Political importance

Vietnam’s sustainability agenda is gaining traction as the government leads the transition into a carbon-neutral economy. Political initiatives reflect the country’s National Strategy on Green Growth (2021-2030) and Vietnam’s commitment to the United Nations Climate Change Conference (COP26).

The government has also launched the National Action Plan on Responsible Business Practices, which aims to align national and global procedures and provide an operational framework for companies working with ESG-related matters.

 

 

 

Corporate attention

According to PwC, Vietnam demonstrated strong leadership in ESG initiatives in 2022, with 80% of surveyed Vietnamese companies having made ESG commitments or planning to do so within the next 2-4 years. However, the survey also indicated that implementing ESG commitments is mainly prioritized by Foreign Invested Enterprises. FIEs in Vietnam usually follow ESG procedures designed by their parent companies. Domestic companies tend to pursue a “wait and see” approach directed by formal regulatory guidelines.  

Most companies lack an understanding of the data required for reporting on ESG compliance. Thus, the government is providing due diligence guidelines inspired by the UN Guiding Principles on Business and Human Rights. 

62% of businesses list governance as the top priority of the three overall ESG categories. Presumably, this prioritization reflects the Vietnamese government’s efforts on legal compliance and anti-corruption practices. 

Trends

In 2017, the government issued a policy to improve access to green financing. As a result, green credits from domestic banks have grown by 22% annually. Green credit funds are mainly targeted at clean energy, renewable energy, and green agriculture industries.

The number of loans assessed for environmental and social risks by credit institutions is also going up. Nearly 50% of Vietnamese banks have established environmental risk management divisions, integrating them with general credit assessments. 

Greenwashing is a growing concern as Vietnamese companies are becoming aware of the competitive benefits of ESG compliance. To counter greenwashing, national labeling programs have been launched to certify products and services. Programs include Vietnam Green Label (Nhãn Xanh Việt Nam) and Energy Label (Nhãn Năng Lượng). 

 

 

 

Threats and opportunities

Awareness and understanding of ESG principles are generally low in Vietnam’s manufacturing sector. Despite the government’s commitment, challenges are accentuated by an inadequate regulatory framework and insufficient supervision, which makes it difficult to measure on-the-ground developments. Several initiatives to improve awareness among manufacturing companies have been launched. They offer useful resources to advance ESG reporting, assessments, etc.

To make potential investment recipients more attentive, the Ministry of Natural Resources and Environment has announced a carbon trade exchange in Vietnam to be launched in 2028. The exchange will facilitate the trading of carbon credits with regional and international markets. It is expected to trade 57 million annual carbon credits with international organizations. 

The carbon trade exchange is part of Vietnam’s ambition to build a business environment that aligns with the country’s climate commitments. These include net-zero emissions by 2050, ending deforestation by 2030, and phasing out coal-fired power by 2040 as stipulated in the 26th United Nations Climate Change Conference of the Parties (COP26). 

 

 

Useful resources

Downloads

Find links to recent publications about ESG conditions in Vietnam

ESG compliance services

Danish Industry offers online diploma courses for individuals, and in-person training workshops for full teams. The point of departure is to introduce basic ESG concepts and advice on how to align business with local regulations and social expectations.

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Support options

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ESG in other Asian countries

ESG varies all across Asia. We have gathered the most important information about politics, trends, opportunities, and threats in the different Asian countries.

Click on the specific country to learn more.