Vietnamese businesses are facing increasing pressure to adopt Environmental, Social, and Governance (ESG) standards, driven by demands from international partners, investors, and financial institutions. While there’s a strong commitment to ESG integration, a significant gap in human capital and expertise is hindering effective implementation.
The ESG Skills Gap
A recent PwC survey highlights the scale of this challenge across Southeast Asia, with 78% of CEOs prioritizing ESG, yet 40% lacking the necessary workforce to meet these demands. In Vietnam specifically, 80% of businesses are committed to or planning ESG implementation within the next 2-4 years. However, 60% identify a lack of specialized knowledge as their biggest barrier, with 54% never having conducted ESG training for employees and 38% lacking a dedicated ESG leadership team.
Experts, such as Phung Van Dong, Director of AIT Vietnam, emphasize the severe shortage of qualified ESG professionals. This scarcity is a major bottleneck, impacting not only ESG adoption but also broader digital transformation initiatives, which are intrinsically linked to sustainable ESG practices. The current deficit in IT professionals further exacerbates this issue, with Vietnam aiming for 700,000 IT professionals by 2025 but currently only having around 530,000, and only 30% of graduates meeting immediate enterprise requirements.
A Strategic Imperative for Sustainable Growth
Sam Hana, CEO and Vice President of Strategy for ASEAN Shell Global Lubricants and co-director of the EMBA program at AIT, underscores that ESG is no longer optional but a prerequisite for business survival and growth in the 21st century. Despite the high commitment to ESG among Vietnamese businesses, significant gaps remain: 34% have yet to develop specific programs, and only 15% of large enterprises have comprehensive ESG reports. Furthermore, 76% of organizations lack a clear ESG governance structure, from role assignments to monitoring mechanisms.
Deputy Minister of Home Affairs, Nguyen Thi Ha, reinforces that strong ESG performance offers a competitive advantage, attracting investment and building a sustainable reputation. Investors, consumers, and communities are increasingly factoring environmental, social, and governance considerations into their decisions.
Practical Solutions for ESG Integration
To effectively integrate ESG, businesses, particularly SMEs, need practical, tailored solutions. Hana suggests starting by identifying key ESG factors relevant to operations and stakeholder interests, then embedding these values into core business strategy.
Luong Thai Bao from the Institute of Banking and Finance highlights that ESG and digital transformation are aligned, aiming for more efficient production models that generate higher output while adhering to new environmental and social responsibilities.
Addressing the human resource challenge is paramount for successful ESG implementation. Without a concerted effort to develop and attract ESG expertise, Vietnamese businesses will continue to face significant hurdles in achieving their sustainable development goals.
