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Role of sustainable supply chains – building a resilient future
Sustainability is a rapidly growing priority that has become central to how corporates in Asia are planning to govern their supply chains and respond to customer expectations, writes Surajit Rakshit, country head of global trade solutions at HSBC Vietnam.
Surajit Rakshit, country head of global trade solutions at HSBC Vietnam. Photo courtesy of the bank.
A few months ago, I read some news on Helene and Milton hurricanes being supercharged by climate change that hit hard on the U.S. Closer to home, typhoon Yagi wreaked havoc disrupting normal life in many Southeast Asian countries.
It was a shock to see how a warming planet can make storms so much more powerful and destructive. It reminds us once again that climate change is right here, and it impacts all of us worldwide.
Fortunately, sustainability is gaining more focus globally. Coupled with the latest report from Intergovernmental Panel on Climate Change that highlighted the cost of inaction, there is an increasing push on companies to adopt sustainable practices today.
Stakeholder pressure including investors, customers, employees, and regulators is further driving this change. As a result, we are seeing more companies adopt net zero commitments as part of their environmental as well as broader ESG policies.
In Vietnam, 40% of local businesses have planned for and set themselves ESG commitments, according to a study by PwC. In a recent survey conducted by the Vietnamese Government’s Private Economic Development Research Board, 48.7% of businesses mentioned that net zero transition was critical to them.
The toughest nut to crack
Large global companies are already incorporating ESG considerations into their operations. For instance, HSBC aims to achieve net zero in our operations and supply chain by 2030 and in our financing portfolio by 2050. Not stopping there, this approach is increasingly being adopted further down the supply chain.
As corporates are actively looking at ways to improve their green performance, most of them will increasingly scrutinize their supply chains. The reason is simple. For most organizations, the environmental impact within their supply chain significantly outstrips the impact related to their own operations. On average, supply chain accounts for more than 90% of an enterprise’s greenhouse gas emissions.
The so-called Scope 3 emissions, generated by companies’ suppliers, is the toughest nut to crack for many corporates committed to reducing their carbon footprint. That said, their efforts are encouraging. According to a study by EY, 78% of companies are developing programs and initiatives around sustainable supply chains with key partners, showcasing strong ambition for making the change. In DMCC’s Future of Trade survey, most respondents (59%) expected firms to remove poor ESG performers from their supply chains.
Sustainability is also a rapidly growing priority that has become central to how corporates in Asia are planning to govern their supply chains and respond to customer expectations. The findings of HSBC’s Asia Supply Chains – A New Era report show that firms are not only developing green policies, but also investing in the implementation of sustainable practices across their network.
Removing the barriers
While there is a clear uptick in corporates adopting environmental and social policies for their supply chains, greening entire supply chains is challenging, given the lack of relevant data and transparency.
In the long term, the push for greener supply chains will lead to a rerouting of trade whereby businesses will not only seek out the most cost-effective supplies but will also demand more data on environmentally friendly producers.
Suppliers in many parts of the world face challenges to improve their sustainability performance, including the lack of access to finance, incentives, and knowledge. Delivering Net Zero Supply Chains, a recent research from HSBC and Boston Consulting Group (BCG), highlighted that SME businesses don’t have the in-house climate expertise and have limited access to capital to drive and fund climate transformation.
In particular, the costs of this transition can be significant particularly for small scale factories in developing markets, and corporates also must consider the differing regulatory environments across their supplier markets.
The report identified the need for a ‘leadership crucible’ where large corporates can provide liquidity and share knowledge and resources with smaller businesses. This is where global banks can play a role in helping decarbonize cross-border trade flows and supply chains.
HSBC, for example, works with corporates to support them in meeting their longer-term, enterprise-wide environmental and social targets. Our strategic propositions, including sustainable supply chain financing solution, has significant potential to help companies reduce their Scope 3 emissions and to cascade climate action through their supply chains.
This solution can help our clients’ suppliers access working capital – usually in the form of early payment terms or tiered interest rates that consider the suppliers’ sustainability performance – which can be used to support emissions reduction and wider sustainability improvements.
With this financial solution, SME businesses who are under large corporates’ supply chains will have better access to the bank’s working capital at lower interest rates compared to their own borrowings.
