The Great Financial Institution Exodus from Net-Zero Commitments: What’s in It for Vietnamese Businesses?

In early 2025, significant shifts in the commitments of major financial institutions towards climate initiatives took place. On January 9, BlackRock, the world’s largest asset management company with $11.5 trillion in assets, officially withdrew from the Net Zero Asset Managers Initiative (NZAMI).

BlackRock cited “confusion over climate efforts” as the reason for their decision and faced pressure from politicians. A few days later, on January 13, NZAMI announced a pause in its member tracking and reporting activities, removing the list of members and their published targets from its website for a comprehensive review amidst these new developments.

Earlier, in early 2024, several other large financial corporations like State Street and JP Morgan, along with BlackRock, had also withdrawn or significantly reduced their participation in the Climate Action 100+ alliance.

Is Sustainable Development Still a Necessary Business Strategy?

“As more organizations withdraw from net-zero emission associations, is climate change still a pressing issue?” asked Pham Minh Huong, Director of Sustainable Development & Climate Change Consulting Services at Deloitte Vietnam, during a workshop on “Corporate Governance and Climate Change Governance: A Perspective from Transparency and Efficiency.”

The workshop was organized by the Vietnam Institute of Directors (VIOD) and the Vietnam Association of Certified Public Accountants (VACPA) on the afternoon of May 13.

According to Huong, the core causes of climate change remain the issues of pollution and greenhouse gas emissions from business operations. She emphasized that while legal regulations are important, the impetus for businesses to act should stem from recognizing the long-term impacts of climate change.

To prepare for effective responses, businesses need to proactively assess risks and impacts now and build resilience to extreme weather events. In reality, many pioneering businesses, especially those with export products or foreign investment, have been actively implementing sustainable development strategies.

Discussing solutions to reduce greenhouse gas emissions towards the net-zero target, Huong pointed out a notable aspect. Among measures such as reducing heat energy consumption or investing in new technologies, improving energy efficiency surprisingly brings significant impacts. Specifically, improving energy efficiency by just 1-8% can be as effective as cutting coal-fired power output by 50%.

Thus, the journey towards net-zero does not necessarily require massive investments in new technologies or a complete business model overhaul but can start with practical and simple solutions.

In reality, some experts argue that despite the wave of withdrawals from organizations like NZBA, NZAMI, and Climate Action 100+, not all organizations are experiencing this. Political pressure from Republican politicians in the US under the administration of President Donald Trump is considered the main factor leading to these decisions.

Climate Change Governance: The Central Role of Boards and Executives

Sharing a different perspective on the urgency of action, Simon C.Y. Wong, a member of the VIOD Professional Advisory Board and Head of Sustainable Finance at the Cambridge Institute for Sustainability Leadership (CISL), cited alarming figures.

A study by scholars at the Potsdam Institute for Climate Impact Research (Germany) found that by 2049, the global cost of climate change impacts could exceed $38 trillion per year.

“Climate action is a process for any company,” emphasized Simon Wong.

Accordingly, Simon Wong suggested that climate issue oversight needs to be placed on a solid governance structure foundation, from the Board of Directors (BOD) to the executive level. The executive team is responsible for building consensus with the BOD, among senior leaders, and disseminating this commitment throughout the organization.

Building robust sustainable development capabilities for both the BOD and the executive team is crucial. Simon also pointed out the role of assurance in sustainability reports and commitments as a challenge businesses need to overcome to enhance transparency and trust.

In the ASEAN region, Simon Wong observed that most companies are in the early stages of their sustainability journey. International experience shows that BODs play a central role in corporate governance and must guide companies to take specific climate-related actions.

Similar to other regions globally, Southeast Asian BODs are increasingly expected to lead the climate transition process. For example, in Malaysia, the Corporate Governance Code clearly states: “The Board and the senior management are responsible for sustainability governance in the company.” The Code also requires the BOD to “keep themselves updated and informed of sustainability issues relevant to the company and its business, including climate-related risks and opportunities.”

In Thailand, the central bank requires the BODs of financial institutions to “determine the strategic direction, risk appetite, key policies, and overall framework to address short-term and long-term environmental changes.”

To support this process, adopting international standards can help create alignment and coherence within businesses. Some pioneering companies in Southeast Asia have even started implementing internal carbon pricing mechanisms as a tool to drive the climate transition.

Finally, Simon Wong emphasized the importance of experiential learning as an effective method to equip BODs with the necessary knowledge and confidence to successfully lead the climate change governance process in their organizations.