The concept of ESG—Environmental, Social, and Governance—is increasingly becoming a shared language between businesses and the global community. Among its three pillars, the ‘S’ for Social—once frequently overlooked—has emerged as one of the most challenging, as it involves real people and real-world issues.
Just a few years ago, ESG was a relatively unfamiliar concept. Today, it features prominently in strategic meetings, investment due diligence processes, and partnership criteria across global supply chains—from textile factories to publicly listed corporations. Notably, among the three ESG pillars, the ‘S’ for Social—once underappreciated—has emerged as the most complex for many businesses. Unlike abstract concerns such as carbon emissions or board composition, the Social pillar touches on tangible, immediate issues: people, workers, and everyday realities.
ESG is no longer someone else’s concern
Contrary to the common perception that ESG is relevant only to multinational corporations or large publicly listed firms, it is increasingly becoming a prerequisite for businesses of all sizes seeking to participate in the global value chain.
Today, before negotiations even reach pricing, partners often begin with questions such as: Do you pay wages on time? Are your employees working overtime voluntarily? Do you have a policy against workplace harassment? These are no longer just ethical considerations—they are concrete business requirements. If your company cannot provide clear, documented answers—or offers only vague verbal assurances—you risk being excluded from the conversation entirely. Being cheap, fast, and high-quality is no longer sufficient. Your product or service must also be created in a workplace that is fair, transparent, and respectful of human rights.
Labor compliance: An old story that needs a new perspective
Many businesses in Vietnam still assert that they are ‘fully compliant’ with labor laws—maintaining valid employment contracts, paying mandatory insurance, and registering internal regulations. However, in the context of ESG, these are merely the starting points.
Today’s global expectations go far beyond basic compliance, demanding greater transparency, proactiveness, and accountability. For instance: Does your company provide a safe channel for workers to report discrimination? Are whistleblowers protected from retaliation? Do you actively measure and respond to employee satisfaction? And if an international partner were to visit your facility next week, would you feel confident opening your doors? These are no longer hypothetical questions—they are increasingly relevant standards designed not to burden businesses, but to ensure they operate with credibility and integrity.
Knowing the “what,” but unclear on the “how”
There is no denying that adopting ESG—particularly the Social pillar—can place real pressure on businesses.
First, ESG is not governed by a single law or regulation. For companies used to operating within clearly defined legal frameworks—such as laws, decrees, and circulars—navigating the open-ended nature of ESG can feel like learning to swim without a safety line.
Second, there’s the challenge of resources. For many small and medium-sized enterprises (SME) in Vietnam, ESG initiatives may seem like a luxury. Investments in performance evaluation systems, internal feedback mechanisms, or labor rights training are often postponed in favor of immediate business needs.
Third is the fear—sometimes even panic—of audits and assessments. Some businesses worry that embracing ESG will uncover past missteps or neglected areas. But ESG is not about exposing flaws; it is about creating the opportunity to correct them and move toward sustainable, responsible growth. Perfection is not expected from day one—but transparency, commitment, and a credible plan forward are.
The Government is not standing aside
One of the most encouraging developments is the Vietnamese Government’s active role in advancing ESG practices—particularly the Social pillar. To date, Vietnam has ratified nearly all of the International Labor Organization’s (ILO) core conventions, which include key principles on forced labor, freedom of association, and non-discrimination. The 2019 Labor Code marked a major step forward, allowing for the formation of independent worker organizations, opening a new chapter in labor dialogue and worker rights in Vietnam.
Several ministries and agencies have also taken proactive steps. The Ministry of Planning and Investment (now merged into the Ministry of Finance), the Ministry of Labor, Invalids and Social Affairs (now merged into the Ministry of Home Affairs), and the State Securities Commission have launched various initiatives to support ESG adoption. These efforts include encouraging the disclosure of sustainability reports, providing free ESG training programs, and partnering with international organizations to pilot ESG implementation across specific sectors.
Clearly, ESG is no longer a ‘private game’ played solely by businesses. The stage has been set—and the spotlight is on. The only question that remains is whether businesses are ready to step up and demonstrate their commitment.
What can businesses do to avoid being overwhelmed?
The short answer: start with what you already have, and build from there. ESG is a journey of continuous improvement—not a final exam. Begin by reviewing your existing HR processes and labor management practices, including employment contracts, disciplinary procedures, and internal feedback mechanisms. These should be standardized, transparent, and easily verifiable.
Next, set up an internal feedback channel. It does not need to be high-tech, but it must be safe, impartial, and supported by a clear, trusted response process. From there, expand gradually: provide training for middle managers, update HR policies to promote fairness and inclusion, and, if feasible, start publishing a basic ESG information sheet. Even a simple report can go a long way in signaling your commitment and proactive mindset.
If you are unsure where to start or want to take a more structured approach, consider reaching out to specialized ESG consulting firms. Vietnam now hosts a growing ecosystem of organizations offering ESG advisory services tailored to businesses of all sizes. These include VietESG, the Big Four auditing firms, as well as entities partnering with GIZ or UNDP. For smaller enterprises, startups like Hectagon and ClimaX provide flexible, step-by-step solutions suited to various budgets and levels of readiness. Working with a consultant not only saves time and avoids costly missteps—it also helps you build a professional, methodical roadmap, which is especially crucial when entering international markets.
More concretely, SMEs in Vietnam can begin their ESG journey by identifying criteria that align with their industry and scale, designating staff responsible for ESG matters, and conducting an initial internal assessment. From there, they can develop a phased action plan tailored to their capacity. A practical approach includes combining internal training, peer learning, and staying informed through organizations such as the UNDP or the Vietnam Chamber of Commerce and Industry (VCCI).
To track progress, businesses can measure ESG effectiveness using clear, actionable metrics—such as employee satisfaction through regular surveys, staff retention rates, the number of internal complaints resolved on time, and improvements in employer branding on recruitment platforms. These indicators provide direct insights into how ESG initiatives influence both performance and workplace culture.
Support resources for ESG transition are also expanding. In addition to professional consulting services, businesses can tap into free workshops and training programs offered by industry associations, chambers of commerce, and internationally funded initiatives. Actively seeking knowledge, building strategic partnerships, and embedding ESG into long-term planning are essential steps to help businesses stay resilient and competitive amid increasingly stringent market demands.
ESG is not a burden, but an opportunity to upgrade
A common takeaway from businesses that adopted ESG early is that they not only attracted partners but also transformed their internal operations. Employees became more satisfied, turnover rates dropped, and productivity improved thanks to a more transparent and equitable workplace culture. ESG does not turn a business into a “moral angel,” but it provides a framework for operating in a structured, responsible, and sustainable way. In uncertain times, this becomes a true competitive edge.
To put it simply, if tomorrow a foreign investor, key partner, or ESG rating agency showed up at your company and said, “We’d like to see how you treat your workers,” would you be ready to welcome them in, offer them tea, and answer with confidence? If your answer is “not quite”—then today is the perfect day to start.
