A Sustainability Report (also known as ESG Report) is no longer a foreign term for listed companies on the stock exchange. On January 11, 2013, the State Securities Commission of Vietnam and the International Finance Corporation (IFC) jointly published the Guidelines for Preparing Sustainability Reports for Vietnamese Enterprises.
Encouraged by the United Nations, each enterprise is recommended to prepare Sustainability Reports to enhance transparency and promote sustainability in business operations, supply chains, and investment decision-making.
What Is a Sustainability Report?
What Is a Sustainability Report?
A Sustainability Report is a practice of measuring, disclosing, and being accountable to stakeholders for a company’s activities with the goal of sustainable development.
Listed companies are encouraged to publish Sustainability Reports to disclose information regarding their operational performance, focusing on environmental and social aspects.
In addition to outlining the company’s sustainable development plans and aspirations, the report proactively evaluates the action plans to achieve the set targets.
Benefits of Sustainability Reporting
Sustainability Reporting helps companies build and strengthen investor confidence and enhances more effective business risk management.
An increasing number of enterprises integrate environmental, social, and governance (ESG) information into their annual reports. This trend partly demonstrates the correlation between sustainable development and operational efficiency, as reflected by corporate profitability.
Benefits of Sustainability Reporting
Below are several benefits as published and recommended by the State Securities Commission:
A Management Tool to Enhance Understanding of Risks and New Business Opportunities
Consider the continuous trends of development and innovation in business operations. Predicting and planning for new trends is an advantage achievable only when companies prepare thoroughly through a clear delegation of responsibilities and robust internal systems to optimize business efficiency.
Consideration of Stakeholder Interests
Stakeholders include employees, customers, partners, investors, government agencies, media, etc. A company’s engagement in sustainability reporting reflects its credibility and transparency to these stakeholders. This is considered a step forward in enhancing corporate reputation and business capacity by building trust with stakeholders.
Benefits of Sustainability Reporting
Quantification of Business Value
Nowadays, investors increasingly show interest in ESG strategies and sustainable development of enterprises. Companies practicing ESG are perceived as more valuable by investors, thereby enhancing competitiveness. Most governments worldwide facilitate and provide opportunities for enterprises oriented toward sustainable development.
Positive Investment Outcomes from Sustainable Activities
Sustainability reports generally disclose transparent goals with specific measurement criteria to demonstrate effective risk management. Effective risk governance contributes to better investment results.
Current Status of Sustainability Reporting in Vietnam
The number of sustainability reports prepared by enterprises increased from 21 to 33 by the end of 2024 compared to 2023. At the 17th Listed Companies Awards held on November 16, 2024, many new enterprises participated, reflecting a rising trend year over year.
Moreover, according to the judging panel’s assessment at this award, sustainability reports have improved both in quantity and quality. Report structures have attracted more attention and have been increasingly refined by enterprises.
Current Status of Sustainability Reporting in Vietnam
In Vietnam, KMC would like to highlight several outstanding names that have been quite successful in developing their sustainability report structures.
For example, Vinamilk published its 2023 Sustainability Report titled “Mindful Change – Net Zero 2050.” The report covers content related to Vinamilk’s Net Zero roadmap, such as greenhouse gas inventories according to ISO 14064 and carbon neutrality certifications under the international PAS 2060:2014 standard.
Another example is ACB Bank, the first entity to publish a separate sustainability report based on and referencing the Global Sustainability Standards Board (GSSB) disclosure standards.
Conclusion
Generally, not only Vietnamese enterprises but also companies worldwide are increasingly conscious of transparent and public disclosure of sustainability reports. Given the definite benefits, experts believe sustainability reports will gradually become an important standard for enterprises and one of the key criteria for investors during company evaluation and due diligence processes.
