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Accelerating ESG adoption in Vietnam’s financial services sector
Findings from Vietnam ESG Readiness Report 2022
The financial services sector, plays a critical role in enabling holistic efforts toward sustainability. As such, embedding ESG principles into the core strategy and operation of financial institutions will be key. Towards this end, Vietnamese policy makers are pushing to integrate ESG into the fabric of the sector. So, how is the sector responding to ESG?
About the survey
The Vietnam ESG readiness report 2022 was jointly developed by PwC Vietnam and the Vietnam Institute of Directors (VIOD). This financial services report is an extracted key findings of the same survey, conducted online between May and August 2022 among the business community in Vietnam. The goal was to get an understanding of how businesses in Vietnam approach ESG.
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88% have made or plan to make ESG commitments |
67% ranked Governance as 1st priority |
30% have ESG leader with clear KPIs and authority to drive ESG programme, reports to the Board |
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73% find difficulty in embedding ESG risks in your existing risk framework |
30% of those reporting externally use third party to verify / audit the information published in the non-financial disclosures |
27% conducted / plan to conduct Board-level training, required ESG SMEs |
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What can be done to accelerate ESG integration?
ESG strategy and alignment to corporate strategy
Having a clear understanding of the specific E, S and G issues that are material will help financial institutions focus their time, energy and resources on fewer, yet more impactful, issues. These elements must be aligned to the overall corporate strategy. It is also critical that the Board leads the way in shaping a strategic vision for the ESG programme.
Managing ESG risks
Financial institutions can future-proof themselves by integrating ESG risks in every stage of the risk management framework. For instance, climate stress testing can be used for ESG risk assessment. Considerations on whether investments are concentrated in specific industries or regions could form part of the ESG risk identification process.
Credit assessment
Incorporate ESG factors into risk rating models and frameworks to make credit risk appraisal decisions. In short, to move ESG from policy to practice, it is useful to embed ESG in existing processes instead of creating parallel checks. Integrating ESG in the credit or investment cycle, from loan origination to completion is an example.
Culture & Capacity building
Investing in upskilling and capacity building programmes is critical. More importantly, the initiatives must be aligned with the business vision of the culture, capabilities, knowledge and competencies that your workforce should have.
Addressing data gaps
Data collection is essential for Financial Services firms to successfully identify and assess ESG risks and integrate ESG into risk modelling. To facilitate robust risk monitoring and risk management, determine reliable internal and external data sources to accurately reflect the exposure to relevant ESG risks. Avenues to collect and process data could include existing Client Due Diligence (CDD) /Know Your Customer (KYC).
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Get in touch
Nguyen Hoang Nam
Environmental, Social & Governance (ESG) Leader and Partner, Assurance Services, PwC Vietnam
Tel: +84 28 3823 0796
Nguyen Dinh Trung, CFA
Senior Manager | Risk Consulting services, PricewaterhouseCoopers Consulting Vietnam
Tel: +84 24 3946 2246