New Initiative Launched to Promote Private Sector-Driven Sustainable Growth
The United States Mission to Vietnam, through the US Agency for International Development (USAID), and Vietnam’s Ministry of Planning and Investment (MPI) on November 22 announced a new initiative to spur private sector-driven sustainable and inclusive growth across Vietnam.
The new initiative promotes socially-conscious business behavior, known as Environmental, Social, and Governance (ESG) standards.
|USAID Assistant Administrator for Asia Bureau Michael Schiffer and Vietnam's Vice Minister of Planning and Investment Tran Quoc Phuong launched the initiative 'Environmental, Social, and Governance (ESG)' standards.|
Investors use ESG standards to measure how a company protects the environment; manages its relationships with workers, customers, and the communities where it operates; and employs transparent and accountable corporate governance.
USAID Assistant Administrator for Asia Michael Schiffer and MPI Vice Minister Tran Quoc Phuong announced the ESG initiative at a USAID-supported business forum in Hanoi.
“Despite being the main source of job creation, Vietnam's small and growing businesses are facing many challenges in sustainable development. USAID is pleased to launch this new initiative with the Ministry of Planning and Investment,” said USAID Assistant Administrator Schiffer, “which will help small businesses improve their competitiveness and innovation, overcome constraints, and chart a path for sustainable growth and job creation and to continue to contribute to Vietnam’s prosperity.”
|USAID Assistant Administrator for Asia Michael Schiffer speaks at the event.|
According to MPI Vice Minister Tran Quoc Phuong, before the impact of climate change and the requirements of partners, the market towards sustainable production and consumption is going strong. Vietnam's commitments when joining the United Nations Framework Convention on Climate Change, priorities in the international cooperation frameworks on sustainable business, green production, carbon tax issues, are posing challenges that need to be renewed for Vietnamese businesses to catch up with new trends, otherwise they will lose their competitiveness and lose the opportunity to participate and go deep into the global value chain.
“This new initiative will be the basis for finding excellent ideas, forming typical models, helping to create a spillover effect, encouraging many businesses to actively practice this method, towards a more sustainable economy", emphasized the MPI Vice Minister.
This first-ever ESG initiative for Vietnam targets small and growing businesses (SGBs). SGBs account for more than 90% of Vietnam’s private sector, employ more than 50% of the workforce, and contribute roughly 40% of GDP.
As such, SGBs play a critical role in Vietnam’s socio-economic development and environmental sustainability. ESG is a recognition that business sustainability is multi-faceted, extending beyond environmental issues to people, resources, and systems.
Businesses that invest in more energy efficient technology, create a good impact on communities, and consider input and feedback from people affected by the business achieve consistent growth and have stronger business models.
USAID’s new ESG initiative will help SGBs adopt ESG standards. By 2025, the initiative will deliver ESG technical assistance packages to 300 businesses, of which 10 will receive additional assistance to pilot, implement or scale their innovative ESG business concepts.
The new initiative is part of USAID’s USD-36-million Improving Private Sector Competitiveness (IPSC) project. IPSC removes policy, market, and firm-level constraints on the growth of SGBs, including those owned by women and vulnerable populations. IPSC works with Vietnam to foster an innovative and dynamic private sector that can compete globally and expand economic opportunities domestically.
The effort supports Vietnam’s Green Growth Strategy 2021-2030, and the Prime Minister’s Decision 167 on supporting private enterprises in sustainable business.
In April 2022, USAID and MPI expanded their joint efforts to strengthen private sector competitiveness. The bilateral partnership agreement as amended will expand our joint efforts to strengthen private sector competitiveness, innovation and startup ecosystems, human capital, and local capacity building.
Under this amended agreement, USAID's contribution in these areas will increase from USD 42 million to up to USD 100 million, and will continue for an additional three years, to September 30, 2028.
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