FROM AWARENESS TO ACTION: UNDERSTANDING ESG CHALLENGES AMONG VIETNAMESE BUSINESSES

Nguyen Thi Hong Thuy

�VNU - University of Economics and Business, Vietnam�

ESG Implementation in Vietnamese Enterprises

Identify Barriers�and Propose�Recommendations

Analyze ESG�Implementation�Status

Pinpoint challenges�and suggest�solutions

Assess current ESG�practices

2

3

Improve ESG�Practice and�Adoption

Evaluate ESG�Awareness

1

4

Gauge�understanding of�ESG principles

Enhance ESG�implementation and�acceptance

The Rise of ESG Disclosure

ESG disclosure is gaining importance in investment decisions globally. Investor demand and regulations are driving adoption.

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Global Trend

Investor demand for sustainable practices is rising.

Regulatory Push

Listing requirements promote ESG adoption.

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Stakeholder

Requirement

Stakeholders’ requirement

INTRODUCTION

ESG Survey structure and implementation

ESG Business Sustainability�Assessment Tool

36 Questions

3 Main Pillars

1,019 Enterprises

Sub-topics

Channels

Agency for Enterprise�Development

May–July 2024

Implementation Process

ESG Survey

Survey Structure

Survey Instrument

ESG Survey structure and implemetation

• Businesses have never heard of ESG (39%)
• Businesses have never heard of ESG but are practicing environmental, social, and governance topics (16%)
• Businesses are learning about ESG (30%)
• Businesses are developing ESG implementation strategies (7%)
• Businesses have ESG strategies and commitments but no specific implementation plans (5%)
• Businesses have plans and are implementing ESG (3%)

Enterprise Awareness and Implementation of ESG

24% Others

39% Never Heard of ESG

7% Implementing ESG Practices

30% Learning About ESG

Non-Compliant

21%

Compliant, Publicly Disclosed

24%

Not Applicable

29%

19%

Compliant, International Disclosure

3%

5%

Compliant, International Non-Disclosure

Compliant, Not Disclosed

Envỉonmental Pillar: Level of compliance with management, monitoring, and impact assessment policies

Despite some level of policy compliance, public disclosure remains limited. Only 8% of enterprises comply with both domestic and international standards, while 21% lack any environmental policy. Nearly one-fourth of businesses consider environmental standards not applicable, reflecting gaps in awareness or regulation enforcement.

Not applicable due to the nature of the business

Non-compliant – No policy in place

Not Applicable

26%

44%

20%

No Reporting

25%

Mandatory Reporting

Voluntary Reporting

10%

5%

0%

30%

100%

40%

90%

50%

80%

60%

Envỉonmetal Pillar: Enterprise Environmental Reporting�Practices

70%

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44% – Yes, reports and discloses environmental information to state authorities and stakeholders as required by law

26% – Not applicable due to the nature of the business that is not subject to mandatory reporting

25% – No reporting or disclosure mechanisms in place

5% – Yes, voluntarily reports and publicly discloses environmental information

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Environmental Staffing Allocation in Enterprises

50%

40%

10%

Part-time Staff

Concurrent�environmental�responsibility

Dedicated Staff

No Staff

Full-time environmental�responsibility

No assigned�environmental�personnel

10% – Yes, dedicated environmental staff (full-time responsibility)

50% – Yes, part-time or concurrent responsibility (not full-time)

40% – No environmental staff assigned

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Half of the surveyed enterprises assign environmental responsibilities on a part-time basis, while only 10% have dedicated personnel.

A notable 40% do not have any staff in charge of environmental management, highlighting a gap in organizational capacity for ESG compliance.

Social Pillar: Employee Benefits Provision in Vietnamese�Enterprises

6% No Benefits Provided

28% Full Compliance with Additional Benefits

66% Minimum Legal Compliance

While two-thirds of enterprises (66%) comply with the basic legal requirements for employee benefits, only 28% go beyond to offer additional support. A small portion (6%) report having no benefit programs in place, indicating room for improvement in corporate social responsibility and employee welfare.

Social Pillar: Enterprise Community Engagement Activities

Yes

51%

Enterprises actively�engage with community

49%

No

Enterprises do not�participate in�community activities

Slightly more than half of surveyed enterprises (51%) report having organized or participated in community engagement initiatives. However, 49% still lack structured efforts to build relationships with local communities, indicating potential for enhanced social responsibility programs.

Social Pillar: Enterprise Safety Evaluation Processes

9%

38%

38%

14%

Formalized and�Publicly Disclosed

Documented Internal�Process

Undocumented Internal�Process

No Safety Evaluation�Process

While 47% of enterprises have documented procedures for evaluating product/service safety, only 9% make them publicly available. Meanwhile, 38% follow informal or undocumented practices, and 14% lack any safety evaluation process, indicating a need for greater transparency and standardization in consumer protection.

