ESG, EPR, and Impact Investment: Turning green pressure into opportunity

Speaking at the seminar “Guidance and financial support for ESG implementation to access the EU market” on September 23, Ms. Vu Kim Hanh, Chairwoman of the Vietnam High-Quality Goods Business Association, stated that ESG (Environment – Social – Governance) is no longer just a trend but has become a mandatory requirement for businesses. Without a “green pass,” companies can hardly engage in trade, partnerships, or access international capital. This is an urgent pressure but not easy to resolve, as meeting ESG standards requires not only financial investment but also knowledge and practical, sustained commitment.

Many businesses have yet to establish a solid legal foundation, and their approach to accessing capital and managing ESG resources remains limited. Therefore, companies need to “build up” knowledge, skills, and experience to sustain long-term development.

Ms. Vu Kim Hanh also highlighted a reality: there have been cases where companies hired others to write ESG reports that did not accurately reflect their actual operations.

“ESG is not just a procedure or a certificate; it is a long-term development strategy. It requires genuine investment, from internal governance to finance and technology, so that Vietnamese businesses can compete sustainably in the global market,” emphasized Ms. Vu Kim Hanh.

According to Ms. Nguyen Cam Chi, Director of the Sustainable Development Advisory Division at MCG Consulting and Management Co., Ltd., global ESG assets have now reached USD 41 trillion, establishing ESG as a new investment standard.

However, Ms. Cam Chi noted that businesses need to shift their mindset and adopt smart investment strategies, rather than trying to meet all criteria superficially.

“Investing in ESG goes beyond obtaining certificates; it also involves production infrastructure, technology, and data - these are the foundational elements for sustainable business practices,” said Ms. Cam Chi, noting that Vietnamese companies need a proper understanding of ESG to implement it effectively and avoid mere formalities. She also emphasized balancing investment costs and selecting appropriate criteria, particularly addressing the common weakness of lacking systems for measurement, recording, and reporting.

Alongside ESG, Extended Producer Responsibility (EPR) policies are also becoming a pressure that compels businesses to change. EPR requires companies to take responsibility for the entire lifecycle of their products, including when they become waste.

According to Ms. Chu Thi Kim Thanh, Executive Deputy Director of PRO Vietnam, EPR serves three roles: assigning responsibility to producers, promoting a circular economy, and reducing environmental pollution. While EPR has long been implemented globally, in Vietnam, the 2020 Environmental Protection Law has made it mandatory. Businesses have two options: recycle on their own or contribute financially to the Vietnam Environmental Protection Fund.

Alongside ESG and EPR, impact investing is emerging as a global financial trend. The goal of this capital flow is not only profit but also creating positive value for society and the environment.

Mr. Abhishek Mittal, CEO of Aavishkaar Capital, stated that by 2024, the assets under management of impact investors reached USD 490 billion, with emerging markets in Southeast Asia alone attracting USD 6.17 billion. The majority of this capital is focused on climate change projects, renewable energy, and solar power. Of these investments, 69% target greenhouse gas emission reduction, 67% focus on climate adaptation, and only 9% are unrelated to climate goals.

Mr. Mittal added that Aavishkaar Capital currently manages eight funds with total assets exceeding USD 500 million and operates in Indonesia and Bangladesh. The firm is particularly planning to expand into Vietnam, focusing on three key areas: agriculture and food; supply chain solutions; and sustainable manufacturing and export.

According to Ms. Nguyen Cam Chi, for Vietnamese businesses, the biggest challenge is the “green barrier” from Europe. For example, 50% of coffee farmers lack cadastral records and cannot trace their cultivation areas, making compliance with EUDR regulations very difficult. Wood and agricultural product companies also face significant pressure. It’s not just the EU; the US, Japan, South Korea, and Singapore are all imposing increasingly strict green standards.

ESG is not only a “playing field” for large corporations. In fact, small and medium-sized enterprises (SMEs) may have an advantage due to their flexible governance structures, which allow for easier adaptation.