In the context of sustainable development becoming a guiding principle for global businesses, ESG (Environmental, Social, Governance) has transcended traditional CSR concepts, evolving into a comprehensive framework that enables Vietnamese enterprises to manage risks, enhance value, and gain competitive advantages.
In 2023, 33 listed companies in Vietnam issued standalone sustainability reports, a significant increase from 21 in 2022. This indicates that Vietnamese businesses are taking initial steps to leverage ESG standards for competitive advantage.
ESG (Environmental, Social, Governance) is a foundational concept for sustainable development within enterprises. For a deeper understanding of ESG, its pillars, and significance, please refer to the detailed article here:
What Is ESG? A Strategic Compass for Sustainable Business Growth
What Is ESG? A Strategic Compass for Sustainable Business Growth
This article provides a comprehensive overview of:
- The importance of ESG in global and Vietnamese contexts
- The current state of ESG adoption among listed Vietnamese companies
- Examples of successful ESG implementation in Vietnamese enterprises
I. The Importance of ESG in Global and Vietnamese Contexts
1. Investor Pressure
Investors and financial funds increasingly prioritize companies with clear ESG strategies. An Edelman report indicates that 88% of investors believe ESG-focused companies will deliver superior long-term returns.
In Vietnam, international investment in green finance has surged, with major funds like IFC, Vietnam Holding, and Dynam Capital considering ESG as a key criterion.
Notably, partners from the EU and the US—where ESG compliance is mandatory in supply chains—are exerting significant pressure on Vietnamese enterprises.
However, according to the Vietnam Textile and Apparel Association (VITAS), despite a nearly 10% decline in the textile industry in 2023, some companies maintained positive growth due to possessing ESG certifications, making them preferred partners for international clients.
2. Legal Regulations and Policies
Vietnam has enacted several policies to promote ESG, including:
- Power Development Plan VIII (PDP8): Phasing out coal power and developing renewable energy
- Decrees on greenhouse gas emission reductions and the domestic carbon market
- National strategies on green growth, climate change, and environmental protection
- Labor Code, Consumer Protection Law, Decrees on environmental risk management, Enterprise Law, and Investment Law
- Sustainable development indices (VNSI), corporate governance principles, and ESG disclosure guidelines on HOSE
3. Competitive Advantage
A robust ESG profile enables businesses to attract and retain green investment capital, such as green credit, as major funds prioritize companies with strong ESG performance due to their stability and sustainable growth potential.
Implementing ESG also enhances reputation and brand value, strengthens customer loyalty, and appeals to socially conscious consumer generations.
ESG initiatives often lead to resource optimization and improved process efficiency, resulting in operational cost savings and enhanced risk management.
Moreover, a strong ESG commitment serves as a magnet for attracting and retaining top talent seeking meaningful and purposeful work.
Finally, compliance with international ESG standards is an essential "passport" for Vietnamese businesses to access demanding markets and solidify their positions in global supply chains.
4. Customer (Consumer) Demand
Today, consumers are not only concerned with product quality or price but also demand that businesses demonstrate clear environmental and social responsibility.
A 2022 Nielsen Vietnam survey revealed that 73% of consumers under 35 are willing to pay more for products from sustainable brands. This indicates a preference for "green," "clean," and "responsible" products.
The trend of green consumerism is driving businesses to implement ESG practices.
II. Current State of ESG Adoption Among Listed Vietnamese Companies
1. Awareness and Implementation Levels
Major surveys indicate that Vietnamese businesses increasingly recognize the importance of sustainable development.
The UOB Business Outlook Report 2023 shows that 94% of Vietnamese enterprises acknowledge ESG as essential, with 51% having initiated practices.
However, the ESG Readiness Report in Vietnam by PwC and VIOD (2022), involving 234 listed companies, found that only about 44% had specific ESG plans and commitments, 36% were in the preparation phase, and the remainder needed to improve awareness and planning.
Notably, a 2022 survey by the Agency for Enterprise Development (Ministry of Planning and Investment) indicated that ESG pioneers are mainly large enterprises, such as foreign direct investment (FDI) companies, public companies, or exporters.
PwC also reported that 57% of FDI enterprises committed to ESG, while only 35% of listed companies and 40% of private/family businesses did so. Among uncommitted enterprises, up to 60% were small and medium-sized enterprises (SMEs).
Additionally, an analysis of ESG performance in approximately 500 Vietnamese companies by MCG Group revealed uneven practices across the pillars:
- Social (S): Strengths, notably in labor safety
- Environmental (E): Weakest, with most companies lacking plans or reports on emissions, climate, and resource use
- Governance (G): Average, with insufficient compliance with standards and a need for significant improvement
2. Implementation Challenges
- Lack of Clear ESG Regulations:
Currently, Vietnam lacks specific and comprehensive ESG regulations, particularly detailed reporting guidelines and enforcement mechanisms.
This leads to confusion and a lack of standardized ESG application among businesses, such as delays in submitting emission reports required by the EU's carbon tax mechanism (CBAM).
- Financial and Resource Constraints:
Many enterprises, especially SMEs, struggle to invest in sustainable initiatives due to high costs and limited financial support. This diminishes motivation to adopt ESG, particularly when long-term benefits are unclear.
- Limited ESG Expertise:
Most businesses lack dedicated ESG departments or leaders. There is a shortage of personnel with deep ESG knowledge, and awareness of ESG's importance is not widespread. Building an ESG-oriented corporate culture is still in its infancy.
