Charting global course for Vietnamese enterprises

As developed nations tighten emissions rules and demand greater supply chain transparency, Vietnam faces growing pressure to adapt. ESG standards are no longer a nice-to-have; they are essential for businesses and industrial zones to attract investment, reach export markets, and stay competitive in the global value chain.

Shift forward or slip back?

According to experts, the global push for stricter emission controls and greater supply chain transparency is becoming a real-world filter for manufacturing countries, including Vietnam.

M.A. Tran Hoang Nam, head of Real Estate of the Faculty of Economics, HCMC University of Economics and Finance (UEF), said Vietnam remains largely involved in low value-added stages of production, such as raw material supply and basic processing. Even the manufacturing process often stops at intermediary steps. Without upgrading their non-cost capabilities, Vietnamese businesses could easily be replaced, he warned.

“In the past, many firms operated through informal trade channels, with little regard for environmental standards or traceability. But as they enter markets like the EU and North America, ESG compliance is no longer optional—it is a requirement. This shift presents both a challenge and a chance to climb higher in the value chain,” he said.

PhD. Do Thi Thu Ha, vice dean of the Faculty of Economics and head of Logistics and Supply Chain Management, UEF, emphasized that a lack of transparency remains a major hurdle for Vietnamese businesses. “The belief that Vietnamese products are cheap but unsustainable does not necessarily reflect their true quality; it often stems from insufficient evidence and inconsistent messaging,” she explained. “We might be doing the right things, but we often fail to prove it. Without ESG data, traceability mechanisms, or independent verification, it is difficult for Vietnamese goods to gain credibility in developed markets.”

PhD. Ha added that integration into global supply chains is not only challenged by technical standards but also by Vietnam’s current stage of economic development. Most Vietnamese businesses, she said, are still small-scale, with limited technology and operations that fall short of international benchmarks. “Many firms are domestically oriented, lacking the scale and technological capacity to meet global standards,” she said. “In demanding markets like Europe, particularly in sectors such as agriculture, companies that cannot comply with stringent process requirements will find it difficult to compete and maintain market share.”

She added, “Today’s partners do not just ask what you are doing. They want evidence, clear standards, and third-party verification.” To move deeper into the value chain, she said, businesses – particularly those operating in industrial zones – must pursue a comprehensive green transition. This includes investing in clean technologies, ESG data management systems, and independent audit mechanisms.

Challenges still ahead

Even as ESG standards have gradually emerged as a gateway to global supply chains, most industrial zones in Vietnam have yet to catch up. Of the 400-plus zones currently in operation, only a limited number incorporate green practices – such as renewable energy use, compliant waste and emissions treatment, resource efficiency, and transparent data systems. The majority still rely on conventional, resource-intensive models.

Vietnam’s transition toward green industrial zones faces a range of systemic challenges. Waste and energy management remain fragmented, with limited coordination and shared infrastructure among businesses operating within the same zone. This results in inefficient resource use, high operating costs, and difficulties in developing circular economy models. Additionally, the spatial disconnect between industrial zones and nearby residential or urban areas makes it difficult to build integrated ecosystems—where workers can live, work, and access essential social services in one connected environment.

The shift toward ESG is hindered not only by infrastructure gaps but also by the structure of the business community. Over 90% of businesses in Vietnam are small and medium-sized enterprises (SMEs), which typically lack financial resources, technology, and skilled personnel needed for ESG implementation. Most do not have dedicated ESG teams, are unfamiliar with sustainability reporting, and often do not know where to begin when asked to comply with international standards. According to experts, the issue is not resistance, but relevance. “SMEs aren’t ignoring ESG; they just haven’t seen a clear reason to act. Without pressure from regulators or large buyers in the supply chain, ESG remains a distant priority for many,” they said.

Nam also stressed that ESG implementation must go beyond surface-level changes. “If you want to do it seriously, you need to overhaul the entire operating foundation—from technical processes and production technologies to human resources. These are major investments that businesses will only commit to if they see long-term benefits in growth or access to high-quality markets,” he said. According to Nam, overcoming these barriers would not only improve production efficiency but also give businesses a chance to move up the global value chain.

Going green takes more than just business effort

Vietnam’s ability to meet ESG requirements and remain competitive in global supply chains depends on more than just individual business efforts. According to experts, green transformation must be a coordinated, system-wide process involving all three key players: the Government, industry, and the academic community – working together under the Triple Helix model.

Nam emphasized the role of the Triple Helix model in developing skilled talent, advancing green technologies, and shaping sustainable industrial zones. This approach, he noted, is crucial for scaling up best practices and enabling Vietnamese manufacturing to tap into high-end markets. He cited Binh Duong Province (prior to its merger with HCMC) as a proactive example. Local authorities there began setting strict entry criteria for new industrial zone investors, requiring clean technologies, large-scale operations, and clear sustainability commitments. This marked a shift from a “growth-at-any-cost” strategy to a more selective, strategic investment model—laying the groundwork to attract high-quality capital.

A key challenge, experts note, is the lack of consistent ESG standards across provinces, leading to uneven and discretionary enforcement. While some localities have started applying ESG in project reviews, the absence of a unified framework leaves decisions largely to local authorities. Provinces with greater leverage can uphold strict standards, while others may lower the bar under investment pressure. Nam highlighted Binh Duong as a proactive example, where new industrial zones require investors to meet high benchmarks in clean technology, scale, and sustainability. This strategic shift from broad investment attraction to selective targeting is helping the province draw higher-quality capital.

Experts have called for the early adoption of a minimum green standard to serve as a baseline for assessing and operating industrial zones. PhD. Ha added that while such a framework should include mandatory core criteria, it should also allow for a degree of flexibility so that provinces can tailor implementation to their specific industries and enforcement capacity.

PhD. Ha also highlighted a critical gap in ESG implementation: the lack of reliable data infrastructure and independent auditing systems. While many industrial zones may be making efforts to transition, without concrete evidence—such as emissions data, wastewater treatment records, and traceability—they are unlikely to gain recognition in international markets.

Beyond institutional frameworks, two essential components for a successful transition are technological capability and interdisciplinary human resources. Vietnam needs to proactively invest in green technologies—from environmental treatment infrastructure to ESG data management systems. At the same time, workforce development in sustainability should be strengthened through collaborative programs that link universities, businesses, and government agencies.

In the end, experts agree that awareness is the most critical driver—both among government officials and business leaders. Green transition is not just a matter of technology or policy; it is a question of mindset and leadership. Ultimately, progress depends on the attitudes of those at the top – whether local authorities or business owners. If leadership fails to recognize the strategic importance of going green, change is unlikely to happen – even with supportive policies. But when leaders have the vision, determination, and ability to inspire their teams, meaningful action can take place even before legal requirements are enforced.

Driving the green transition is therefore not just a matter of policy or technology—it requires a clear roadmap, tailored support mechanisms, and persistent communication that reaches every decision-maker. As experts put it, “we need to speak up so people know this is happening”—laying the groundwork for system-wide consensus. Without action today, they warn, the window of opportunity to enter higher-value segments of the global supply chain could narrow quickly as international markets become increasingly selective.