In 2019, HSBC supported US retail giant Walmart to create an industry first supply chain finance program which not only enables greenhouse gas emission reductions but also uses science-based targets to do so in a way that aims for a 1.5°C pathway.
The program introduced enhanced standards, tools and capacity building to help Walmart’s private brand suppliers upskill. In turn, they aligned their operations with transparent sustainability objectives and can access better pricing than available in traditional supply chain financing offerings.
Those who adopt science-based targets and international reporting standards, increase level of suppliers in Climate Disclosure Program (CDP), and demonstrate progress in their sustainability credentials will be incentivized with access to improved financing from HSBC.
HSBC has developed this proposition globally including Asia Pacific, Europe, USA, and Middle East with successfully implementing many programs for our clients in different industries, ranging from retail, footwear, textile and garments etc.
In markets like Vietnam, we see significant opportunities in sustainable supply chain finance services given a strong interest among clients in fast moving consumer goods, logistics, and so on.
In conclusion, sustainability has rapidly become a core consideration in today’s corporate supply chain discussion, driven largely by consumers and investors looking for more ethical manufacturing practices from the companies they buy from and invest in. The conversation will continue to evolve and have an impact on supply chain strategy globally. The finance sector will certainly have a role to play in supporting corporates in driving their sustainability agenda enterprise wide.
The event presented key topics including international standards and technological solutions for carbon emissions’ management, environmental, social, and governance policy evaluation based on global standards, and the application of technology in optimising operational costs.
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| ACCA event highlights technology’s role in sustainability practices |
The conference served as a platform for future-oriented businesses to share their successes and challenges while fostering collaboration among those committed to sustainability.
During the conference, Ren Varma, ACCA’s head of Mainland Southeast Asia, delivered in-depth insights into ACCA’s role in supporting businesses in building sustainable development capabilities.
Citing 2024 trade figures, Varma noted that Vietnam’s import-export turnover maintained unprecedented levels over the past 40 years, supported by the enforcement of over 17 trade agreements.
Vietnam-EU trade exceeded $67 billion, with numerous domestic enterprises integrating into European and global supply chains.
“Implementing sustainability reporting is imperative for Vietnamese firms participating in global supply chains to comply with Europe’s mandatory sustainability disclosure regulations. The key challenge is how businesses can effectively implement sustainability reporting with existing resources while meeting international standards,” said Varma.
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| Ren Varma, head of Mainland Southeast Asia, ACCA. Photo: ACCA Vietnam |
Representatives from various other organisations, such as VACPA, FPT, Unilever, HDBank, PwC, and the University of Economics in Ho Chi Minh City shared their experiences in leveraging technology for sustainability.
These real-world case studies enabled participants to gain practical insights into how best to apply technology to sustainable management, while understanding the essential competencies required for effective implementation.
At the event, experts reaffirmed their commitment to enhancing capabilities and professional expertise in achieving national sustainable development goals and the target of Net-Zero by 2050.
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| Photo: ACCA Vietnam |
ACCA pledged its continued support by launching the Professional Diploma in Sustainability (ProDipSust) across more than 180 countries, including Vietnam. This initiative aims to equip professionals with the necessary expertise to implement sustainable business practices.
ProDipSust not only provides in-depth knowledge on sustainability but also guides businesses on practical applications, from understanding international frameworks and regulations to strategic management, sustainability reporting, and assurance.
Recognised as a globally standardised knowledge framework, this diploma plays a crucial role in strengthening corporate sustainability governance, ensuring transparency, and complying with international standards.
Beyond offering training programmes, ACCA actively collaborates with leading organisations to drive sustainable development initiatives.
Beyond offering training activities, ACCA collaborates with major organisations to drive sustainability initiatives. In this seminar, ACCA Vietnam, in partnership with VACPA and PwC Vietnam, established a highly practical forum to help Vietnamese firms align with international standards and devise effective sustainability strategies.
Ren Varma underscored the critical role of finance and accounting professionals in advancing sustainable development, saying, “Financial expertise is not just about financial reporting, it plays a fundamental role in shaping sustainable strategies. Finance professionals are responsible for integrating sustainability initiatives into business models, accurately measuring their impact, and transparently communicating them to stakeholders. ACCA’s certification serves as a vital tool for businesses and individuals to enhance their expertise in this field.”
