Sustainability

in Vietnam's

Retail Industry
 Emerging Focus Areas
Sustainable Supply Chain ESG Commitment

Procurement Transportation & Distribution Sales & Marketing

Customer Service
Sourcing ethically and sustainably, Emissions and waste management from P roviding clear and accurate information

involving fair labor practices, minimizing transport, storage (in warehouses, distribution about the sustainability attributes of products,
environmental impact, and supporting centers & retail facilities) and packaging raising awareness and encouraging responsible
responsible resource extraction consumption

Use Of Sold Product End-of-life Treatment

Technology ntegration
I

Of Used Product
Direct and indirect use-phase energy Establishing systems for the
mplementing digital technologies, such as
I

consumption, emissions and waste proper recycling and disposal of

data analytics and , can optimize inventory
AI

management thorough product lifetime products at the end of their life cycle management and supply chain e ciency
ffi

Source: YCP Research & Analysis, ESG & GHG Protocol

 Why Sustainability?

Key Drivers For Retailers

82% Brand credibility

& image 68% Enhance
competitiveness 44% Talent attraction
& retention 40% Enhance
competitiveness

For Consumers & Investors

Growing investor focus on sustainability

Shifting consumer preferences
global investors declare to use ESG assessments on a
65%
50% consumers of Vietnamese will be
millennials and Gen Z by 2029
regular basis, at least once a week

p q p
66%
pp
of Vietnamese o ulation use the internet, enabling x3 growth in rivate e uity and venture ca ital sustainability
A
investments in SE between 2020 202- 1
fl
consumers to be more informed and in uential in
driving sustainable practices through online platforms p .I
$284M $165M convertible tier 2 bonds issued by HDBank to increase
Green bonds were issued by Vietnamese com anies n 2022,

h h lending to retail and SMEs

44M
Vietnamese in middle class, w ic is
expected to double by 2030
ESG has been emerging in securities market (equity & bond), credit market/bank loans and trade
population currently live in urban areas, & investment. FinnGroup, Vietnam Association of Securities Business (VASB) and S&P Global are
36% which is forecasted to reach 50% by 2030
collaborating to develop ESG Scoring data for 2600+ public companies & 1700+ listed companies

to promote investments, credits and cross-border trades in Vietnam

Source: YCP Research & Analysis, Vietnam ESG Readiness Survey by PwC and Vietnam Institute of Directors
 Vietnam's Sustainability-Driving Policies and Regulation
The Ministry of Finance sets out guidelines on Approved the National Environment Protection Strategy until 2030 & Vision until 205
information disclosure in the stock market (ESG Approved the Program to support private enterprises for sustainable business in the period 2022 - 202
disclosure in annual report) applicable to public Approved the Circular Economy Development Project in Vietnam issued by the Prime Minister & Decision
and listed companies and bond issuers 687, transforming from linear “take-make-dispose” to circular “make-use-recycle” model

2020 2022

Draft Revised Consumer Protection Law to be effective from July 2024, providing Decree 13 on Personal Data Protection took effect
new requirements on digital platform providers, influencers and personal dat from July 2023, applies to any domestic or foreign
Draft Law on E-transaction to be effective from July 2024 regulating e- contract organizations or individuals involved in processing
and signature, digital platforms, data privacy, and cybersecurity. personal data in and outside Vietnam

202 4 202 3

Source: YCP Research & Analysis

 Key Retail Sustainability Practices

Key Global Retail Sustainability Practices Key Vietnam Sustainability Retail Practices

Sustainable Energy Technology Waste Develop new Sourcing & Sustainable Energy Technology Waste Develop new Sourcing &
Labelling Resale Labelling Resale
material use Efficiency application mgmt product traceability material use Efficiency application mgmt product traceability

Appareal &
The resale market emerges as a dominant trend in developed countries, driven by ease of adoption, Vietnamese start-ups embrace eco-friendly materials for apparel and footwear, while initial technology
Footwear potential returns for companies, and the rise of eco-conscious consumerism adoption, like self-checkout machines, remains limited amongst only global brands

Sustainable Energy Technology Waste Develop new Sourcing & Sustainable Energy Technology Waste Develop new Sourcing &
Labelling Resale Labelling Resale
material use Efficiency application mgmt product traceability material use Efficiency application mgmt product traceability

FMCG Implementing waste management throughout the supply chain and prioritizing energy efficiency in daily Global brands have notably ramped up plastic waste management efforts, whereas local players like
production are key practice of FMCG companies Vinamilk have achieved success in implementing energy efficiency measures.