- Data and Measurement Barriers:
Due to the absence of measurement systems and standardized criteria, many enterprises face difficulties in collecting comprehensive and accurate ESG data. Dispersed and unstandardized data leads to unreliable and inconsistent ESG reports.
III. Examples of Successful ESG Implementation in Vietnamese Enterprises
1. Vietcombank – A Proud Green Seal
The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) is a pioneer in ESG adoption within the banking sector. Since 2019, Vietcombank has reported ESG according to GRI standards across all its business activities.
- Environmental (E):
Funding for renewable and clean energy projects accounts for 84.7% of green credit. Sustainable water management in urban and rural areas represents 7.8%. By the end of 2024, the bank's green credit portfolio reached approximately VND 47,600 billion.
Additionally, household waste in 2024 (at the headquarters and Ho Chi Minh City branch) totaled 344 tons, a 34% reduction from 2023.
- Social (S):
Vietcombank invested over VND 571 billion in social welfare activities, including building charitable houses, schools, hospitals, and providing scholarships to underprivileged students.
Nearly 110,000 customers benefited from interest rate reductions, with supported loan balances exceeding VND 900 trillion.
The bank's EES performance score in 2024 remained at an "excellent" level in the market. Female staff at Vietcombank constitute about 61% of the total workforce.
- Governance (G):
Vietcombank practices transparent and effective corporate governance with a focus on responsible development. The bank excels in digital transformation and innovation, creating a sustainable value chain and committing to a healthy business environment.
As a result of its ESG efforts, Vietcombank was ranked among the Top 20 companies with the best Sustainable Development Index (VNSI) in Vietnam by the Ho Chi Minh Stock Exchange (HOSE).
2. Vinamilk – Green Transformation in the Food Industry
Vietnam Dairy Products Joint Stock Company (Vinamilk) has implemented a comprehensive green transformation across its value chain, from farms to consumers, applying ESG according to GRI standards and establishing a unique sustainable development model in Vietnam's food industry.
- Environmental (E):
Vinamilk has three units (two factories and one farm) certified as Carbon Neutral according to PAS 2060 standards, moving closer to the Net Zero 2050 goal.
The group's ESG data system enables transparent and real-time sustainable management.
All Vinamilk factories and farms conduct greenhouse gas inventories.
Since 2013, all factories have implemented energy management systems per ISO 50001 standards.
- Social (S):
Vinamilk runs community programs based on four pillars: Nutrition, Knowledge, Health, and Love, aiming for harmonious and comprehensive development in Vietnam.
In 2024, Vinamilk contributed nearly VND 75 billion to community activities and nearly VND 10 billion for disaster relief from Typhoon Yagi.
Notably, since 1995, Vinamilk has partnered with the Ho Chi Minh City Association for the Support of Poor Patients, contributing nearly VND 8.2 billion for heart surgeries and eye operations for underprivileged children.
- Governance (G):
Vinamilk has implemented smart logistics and applied AI in performance evaluation and human resource management. Additionally, the company uses a synchronized ESG data collection and management system across its value chain.
Due to its ESG initiatives, Vinamilk has maintained a high ranking in the Top 10 sustainable development companies for nine consecutive years, achieving an ESG score of 83% in 2024, significantly surpassing the average in Vietnam's dairy industry.
3. FPT – Technology for Sustainable Development
FPT Corporation has positioned itself as a leading technology enterprise in ESG application per GRI standards, particularly in using technology to address environmental and social issues.
- Environmental (E):
FPT successfully conducted afforestation activities in Soc Trang, Thua Thien Hue, and Thanh Hoa, planting 4,500 trees. Additionally, FPT pioneered the construction of green offices using solar power systems, aiming for carbon neutrality.
- Social (S):
FPT allocated VND 66.3 billion to community support activities. In 2024, FPT assisted 62,540 disadvantaged individuals nationwide, built 431 bridges to support children's education, and established the Nguyen Van Dao scholarship fund with VND 168.1 billion.
FPT ranks among Vietnam's Top 10 best workplaces, with 36% female managers and VND 184.7 billion dedicated to internal training. Moreover, FPT fosters a culturally diverse workplace with 3,489 foreign employees from 87 nationalities.
- Governance (G):
In 2024, FPT continued to widely implement the Objectives and Key Results (OKRs) governance model across its system. This method aligns individual goals with the corporation's direction, ensuring adherence to the overall strategy, thereby enhancing operational efficiency and productivity.
Concurrently, FPT and its key sectors actively apply international standards, achieving numerous prestigious certifications to strengthen global competitiveness.
As a result of these efforts, FPT was ranked among the Top 10 sustainable brands recognized for innovation (by the National Innovation Center and VCCorp), the Top 50 exemplary sustainable development enterprises in Vietnam, and continues to be the only technology stock included in the VNSI sustainable development index, as assessed by HOSE in 2024.
IV. Conclusion
ESG is not only a global trend but also a vital factor enabling Vietnamese businesses to develop sustainably, enhance competitiveness, and meet the increasingly stringent demands of international markets, investors, and customers.
The ESG journey presents many challenges but also numerous opportunities. Implementing ESG allows businesses to optimize costs, boost credibility, reduce risks, and contribute to building a more harmonious and developed society.
Business owners and managers must take the initiative to raise awareness, develop strategies, and gradually implement ESG—starting with small but practical actions.
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