PWC Vietnam Esg Readiness 2022 en

IN COLLABORATION WITH
From
Ambition
to Impact
Vietnam ESG Readiness
Report 2022
Making sense of ESG
A business perspective
ESG is a set of environmental, social and governance standards*

for company operations. It serves as a guide for stakeholders to
understand how an organisation manages risks and opportunities
across the three dimensions.
What’s inside each dimension?
2 Vietnam ESG readiness report 2022

ENVIRONMENT SOCIAL GOVERNANCE
The energy your company The relationships and the The oversight mechanism
takes in and the waste it reputation fostered through of controls, procedures
discharges or the natural your business dealings and practices needed to
resources needed to keep across the communities govern and make effective
your business operational. where you do business. decisions for the wider good
of the company.
What’s What’s What’s

inside? inside? inside?
Climate Employee Business practices

Carbon emissions Basic needs & wellness Ethics
Physical asset resilience Diversity & inclusion Competitive behavior
Pollution Hiring & advancement

Transparency & Disclosure
Worker experience
Air Tax
Water Customer Accounting & Internal Audit
Soil Product safety and quality
Leadership
Other Selling practices
Board & management profile
Waste Privacy & data security
Board/Exec remuneration
Packing Business model
Purpose and values
Electronic Operations resilience Risk and opportunity
Hazardous Product design & lifecycle Ownership & Succession
Wastewater management
Other Supply chain management

Resource use Accessibility
Water stress Community investment
Energy management
Biodiversity & land use
Other
ESG terminology as per Global Reporting Initiative1:
• ESG standards are a specific quality requirement for ESG reporting. ESG standard typically contains detailed criteria or
metrics of ‘what’ should be reported on each ESG topic.
• ESG framework provides a broader, contextual “frame” for ESG information. It can be thought of as a set of principles
providing guidance and shaping people’s understanding about a certain ESG topic, but miss a defined reporting obligation.
ESG framework may be used when a standard does not exist.
Vietnam ESG readiness report 2022 3

Foreword
Dinh Thi Quynh Van Phan Le Thanh Long

General Director Chief Executive Office
PwC Vietnam VIOD
ESG creates winners among businesses, It is against this backdrop that both
governments and society. Those who address PwC Vietnam and the Vietnam Institute
sustainability and climate change today stand as of Directors (VIOD) jointly conducted a
leaders of tomorrow. survey between May and August 2022 to
find out how businesses in Vietnam are
Environmental, social and governance (ESG) has (in reality) approaching and handling ESG
become mainstream and is widely recognised as matters. Where are these companies on
business critical. It is no wonder that ESG remains top the ESG journey? What are they thinking
of mind for Management Boards today. and feeling about ESG and the imperative
ESG serves as a framework to help stakeholders make for green growth? What support is
sense and measure how sustainably an organisation is needed to move the needle on ESG?
operating. With consumers, employees, and investors This is what we explore in our inaugural
demanding that companies do more or face serious Vietnam ESG readiness report 2022.
consequences, businesses can no longer afford to The results from 234 respondents
ignore ESG issues. highlight that ESG concerns are front and
When done correctly, ESG enables businesses to tackle centre for businesses here. Stakeholder
the biggest challenges of today - and capture the best expectations are also increasing. So
opportunities of tomorrow. However, ESG takes on more needs to be done. We hope
different meanings for each organisation given its broad you find this report an interesting and
spectrum of topics. And so, to fully realise its potential, thought-provoking read. We also would
the ESG concept must be aligned with an organisation’s like to take this opportunity to thank
strategy and help advance its’ business model. all respondents who took the time to
contribute to this valuable research.

Acknowledgements
This Vietnam ESG Readiness Report 2022 was jointly developed by
PwC Vietnam and the Vietnam Institute of Directors (VIOD). We would
like to thank the organisations, business associations and chambers
that contributed to and participated in the survey and report.
Special thank to the strong support from the State Securities
Commission of Vietnam (SSC), Vietnam Chamber of Commerce
and Industry (VCCI), Ho Chi Minh City Stock Exchange (HOSE),
International Finance Corporation (IFC).

What’s inside
8 ESG in Vietnam
What do companies operating in
12 Vietnam say
13 ESG commitment levels are high
18 The ESG action gap: More to do
29 Taking ESG forward
Recommendations for businesses
35 in Vietnam
38 About the survey
40 References

ESG in Vietnam

A clear signal from the Vietnamese government
ESG has gained prominence in Vietnam over the past few years. This is largely driven by the
Government’s efforts to promote ESG-related practices, and investors’ growing demand for
sustainable investment.
At the 2021 United Nations Climate Change Conference (COP26), Vietnam made a big splash when
the Prime Minister announced a series of climate-action commitments. These will have a significant
impact on the transition to carbon neutrality and will require a rewiring of the entire economy.
But that’s not all. As illustrated below, efforts by the Vietnamese government cover all three dimensions
of ESG. In taking the lead to provide the relevant ESG policies and regulations, the Vietnamese
government can help galvanise businesses into playing a greater role in achieving the national
commitments related to ESG objectives.
Vietnam’s commitments to tackle climate change
Net-zero carbon Phase out coal-fueled Stop

emission target power generation by deforestation by
Year Year Year
Vietnam
To reduce GHG submitted its
emissions by updated NDC on 11
September, becoming
Year
2030
the 12th country to do
so in 2020.
Between 9% (with domestic

resources) and up to 27%
(with international support)
Source: UNFCCC, MONRE
Vietnam: Boosting resilience to climate change, accelerating transition to a low

carbon economy, while achieving country objective to become a high-income
economy by 2045.
Watch 5-min video from The World Bank Group’s Country Climate and
Development Report