Governance pillar: Sustainable Development Policy Implementation

No Policy (20%)

No sustainable development policy or�commitment

Internal Commitments (51%)

Commitments exist but lack formal�documentation

Documented Internally (20%)

Policies are documented but not publicly�shared

Formalized and Publicly�Disclosed (7%)

Policies are documented and shared�publicly

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• 7% – Yes, the policy and commitments are formalized and publicly disclosed
• 20% – Yes, the policy and commitments are documented internally
• 51% – Yes, there are internal commitments but no formal documentation
• 21% – No sustainable development policy or commitment in place

Although 78% of enterprises report having some form of sustainable development commitment, only 27% have documented policies, and just 7% have made them public. This highlights the need for stronger policy formalization and transparency in corporate sustainability efforts.

Governance pillar: Distribution of Reporting Mechanisms Among Enterprises

19% No Reporting Mechanisms

20% Both Financial and ESG Reports

23% Not Applicable

38% Financial Reports Only

While all enterprises are expected to submit financial reports, only 20% have integrated ESG (Environmental–Social–Governance) considerations into their reporting through dedicated environmental and social responsibility reports. The lack of ESG disclosures among 57% of enterprises reflects a need for regulatory clarity and awareness-raising.

Governance Pillar: Establishment of Development and HR Departments

72%

23%

4%

No

Departments or units�are not established

Yes

Do not know /�Not sure

Departments or units�are established

Uncertainty about�department�establishment

Mechanism for Establishing Departments for Development Policies, Human Resources, and Compensation

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A strong majority (72%) of enterprises have established departments or units responsible for development policies, HR, or compensation. However, 23% still lack such internal structures, while 4% of respondents were unaware of whether such mechanisms exist—highlighting opportunities to improve internal governance clarity.

National ESG Performance Ratings

61%

25%

14%

Grade B

Moderate ESG�performance score

Grade A

Grade C

High ESG performance�score

Low ESG performance�score

The majority of enterprises fall into Grade B, indicating moderate ESG practice levels. Only a small proportion (14%) meet the highest standard (Grade A), while 25% fall into Grade C, suggesting low levels of ESG implementation. This distribution highlights both progress and remaining gaps in ESG adoption nationwide.

67%

Finding: The barriers of Awareness of ESG Regulations Among�Vietnamese Enterprises

43%

Small Enterprises

77%

60%

Large Enterprises

All Enterprises

Micro Enterprises

62.41%

Medium Enterprises

Limited awareness—especially among micro and small enterprises—is a significant barrier to ESG implementation. This underscores the urgent need for policy communication, training programs, and capacity-building efforts tailored by enterprise size.

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• 62.41% of enterprises nationwide do not clearly understand ESG-related regulations and government policies.
• Awareness is particularly low among:
• 77% of micro-enterprises
• 67% of small enterprises
• Even larger and medium-sized enterprises face challenges, with:
• 60% of medium enterprises
• 43% of large enterprises still unfamiliar with relevant ESG policies.

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FINDINGS: ESG COMMITMENT STATUS BY THE TYPE OF COMPANY

Limited External�Support

Absence of�Government Policies

Scarce ESG Training�Programs

Lack of ESG�Information

24%

31%

57%

60%

Shortage of ESG-�Skilled Personnel

18%

26%

25%

Difficulty in ESG�Reporting

Financial Resource�Mobilization

Barriers to ESG Implementation in�Vietnamese Enterprises

Enterprises Face Multiple Barriers in Implementing ESG Practices

These challenges reflect both systemic issues and practical limitations in awareness, resources, and institutional support.

• Lack of or insufficient access to ESG-related information (60%)
• Lack of ESG introduction and training programs (57%)
• Absence of specific government policies on ESG implementation (31%)
• Lack of efficient support from government agencies, development organizations, or implementation partners (24%)
• Difficulty in disclosing and reporting ESG practices (18%)
• Challenges in mobilizing financial resources to invest in ESG (26%)
• Shortage of ESG-skilled personnel or training programs for internal staff (25%)�

Discussion: Implications and Contextual Insights

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Development of Clear ESG Policy Frameworks

2

The absence of specific government policies on ESG implementation creates uncertainty. There is a pressing need for the development of regulatory guidelines, sectoral roadmaps, and mandatory reporting frameworks to guide businesses.

Need for Targeted Awareness Campaigns

The lack of basic ESG understanding—especially among micro and small enterprises—highlights the urgent need for national and local campaigns to raise awareness about ESG principles, benefits, and obligations.

Discussion: Implications and Contextual Insights

3

Incentivizing ESG Adoption through

Financial and Tax Tools

4

Given that many enterprises cite limited financial capacity as a barrier, the government should consider tax incentives, ESG-linked financing schemes, and subsidized advisory services to reduce the cost of ESG implementation.

Encouraging ESG Integration into Business Strategy

ESG should not be viewed as a compliance issue but as a strategic advantage. Enterprises should be supported in integrating ESG into core business models, risk management systems, and value propositions.

Customized Approaches by Enterprise Size and Sector�Policy support and ESG tools should be tailored to enterprise size and industry context, recognizing that micro, small, and large enterprises face different types and levels of challenges.

Thank you