BB%89%20th%E1%BB%8B%20B%C3%A1o%20c%C3%A1o%20Ph%C3%A1t%20tri%E1%BB%83n%20b%E1%BB%81n%20v%E1%BB%AFng%20(PTBV)%20c%E1%BB%A7a,tu%C3%A2n%20th%E1%BB%A7%20t%E1%BB%AB%20n%C4%83m%202026).
*Source: Industry and Trade Newspaper