“With a strong commitment to fostering sustainability competencies, ACCA will continue to support businesses and financial professionals on their journey towards a responsible and sustainable economy,” he added.
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Ho Chi Minh City has announced plans to develop infrastructure along the Saigon River towards the East Sea. Photo: Le Toan |
Talking with VIR on March 4, Doan Manh Thang, director of water and resilience at Royal HaskoningDHV Vietnam, said the Saigon River has great potential but has not been exploited properly. The plan will map out a waterway from Cu Chi to the city centre.
Royal HaskoningDHV is the leader of a consortium that includes Boston Consulting Group, Roland Berger, the Ministry of Construction, and ACUD Consult that has been tasked with developing this plan which was approved by the prime minister on December 31, 2024.
The plan aims to develop Ho Chi Minh City into a hub of high-quality human resources, modern services, and advanced industries, pioneering in the green economy, the digital economy, and a digital society. It will also maintain its position as Vietnam’s leading centre for economy, finance, commerce, culture, education, and science and technology, with deep international integration.
“We can build service areas such as marinas and commercial centres along the river, alongside green spaces,” Thang said.
Moreover, a metro line from the city centre to Can Gio Island could act as the driving force for the city to reach double-digit growth, he confirmed.
Can Gio Port, meanwhile, is strategically located opposite Cai Mep-Thi Vai Port – the largest international port in Vietnam. However, it is only operating at 50 per cent capacity. The government has decided to upgrade Can Gio Port to become an international transit centre, with an estimated investment of $4 billion. The port is expected to handle 10 per cent of Vietnam’s imports and exports, of which 90 per cent will be international transshipment.
According to Phan Van Mai, newly appointed Chairman of the National Assembly’s Economic and Financial Committee and former Chairman of Ho Chi Minh City People’s Committee, the city will strive for regional GDP growth of 8.5-9.0 per year until 2030.
“To effectively implement the plan, the city needs to mobilise resources, attract investment, develop human resources, and apply science and technology, innovation, digital transformation, and environmental protection,” Mai said.
Meanwhile, Thang said that the biggest bottleneck in implementing this plan is the lack of mechanisms to entice capital.
“Public investment is the seed capital to stimulate investment from other economic sectors. In fact, many investors are interested, but the mechanisms for investment must be more detailed,” he said.
A resolution issued in June 2023 grants special mechanisms for the development of Ho Chi Minh City. Meanwhile, in February 2025, the National Assembly issued another resolution for Hanoi and Ho Chi Minh City to invest and develop metro systems. On that basis, Ho Chi Minh City will invest simultaneously and complete seven routes with a total length of 355km within 10 years.
“Initially, the state will have to spend money because it will be difficult to attract investment, but when it starts to take shape, private investors will be looking to spend money to build infrastructure. This would remove the bottleneck, but still requires appropriate policies,” Thang said.
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| Thu Thiem New Urban Area – the new financial and economic hub of Ho Chi Minh City. Photo: Le Toan |
In total, 11 plots covering 9.2 hectares in the Number 1 Functional Area will be used for the project in Thu Duc city.
The location was reported to the local Department of Telecommunications on March 11 to set up a plan to develop telecommunications and digital infrastructure for the centre.
Thu Thiem New Urban Area was approved in 1996 covering 930 hectares on the east bank of the Saigon River and opposite District 1. When completed, the area will have a population of 200,000 people.
The area will be divided into a central core, a northern residential area, a residential area along Mai Chi Tho Avenue, an eastern residential area, and a southern zone.
On January 4, Prime Minister Pham Minh Chinh chaired a conference to announce an action plan to implement a regional and international financial centre in Ho Chi Minh City.
At the conference, PM Chinh said that Ho Chi Minh City is located at the head of Southeast Asia, making it convenient for trade and financial connections with major markets such as China, Japan, South Korea, and ASEAN. Building a financial centre there will help reduce costs and transaction times for traders.
To accelerate the project, early this year, Ho Chi Minh City established a steering committee for the construction and development of the centre with 29 members. The establishment of the international financial centre is expected to create a foundation for the future growth of Ho Chi Minh City. This is also an opportunity for the city to attract international investors and increase foreign investment in various sectors.
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