Vietnamese businesses, particularly small, medium, and micro enterprises that account for 97% of the economy, face significant hurdles in implementing environmental, social, and governance (ESG) practices due to information gaps and limited resources. Overcoming these challenges requires practical, collaborative solutions from the Government, the business community, and relevant organizations.
Information gaps: A key challenge for ESG practices
In an interview with The Saigon Times, Dr. Nguyen Giao Hoa, a lecturer at the Institute of Sustainable Finance, University of Economics Ho Chi Minh City (UEH), observed that many businesses—particularly small and medium-sized enterprises (SMEs)—either lack awareness of ESG or are only beginning to explore it. Some engage in related efforts, such as corporate social responsibility (CSR) initiatives, without realizing these align with ESG principles. Others remain uncertain about their environmental practices and hesitate to commit, concerned about the potential impact on profitability.
According to the 2024 ESG Implementation Assessment Report, conducted by the Agency for Enterprise Development under the Ministry of Planning and Investment, in collaboration with the United States Agency for International Development (USAID), ESG remains a relatively new concept, particularly among small, medium, and micro enterprises.
Of the 1,019 Vietnamese businesses surveyed, 39% were unfamiliar with ESG. The highest rates of unfamiliarity were found in the resource extraction and mining sector (59%), healthcare and medical services (53%), and tourism, hospitality, and food services (51%). Additionally, more than 60% of respondents reported being unaware of Vietnam’s ESG-related regulations and policies.
The survey also highlights that most businesses have difficulty gaining access to ESG-related information, with 60% of respondents identifying this as a major challenge. This issue spans all business sizes, affecting 66% of micro-enterprises, 65% of small businesses, 57% of medium-sized enterprises, and 46% of large companies. Larger enterprises, however, generally enjoy better access to information and resources, with only 21% unfamiliar with the ESG concept, compared to nearly 50% among small and micro-enterprises. This advantage enables larger firms to perform better in both developing strategies and implementing ESG-related activities.
Another key challenge identified by surveyed businesses is the absence of clear government policies on ESG, with 31% of respondents citing this as a concern. Additionally, 24% reported insufficient support from the Government, development organizations, or partners in implementing ESG practices. Notably, large firms appeared to face the greatest obstacles in this regard—42% pointed to the lack of specific ESG policies, while 31% struggled due to limited support from relevant stakeholders.
Resource constraints
Dr. Nguyen Giao Hoa also pointed out that for many SMEs, the immediate need to maintain operations often outweighs long-term sustainability goals. These businesses are caught in a cycle where short-term financial pressures hinder the adoption of ESG practices, which are often perceived as long-term investments. Without clear incentives or external support, SMEs may struggle to prioritize sustainability—despite its potential to enhance competitiveness and mitigate risks over time. Dr. Hoa noted that some companies only adopted solar power systems to reduce carbon emissions after coming under pressure from their clients.
Moreover, many companies are unable to track their environmental or social impacts, with only a small number reporting on carbon emissions. The proliferation of ESG reporting frameworks adds to the confusion, making it difficult for businesses to navigate and comply with the varying requirements. According to the report, 42% of businesses nationwide do not produce financial reports or assessments related to environmental and social responsibility. Notably, 19% of these are legally required to do so but fail to comply.
When it comes to financial investment in ESG practices, 23% of surveyed businesses reported facing challenges, with 30% of large enterprises experiencing the greatest difficulty. The report also captures feedback from small and micro enterprises, many of which noted that newly established or very small firms often lack the capital and resources needed to adopt ESG practices. Some added that due to weak operational foundations, they must prioritize business development before turning their attention to ESG initiatives.
Another significant obstacle is the shortage of qualified personnel with ESG expertise. According to the survey, 22% of businesses struggle to find skilled staff in this area and even large businesses are not immune. In fact, 36% of them reported difficulty in recruiting employees with the necessary ESG knowledge and experience.
ESG practices remain relatively new in Vietnam, which complicates the process of sourcing talent in this field. Companies often resort to internal training or hire external consultants, yet they continue to face significant challenges in building a specialized ESG team. Furthermore, implementing ESG requires expertise across multiple domains—ranging from environmental management to social issues and corporate governance—making it even more difficult to find personnel who possess both broad and specialized knowledge.
A path forward for SMEs
Dr. Hoa proposed a comprehensive, multifaceted approach to improving the effectiveness of ESG practices and addressing the challenges associated with them. One of the most crucial steps is providing businesses—particularly SMEs—with access to expert consultants. These professionals can offer tailored guidance, training, and strategic support, helping companies bridge knowledge gaps and navigate operational hurdles. Given their often limited resources and expertise, SMEs stand to benefit significantly from such targeted assistance.
Dr. Hoa also emphasized the importance of leadership in driving ESG initiatives. By focusing on the “why” behind ESG adoption, companies can better understand the risks of inaction, such as losing access to export markets or eroding customer trust. Leadership commitment is essential, as it sets the tone for the entire organization and ensures that sustainability becomes deeply embedded in both company culture and strategic planning. When leadership is fully invested, it becomes easier to integrate ESG into day-to-day operations and long-term goals.
Clear communication and education are also crucial. Many businesses still lack a full understanding of what ESG entails and why it matters. Developing accessible training programs and awareness campaigns can help bridge this gap, ensuring that employees at all levels understand their role in sustainability efforts. A step-by-step approach to ESG implementation is especially effective. Companies can begin with small, manageable initiatives—such as reducing energy consumption or improving waste management—before progressing to more complex tasks like carbon footprint assessments or comprehensive reporting. Focusing on priority issues, such as those required by regulations like Decree 6/2022 on greenhouse gas inventories, allows businesses to allocate resources efficiently while ensuring compliance.
Businesses are more likely to embrace ESG practices when they see a direct connection to economic benefits. Demonstrating how ESG initiatives can improve efficiency, reduce costs, and unlock new revenue streams can shift the perception of ESG from a regulatory burden to a competitive advantage. For example, adopting energy-efficient processes or sustainable supply chain practices not only minimizes environmental impact but also cuts operational costs over time.
Supportive government policies are essential in fostering an environment conducive to ESG adoption. Measures such as green financing programs, tax incentives, and technical assistance can alleviate the financial and operational challenges many companies face. Moreover, encouraging collaboration among businesses, consultants, and financial institutions can create a network of shared expertise and resources, further strengthening the success of ESG initiatives.
Finally, businesses should be encouraged to view ESG as a strategic opportunity rather than merely a compliance obligation. By aligning with global sustainability trends, companies can position themselves as leaders in the field, unlocking new international partnerships and market opportunities. This shift in mindset not only helps businesses remain competitive but also ensures they make meaningful contributions to broader sustainable development goals. Together, these efforts will build a strong foundation for ESG practices, empowering businesses to overcome challenges and thrive in a sustainability-driven economy.
