Vietnam, US begin new initiative to promote private sector-driven sustainable growth

The new initiative promotes socially-conscious business behaviour, known as 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 Vice Minister of Planning and Investment Tran Quoc Phuong announced the ESG initiative at a USAID-supported business forum.

“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.”

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 effort supports Vietnam’s Green Growth Strategy 2021-2030, and the Prime Minister’s Decision 167 on supporting private enterprises in sustainable business.

The US and Vietnam will celebrate the 10-year anniversary of their Comprehensive Partnership in 2023 and this ESG initiative demonstrates how the two countries work strategically together to further sustainable, inclusive growth in Vietnam.

The new initiative is part of USAID’s 36 million USD 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.