ESG stands for Environmental, Social, and Governance. It is a set of standards used to measure factors affecting sustainable development and corporate responsibility to the community. ESG consists of three key pillars:
- Environmental: Evaluates the impact of businesses on the environment, including reducing carbon emissions, using resources efficiently, managing waste, and building resilience to climate change.
- Social: Focuses on the interests of employees, customers, and the broader community by ensuring good working conditions, promoting diversity, addressing basic needs, and fostering equality.
- Governance: Ensures transparent governance processes, legal compliance, and sustainable relationships with shareholders.
In Vietnam, ESG has gained increasing attention in recent years, reflected in numerous regulations and policies. In the environmental sector, the Law on Environmental Protection and its guiding documents are continuously updated to align with Vietnam’s international commitments. At the 2021 United Nations Climate Change Conference (COP26), Vietnam set ambitious goals, including ending deforestation by 2030, achieving net-zero emissions by 2050, and phasing out coal-fired thermal power by 2040. Additionally, Vietnam has announced the Power Development Plan VIII (PDP8) for 2021–2050, prioritizing renewable energy and significantly reducing CO₂ emissions. By 2028, the country is expected to officially launch a carbon credit trading platform to effectively manage emissions and align with international carbon pricing mechanisms.
In the social sector, the most notable recent development is the Decree on Personal Data Protection, along with the upcoming Law on Personal Data Protection. In the governance sector, strict regulations—primarily applied to listed companies—are stipulated in the Securities Law, the Enterprise Law, and the Corporate Governance Principles issued by the Securities Commission.
Enterprises that integrate ESG into their operations are highly regarded by customers, partners, and investors. ESG implementation helps businesses anticipate risks and identify opportunities. Currently, many large enterprises in Vietnam, such as Vinamilk and VinFast, have adopted ESG practices, recognizing the importance of sustainable development. However, the adoption rate among small and medium enterprises (SMEs) remains low due to several challenges, including high initial transition costs, limited human resources, weak governance structures, and a lack of ESG-related knowledge and expertise. According to the 2022 Report on ESG Readiness of Private Enterprises in Vietnam, 60% of surveyed businesses cited a lack of knowledge as a key barrier to ESG adoption, while 54% reported that their organizations had not considered equipping employees with ESG expertise. Therefore, the Vietnamese Government needs to enhance knowledge management and provide greater support resources for enterprises in the ESG implementation process.
Vietnam is still in the early stages of its ESG journey. Implementing ESG is a complex and demanding process, not only for the government but also for enterprises—especially SMEs. To accelerate ESG adoption, the Vietnamese Government needs to provide clear, transparent, and practical guidelines on implementation and compliance. At the same time, enterprises must strengthen their professional and management capacities to mitigate risks and capitalize on emerging opportunities.
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