In particular, 80 per cent of survey attendants said their companies have made commitments or plan to do so in the next 2-4 years. Companies yet to make any commitments or plan for ESG cite lack of knowledge as the key barrier. Only 29 per cent of respondents has confidence in their board’s ESG capabilities, while 43 per cent are considering establishing training on related matters.

Nguyen Hoang Nam - Partner, ESG Leader Assurance Services (left), PwC Vietnam, Dinh Hong Hanh - Partner, ESG Leader Risk Consulting Services, PwC Vietnam

However, only 57 per cent of foreign-invested enterprises have made bold ESG pledges, and 58 per cent of listed companies appear to have taken a “wait-and-see” stance. Interestingly, 40 per cent of private family business respondents say they have made commitments.

This figure may underscore the strong sense of responsibility among Vietnamese next generations that family businesses should lead the way in sustainable business practices, which is clearly indicated in PwC’s report, Vietnamese NextGens.

ESG typically brings to mind environmental issues like climate change and resource scarcity, particularly post-COP26. Over 60 per cent of Vietnamese enterprises, notwithstanding, cited governance as the top priority on the executive agenda.

Regarding sustainability reporting standards and frameworks used, Vietnam is among the lowest for Global Reporting Initiative and Sustainable Development Goal adoption, according to a PwC Sustainability Counts report, which surveyed 50 of the largest listed companies of each of the selected jurisdictions.

Vietnamese companies trail behind global counterparts in seeking independent assurance on ESG disclosures. The country is also the lowest for disclosing ESG governance and board of directors’ responsibilities in these matters. Meanwhile, it has the highest proportion of businesses disclosing short-term targets, but the lowest for long-term targets, which is less than 30 per cent.

As with almost everything, taking the first steps along the ESG journey is daunting. Some 61 per cent of Vietnam’s businesses yet to commit cite lack of knowledge as the key barrier. Two-thirds see ambiguous regulations as a major difficulty, while only 29 per cent of respondents who said that there are board involvements in ESG are confident in their board’s capabilities on these matters.

Clear guidelines, a holistic country roadmap, and a level playing field for industries are needed for businesses here to advance their strategies.

While the government has made progress in developing green energy, environmental protection, and corporate governance, more can be done. For instance, many are waiting for Vietnam’s policymakers to offer clarity around the country’s green finance rules and target areas.

ESG will be a major focus for new reforms in government policy and future corporate strategy. To make it impactful in Vietnam, a 2-pronged approach is required. On one hand, businesses should raise their organisation’s ESG awareness, sets out their visions and re-shape their strategy and its execution. On the other hand, government bodies and regulators should develop clear policies to provide new standards as well as motivate companies in integrating ESG into the way they create value to their stakeholders.

PwC has been active in sharing perspectives in the process of the State Bank of Vietnam in preparing a draft circular guiding the implementation of environmental risk management in credit granting activities of domestic institutions and foreign branches. The circular is set to provide a standard legislative framework mandating them to adopt environmental risk management in loan executing activities.