Sustainable Energy Technology Waste Develop new Sourcing & Sustainable Energy Technology Waste Develop new Sourcing &
Labelling Resale Labelling Resale
material use Efficiency application mgmt product traceability material use Efficiency application mgmt product traceability

Groceries Major players increasingly promote eco-friendly product choices with eco-score labels (e.g., Lidl). Some use platform Initial technology adoption, like self-checkout machines, remains limited amongst big players such as Aeon.
to optimize its fresh food forecasting and monitor inventory, reducing food wastage across its stores

Sustainable Energy Technology Waste Develop new Sourcing & Sustainable Energy Technology Waste Develop new Sourcing &
Labelling Resale Labelling Resale
material use Efficiency application mgmt product traceability material use Efficiency application mgmt product traceability

E-commerce The resale market is expanding rapidly among e-commerce platforms, with a bold embrace of virtual try- Sustainability practice is still limited.
on technology to enrich the consumer experience

Source: YCP Research & Analysis

 Vietnam's Sustainability Roadmap - Commitment
Vietnamese Organization’s ESG Commitment
From an August 2022 survey, 80% of respondents across industries, including retail, have made or plan ESG commitments in the next 2-4 years

44% 36% 20%

has ESG initiatives
currently in the planning has no ESG commitments/

& ESG commitments stage for the next 2-4 years specific plans for the next
2-4 years

FDI 57% 27% 16%

Listed 35% 58% 7%
SMEs 40% 29% 31%

Source: YCP Research & Analysis, Rimm, Vietnam ESG Readiness Survey by PwC and Vietnam Institute of Directors
 Vietnam's Sustainability Roadmap - Implementation

Proportion of Companies with Environmental

Vietnamese Organization’s ESG Actions Supply Chain Policies in SEA Countries

24% 71%
VN 33.3%
have clear ESG
lack of understanding

governance structure of reporting data

ID 39%

28% 70% PH 53.9%

have clear ESG risk No or limited

metrics to track progress ESG reporting

SG 58.6%
35% 36% TH 66.0%
use external partners

68.8%
have active participation

of the BoD on ESG to validate published MY

ESG information

Source: YCP Research & Analysis, Rimm, Vietnam ESG Readiness Survey by PwC and Vietnam Institute of Directors
 What are the Roadblocks?

Financial barrier Limited awareness Lack of knowledge

Balancing Sustainability Lack of buy-in from Lack of guidance on

39% with Growth targets 32% external stakeholders 31% reporting standards

Lack of participation from

35% Cost of deployment
30% internal stakeholders 29% Lack of technical
know-how on planning
and implementation
Difficult to assess Difficult to drive employee
34% future valuation and ROI 30%
24%
involvement and mindset
Lack of ESG specialist

Source: YCP Research & Analysis, Catalysts of Sustainability by DBS & Bloomberg
 Vietnam Retail Sustainability Prospect

Resale in Retail Sustainable Supply Chain Embracing Technology

The rise of the resale market is fueled by Key concerns include the ethical sourcing, Implementing technologies like blockchain
consumer demand for sustainable choices and traceability of products, renewable energy, enhances traceability and transparency in
high prices for new items. Consumers can sell GHG emission and waste management from retailers' supply chain operations due to its
products back to retailers or through retailer- the value chain as well as the product life cycl immutability characteristi
facilitated platforms, potentially earning credit A thorough strategy is essential to implement Artificial Intelligence has diverse applications,
Target customer group: consumers from the sustainability practices across direct retail including designing products to minimize
millennial and Generation operations, indirect operations, and to waste, enhancing traceability, and improving
Target retail category: apparel and accessories, empower partners or vendors forecasting to reduce overstocking and
electronics, and furniture operational waste in retail

Source: YCP Research & Analysis

Author

Chi Ly
Director, YCP Solidiance

Chi is a Director based in our Ho Chi Minh City office. She has over 8 years of experience in providing advisory on cross-border transactions, transfer pricing,
value chain, market research, market entry, and growth strategy in Vietnam and the SEA region.

Chi assisted 50+ multinational companies and local conglomerates across diverse industries, such as Manufacturing, Retail, Healthcare, Pharmaceuticals,
Energy, and Financial Services.

Her expertise within the retail sector spans across a wide range of market studies, restructuring advice, and due diligence in E-commerce, FMCGs, Textile &
Apparel, Fintech, and Logistics.

Prior to YCP Solidiance, she co-founded a market intelligence boutique and worked at reputable advisory firms in Vietnam. She holds a Bachelor's degree in
International Business Economics from Foreign Trade University, Vietnam.

Her previous projects in the retail sector include

Advice on optimization of charging mechanisms for trademark royalty & business support services for a global fashion brand - Vietnam
Restructuring and value chain optimization for an Australian furniture brand - Australia, Hong Kong, Singapore and Vietna
Market assessment of E-commerce, categorizing by 1P, 3P, B2C, and C2C segments, benchmarking of fulfillment rates with mature markets, and
evaluating opportunities for transitioning from offline to online channels - Vietna
Value chain analysis of Logistics, including partnership and synergy between E-commerce players and logistics companies, comparing 3PL and in-
house logistics models, and competitive benchmarking of key logistics players - Vietna
Opportunity assessment of E-commerce players tapping into Fin-tech, including insurance, Buy Now Pay Later, merchant lending, e-wallet, wealth
management products, and credit cards - Vietna
Go-to-market strategy for a digital lending app operator - Vietnam