A recently released report recommending enhanced policy assistance to advance sustainable agriculture in Viet Nam was presented in Ha Noi, providing a thorough overview of environmental, social, and governance (ESG) strategies within the agricultural industry.
The research, published by the Management and Sustainable Development Institute (MSD) in partnership with Oxfam in Vietnam and Fair Finance Asia, is a component of the AGREEN initiative, aimed at enhancing environmentally friendly investment and financing opportunities for agricultural enterprises.
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The report emphasizes the challenges faced by small and medium-sized enterprises (SMEs) and cooperatives in accessing sustainable finance as ESG standards evolve from voluntary to essential in a competitive market. It is based on a survey of 97 businesses and cooperatives, as well as 15 in-depth interviews with experts and stakeholders.
During the launch event, Nguyen Phuong Linh, the Director of MSD, highlighted that the majority of agricultural companies have embraced ESG practices to a certain extent. However, there are constraints in their ability to effectively implement these practices and translate them into measurable results.
Linh emphasized the importance of an integrated ecosystem approach that connects policy, finance, markets, and capacity-building. The research indicates that the adoption of Environmental, Social, and Governance (ESG) practices is not consistent, with emphasis placed on environmental and social factors rather than governance. In numerous instances, ESG initiatives are still mainly responsive to market or regulatory demands rather than integrated into enduring business plans.
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Access to sustainable finance continues to be limited, with only one entity out of the majority that possess sustainable agriculture certifications being able to secure funding specifically for green initiatives.
The majority of these entities resort to conventional bank loans or informal borrowing from family members instead.
The obstacles primarily arise due to traditional lending criteria, including the need for collateral and constraints on business planning capabilities, with approximately 80 percent of survey participants indicating they had never been informed about environmentally-friendly financing options.
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The report highlights the disproportionate distribution of green finance among primarily larger corporations, with smaller players in the agricultural sector being marginalized. It emphasizes the need for revamped financial tools and enhanced intermediary assistance to address this disparity.
Over the next one to three years, there is anticipated growth in the demand for sustainable finance, specifically in sectors like sustainable farming and circular agriculture. This highlights the critical need for credit access reforms.