Corporate Contributions to Environmental Protection: A Key Element of ESG

To achieve sustainable development, businesses must prioritize the environmental aspect of ESG. This article will analyze measures companies can take to protect the environment.

Why is the environmental aspect often a focus for businesses?

ESG (Environmental, Social, and Governance) standards measure a company’s sustainability and social impact. Among these, businesses often prioritize the environmental aspect (E) for several reasons.

Firstly, the environmental aspect of ESG directly impacts the global ecosystem and human survival. Protecting the environment helps mitigate negative effects on the climate, water sources, and biodiversity, ensuring a healthy living environment for future generations.

Next, this aspect can be quickly implemented and easily measured transparently. Energy optimization, switching to solar power systems, and trading Renewable Energy Certificates (RECs) are feasible and transparent solutions.

• Energy optimization: Businesses can reduce carbon emissions and save costs by improving energy efficiency in production processes and daily operations. These measures include upgrading equipment, optimizing HVAC systems, and using LED technology.
• Switching to solar power systems: Installing solar panels helps businesses use clean and sustainable energy. This not only reduces environmental impact but also lowers long-term electricity costs. Many companies worldwide have successfully switched to solar energy, significantly reducing greenhouse gas emissions.
• Trading Renewable Energy Certificates (RECs): RECs are tools that certify the electricity used by a company comes from renewable energy sources. Trading RECs promotes the green energy market and helps businesses achieve sustainability goals transparently and effectively.

The focus on the environmental aspect is further highlighted by global companies like Apple, where electricity constitutes the largest part of the company’s carbon footprint. As a result, Apple has urged its suppliers to use clean electricity. 320 suppliers, accounting for 95% of Apple’s manufacturing costs, have switched, contributing 16.5 GW of renewable energy to Apple’s supply chain and reducing 18.5 million tons of CO2 in 2023.

Apple’s metrics within the scope of ESG practices in terms of E (Image source: Apple)

The global implementation of Environmental aspects

Many businesses have taken significant steps to protect the environment within the ESG framework. For example, Unilever, one of the world’s leading consumer goods companies, has committed to halving its carbon emissions across its supply chain by 2030 and achieving net-zero emissions by 2039. To reach these goals, Unilever has implemented a range of environmental protection measures, including:

• Renewable energy: Unilever has switched to using renewable energy at its production facilities worldwide. By 2020, 100% of the electricity used at Unilever’s facilities globally was sourced from renewable energy.
• Reducing plastic: The company is committed to reducing the use of virgin plastic and increasing recycling, aiming for all its plastic packaging to be recyclable, reusable, or compostable by 2025.
• Water conservation: Unilever is undertaking initiatives to protect and replenish water resources in water-scarce areas and developing water-saving products.

Unilever is always concerned about the E aspect of ESG (Image source: Internet)

Microsoft is a leading tech company that is pioneering efforts to minimize environmental impact and promote sustainable development:

• • Carbon negative: Microsoft has pledged to become “carbon negative” by 2030, meaning they will remove more carbon from the atmosphere than they emit.
  • Climate innovation fund: The company established a $1 billion Climate Innovation Fund to accelerate the development of technologies and initiatives that reduce carbon emissions.
  • Ecosystem protection: Microsoft is involved in numerous global projects to protect and restore ecosystems, including forest and ocean conservation efforts.

These examples illustrate that focusing on the Environmental aspect of ESG not only helps businesses worldwide achieve sustainable growth but also contributes to protecting our planet for future generations. Companies play a crucial role in mitigating environmental impacts while creating long-term value for society and the economy.

The story in Vietnam

In Vietnam, Vinamilk, a leading dairy company, has implemented several environmental protection strategies, focusing on the Environmental (E) aspect of ESG. These efforts help Vinamilk achieve sustainable development, contribute to environmental protection, and enhance its brand reputation.

Vinamilk has adopted renewable energy in its production activities. Installing solar power systems at their farms and factories provides clean energy and reduces operational costs. These systems have significantly lowered CO2 emissions. Additionally, Vinamilk uses modern technologies to enhance energy efficiency in its production processes, including advanced energy management systems and energy-saving equipment.

For instance, the Vietnam beverages factory of Vinamilk in Binh Duong achieved carbon neutrality for Scope 1 and 2 emissions in 2022. The rooftop solar power project at the factory, with a capacity of 1MWp, implemented by Vu Phong Energy Group, contributed to emission reductions.

Moreover, international green mechanisms from markets like the European Union and the US and major corporations’ policies present new opportunities and challenges for Vietnamese manufacturers in implementing the Environmental (E) aspect of sustainable ESG management. For example, the European Union has imposed strict energy consumption and emission standards on suppliers through the Carbon Border Adjustment Mechanism (CBAM) and the Corporate Sustainability Reporting Directive (CSRD), which requires comprehensive disclosure of sustainable development activities by businesses.

Vu Phong Energy Group