Opening Remarks by Ms Dzeneta Mulabegovic, Sustainable Development Specialist, UNDP in Viet Nam
Vietnam Innovation Summit 2023
November 27, 2023
Your excellencies, esteemed colleagues, dear entrepreneurs and innovators, good morning.
Let me start by congratulating Innolab Asia on the organization of another promising Vietnam Innovation Summit, with a theme that is close to UNDP’s heart: innovation for a greener Viet Nam.
We are happy to address you today, and we do so with one key message to all the enterprises in the room, in the words of the UN Secretary General Antonio Gutteres: “We need you more than ever, to help us change course, end fragility, avert climate catastrophe and build the equitable and sustainable future we want and need.”
Private sector has a pivotal role to play in achieving the Sustainable Development Goals. Same can be said for Viet Nam’s climate ambitions. In order to advance towards a more prosperous, equitable and “Greener Viet Nam”, we need the private sector to take the lead in innovations that help deliver these commitments.
Currently, the role of private sector in sustainability is acknowledged by the rising interest in ESG. As you may know, ESG stands for Environmental, Social and Governance, and refers to a framework used to assess business practices and performance, on various sustainability and integrity issues. ESG strategy focuses on setting measurable targets, reaching indicated performance metrics, and conducting audits to verify that the disclosures are accurate.
When done correctly, ESG has indeed the potential to align businesses with the Sustainable Development Goals and the climate ambitions. But beyond the benefits for People and Planet, practicing ESG can also bring important Profit for the businesses, in form of long-term value, by improving financial efficiency and competitiveness, and providing access to capital and access to international markets.
The past few years have witnessed an exponential rise in ESG awareness and adoption worldwide. While officially coined in 2004 in an UN report “Who Cares Wins”, ESG has transcended from a niche concept to a mainstream consideration for investors, businesses, consumers, and regulators alike. In Viet Nam, ESG is beginning to gather pace, driven by Viet Nam’s Net Zero commitment, and policies such as the National Green Growth Strategy, which have focused attention on sustainability goals. As part of these policies, the private sector is increasingly required to align their business operations with Viet Nam’s sustainability ambitions.
As demonstrated by the theme of this Summit, ESG is clearly on the corporate radar in Viet Nam. However, different sources indicate that the actual level of ESG practice is still low. As much as 80% of businesses in Viet Nam might have made ESG commitments, or plan to so in the near future. However, around 70% of them indicate to lack understanding of the data required and to have none to very limited reporting. Only 24% indicate to have a clear governance structure to drive the ESG commitments forward. Merely adhering to ESG-related legislation and regulations, or having some kind of ESG programme in place, falls short of genuine ESG practice. The desired benefits of ESG, for People, Planet and Profit, can only be achieved with an ESG strategy with clearly defined targets and metrics, with rigorous data collection and disclosure, and strong ESG management framework in place.
There are different challenges and barriers to advancing ESG practice in Viet Nam, including lack of knowledge, human resources and government regulation. We see the need for a comprehensive programme to work on capacity building for businesses, to support their access to the ESG and Impact investors, to develop clear regulatory frameworks for businesses and financial institutions, and to raise awareness about the importance of doing ESG the right way, with focus on scientific validity and real-world impact.
The expectation is that both at global and national level, the political commitment and regulatory pressure for corporate sustainability will continue to increase, as will the demand from potential investors and consumers. Access to financial services and investment, also in Viet Nam, is expected to increasingly become related to ESG performances.
The future of ESG will be shaped by innovation and sustainable solutions. UNDP had the honour to support the National Agency for Technology Entrepreneurship and Commercialization in the development of the Innovation and Startup Strategy. The newly launched Open Innovation Challenge or the OIC platform helps enterprises to share their ESG challenges with a pool of thousands of tech solvers, who stand ready to offer their existing innovative solutions or to develop new ones. Enterprises that pioneer eco-friendly technologies, circular economy practices, and renewable energy initiatives will lead the way in creating a greener and more sustainable future.
Although currently a key barrier, the future of ESG lies in data. Harnessing the power of advanced analytics and technology will enable organizations to unlock deeper insights into their sustainability performance. Data-driven decision-making will become a strategic imperative for enterprises aiming to thrive in the age of sustainability. High-quality ESG data will be crucial to attract sustainable investments.
Finally, an important future trend which we foresee and support, will be to move beyond ‘Net Zero’ to ‘Net Positive’. We anticipate the stakeholders including the businesses, to strive to advance faster, by committing beyond the management of risks towards creating a net positive impact.
To move towards Net Positive, improvement in stakeholder engagement is key. Enterprises that actively engage with stakeholders will thrive in the ESG landscape. Meaningful engagement with investors, customers, employees, and communities will foster trust and collaboration, leading to greater positive impact and long-term value creation. New partnerships, in particular with civil society and experts, will become an important element in advancing ESG practice.
While currently lagging behind in ESG practice, Vietnamese businesses have the opportunity to leapfrog on their sustainability path. UNDP has developed the SDG Impact Standards and the Impact Measurement and Management Tool, which can guide you on this path. The SDG Impact Standards are voluntary internal management standards designed to help businesses and investors embed sustainability into their management and decision-making. They provide a decision-making framework to make sense of existing relevant principles, frameworks and tools while also filling gaps in current market practices, to achieve progress on sustainability.
Ladies and gentlemen,
I would like to conclude with a call to all the entrepreneurs in the room to join the movement of sustainability management, measurement and disclosure, creating a culture of accountability and trust, and striving for a real-world impact. We need every enterprise to make a difference where it matters most: on the ground, for people and planet, and for green growth in Viet Nam.