Why is ESG becoming a global trend? About 10 years ago, ESG was still a relatively unfamiliar concept to most businesses. At that time, discussions about the environment, sustainable development, or social responsibility usually appeared only in academic forums, international organizations, or large multinational corporations.
However, in recent years, ESG has become one of the most discussed topics in the global business community. Not only large corporations but also small and medium-sized enterprises are gradually being affected by requirements related to environmental, social, and corporate governance issues.
It is noteworthy that ESG has not developed as a short-lived media trend. Its growing importance stems from fundamental changes in the global economy, financial markets, supply chains, regulations, and consumer expectations.
Understanding why ESG is becoming a global trend therefore requires looking at the major forces that are changing how businesses are evaluated and expected to operate around the world.
1. The world is facing many new challenges.
For decades, economic growth has been considered the most important goal for businesses and nations. However, rapid development has also brought with it many new problems.
1.1. Climate change is becoming increasingly evident.
Extreme weather events such as droughts, floods, severe storms, and prolonged heatwaves are occurring with increasing frequency.
These issues not only affect the environment but also directly impact the production activities, supply chains, and business costs of enterprises.
Many countries have begun implementing policies aimed at reducing greenhouse gas emissions and promoting the green transition.
1.2. Social issues are receiving increasing attention.
Today, consumers, workers, and communities are not only concerned about product quality but also about how businesses treat their employees, customers, and society.
Issues such as working conditions, gender equality, human rights, and corporate social responsibility are receiving significant attention from the international market.
1.3. Corporate governance risks are becoming increasingly complex.
Numerous cases involving financial fraud, corruption, or violations of business ethics have made investors realize that profit is not the only factor to consider.
A business with good revenue but poor management can still face significant risks in the future.
2. Investors are changing the way they evaluate businesses.
Previously, investors typically focused on financial indicators such as revenue, profit, or cash flow.
Today, many large investment funds around the world have begun to consider ESG factors before making investment decisions.
2.1. Investors want to assess long-term risk.
A business may achieve good short-term results but still face many risks if it does not properly manage environmental, labor, or governance issues.
ESG factors help investors gain a more comprehensive view of a company’s potential for sustainable growth.
2.2. Sustainable investment flows are increasing sharply.
In recent years, many investment funds have incorporated ESG criteria as part of their company selection process.
This has led to ESG gradually becoming a factor that directly influences a company’s ability to attract capital globally.
3. International customers are demanding more from suppliers.
ESG is not just a concern for investors. Multinational corporations are also incorporating ESG into their supply chain management systems.
3.1. Global supply chains are changing.
Many large corporations now evaluate not only the cost and quality of a product but also how its suppliers manage environmental and labor issues.
This has led to ESG gradually becoming a new competitive criterion in the global supply chain.
3.2. Export businesses are directly affected.
For export businesses, especially in the textile, footwear, seafood, agriculture, and industrial manufacturing sectors, ESG requirements are becoming increasingly common.
Businesses that prepare early often have a greater advantage in meeting the requirements of international customers.
4. Governments of various countries are promoting sustainable development.
Many countries have developed policies aimed at reducing carbon emissions and promoting a green economy.
4.1. Net Zero Commitment
An increasing number of countries are announcing commitments to achieve net-zero emissions in the coming decades.
To achieve this goal, governments are gradually enacting policies related to the environment, energy, and sustainable development.
4.2. Increasing standards and regulations
Many new regulations related to sustainability reporting, carbon emissions, and supply chains are being implemented in numerous major markets.
This creates pressure but also presents opportunities for businesses that proactively adapt early.
5. Consumers are changing their shopping behavior.
In the past, price was often the most important factor when customers chose a product.
Today, many consumers are becoming increasingly concerned about product origins, manufacturing processes, and the environmental and social impact of businesses.
5.1. Sustainable products are receiving more attention.
Many consumers are willing to choose products manufactured according to sustainable or environmentally friendly standards.
This creates an incentive for businesses to invest more in ESG.
5.2. Corporate reputation is becoming increasingly important.
With increasing transparency, issues related to the environment or labor practices can quickly impact a company’s image.
Therefore, ESG is not just a matter of governance but is also directly related to brand reputation.
6. ESG is becoming a new competitive advantage.
One of the key reasons ESG is thriving is that it not only helps businesses manage risk but also creates numerous opportunities for growth.
6.1. Improving access to capital
Businesses with a clear ESG strategy tend to build greater trust with investors and financial institutions.
6.2. Increasing the ability to participate in international supply chains
Many global corporations are now prioritizing partners with strong ESG management capabilities.
6.3. Attracting high-quality personnel
Workers, especially the younger generation, are increasingly concerned about their work environment and the values that businesses uphold.
6.4. Enhancing long-term adaptability
ESG helps businesses better identify and manage long-term risks, thereby enhancing their ability to achieve sustainable growth.
7. Why ESG is becoming a global trend for businesses.
Many experts believe that ESG will not remain just a management trend but will gradually become part of global business standards.
In the future, ESG could influence many important business decisions such as accessing capital, selecting suppliers, market development strategies, or attracting talent.
For Vietnamese businesses, understanding and preparing for ESG early on not only helps meet new market requirements but also lays the foundation for sustainable long-term development.
8. Conclusion
ESG is becoming a global trend because it reflects the profound changes in the modern economy and markets. Investors, customers, governments, and consumers are all expecting more from businesses beyond traditional financial indicators.
In this context, ESG is no longer simply an option but is gradually becoming a crucial factor in helping businesses manage risks, enhance competitiveness, and build their future position.
Through research and collaboration with businesses, CCV has found that many Vietnamese companies still view ESG as a new trend that has emerged in recent years. However, looking at it more broadly, ESG is actually the result of decades of change in how the market evaluates businesses.
It is noteworthy that the majority of current drivers of ESG development come from outside the business, such as investors, international customers, banks, and new ESG reporting regulations.
CCV believes that in the coming years, ESG will not only be a concern for large corporations but will gradually become a part of the development strategies of many Vietnamese businesses, especially export-oriented, manufacturing, and sustainable businesses with long-term development goals.