A clear signal from the Vietnamese government
(continued)
At a glance: Key ESG legislation, policy developments and regulations
Note: Non-exhaustive
Social
(2019) Labour Code11
Decree2 on (2011)
GHG emission Consumer
and ozone layer Protection Law16
protection, initial
roadmap for (2023) Draft revised
domestic carbon Consumer
market Protection Law17
Draft Decree
on Personal Data
Protection12
Power
Development Plan National green
8 (PDP84) - ongoing growth strategy3 for Law on Banking/
development including 2021 – 2030 period, Financial Institutions18
the phase-out coals with a vision by 2050
National Strategy5 Extended Producer

on Climate Change for Responsibility (“EPR” 9)
2050 Regulations
SBV is drafting
Environment
Environmental
Risk Management
Guidelines10.
Approved scheme6 Vietnam Established

Steering
for circular economy Committee13 on
development towards ESG carrying out COP26
commitment
(2019) Law on
National
Securities19
Environmental
protection strategy7
Decree 155/ND-CP20
until 2030 and vision
MoF sets guiding the Law on
2025
out some Securities
guidelines14
Environmental
Protection Law and
guidelines8.
on disclosure of
information on Governance
securities market
(include ESG
(2017) HOSE related areas)
launched
(2020) Law on
the Sustainable
Enterprises22
Development Index
(VNSI21) The Law on
Investment15
2020 disallows the (2019) Corporate
extension of investment Governance23 Code of
projects that Best Practices.
utilise obsolete
technologies

Key survey themes
Findings from our inaugural ESG readiness survey among businesses operating
in Vietnam have been grouped into three themes
Part 1
ESG commitment levels are high
• 80% have made ESG commitments or plans to do so soon.

• This is primarily driven by demands of consumers, employees and investors.
• Governance is ranked as most important to the ESG strategy for Vietnamese companies.
Part 2
The ESG action gap: More to do
• There is value in an implemented ESG programme.

• Without strong a governance structure, companies may fall short in achieving their ESG goals.
• Fully leverage on senior leadership to drive ESG commitments.
• Both targets and metrics are needed to produce desired outcomes.
• Data is a key barrier.
• Regulators play a critical role in providing clarity on ESG reporting.
• Vietnamese companies lag behind global counterparts in seeking independent assurance on
ESG disclosures.
Part 3
Taking ESG forward
• 61% of companies yet to commit cite lack of knowledge as the key barrier.
• 67% rank absence of transparent regulations as key challenge.
• 29% of respondents who said that there are board involvement in ESG are confident in their
Board’s capabilities on ESG matters

What do businesses in
Vietnam say?

Part
ESG commitment
levels are high

Having a good understanding of ESG
without commitment or vice versa
is meaningless. In order to build a
better and more sustainable Vietnam,
we need the collective commitment
and collaboration between multiple
stakeholders, including individuals,
businesses, investors, entrepreneurs,
regulators, the government as well as
the media.
Andrew Chan
South East Asia Sustainability & Climate Change Leader,
and Sustainability Strategy & Transformation Leader,
PwC Asia Pacific Sustainability Centre of Excellence
Making real progress on ESG issues require

active collaboration among CEOs, investors and
governments.
Watch 2-min video from PwC’s Global Investor Survey

Key survey themes
Talk is cheap. Action is golden.
ESG is clearly on the corporate radar even though in its entirety, ESG can seem overwhelming. This shows that
businesses here are ready to take the next steps, in the right direction, on their ESG journey.
When we looked deeper by company types, the findings on:

• Foreign Invested Enterprises (FIEs) businesses are as
expected with 57% stating they have made explicit ESG
commitments. This high result is understandable as a majority
of FIEs businesses might have to follow the lead of their
parent companies overseas where ESG trends are more
developed than Vietnam
• Listed companies on the other hand, appear to have taken
Have made ESG
a “wait and see” approach as more than half (58%) indicate
commitments or plan to do so
they plan to make ESG commitments in the near future.
in the next 2-4 years.
• Interestingly, 40% of private family business respondents
say they have made ESG commitments. This figure may
underscore the strong sense of responsibility among
Vietnamese NextGens24 that family businesses should lead
the way in sustainable business practices.
Q: Choose statement that best describes the current status of the organisation’s ESG commitment
20%
Do not plan to identify/
36% In the planning phase for
44%
Have made ESG
make ESG commitment in the next 2-4 years commitment and plan
the next 2 -4 years
Breakdown by company types
FIEs FDI
16% 27% 57%
Listed Listed
companies 7% 58% 35%
companies
Private/ Private/Family businesses

Family 31% 35% 40%
businesses

Consumers, employees and investors drive ESG
motivation factors
Never underestimate the power of the conscious
consumer in today’s market. Due to the united
demands from consumers, employees and Avoid greenwashing
investors, companies are stepping up efforts to
address ESG related issues within their businesses.
Greenwashing is the process of
Our survey shows that 82% of respondents conveying a false impression or
across industries choose brand image and providing misleading information
reputation as the top reason to pursue ESG about how a company’s products
while staying competitive is the second cited are more environmentally sound.
reason (68%). Others include employee retention Exaggerating sustainability
and talent attraction and, last but not least, the credentials can lead to criticisms
increasing pressures from investors, shareholders and undermine a business’s brand
and government. and reputation.
Q: Factors motivating or will motivate the organisation to adopt ESG commitment (Choose many)
Manufacturing
and Retail are FS companies
more likely to are more likely
cite “Attracting to cite “Pressure
employees” as from Investors and
82% Government” as
a reason
reasons to adopt
68% ESG commitments
44%
40% 37%
To improve Increase
brand To stay To attract pressure from Increase
image and competitive in and retain investors and pressure from
reputation the market employee stakeholders government
Our survey finding correlates with results Creating a clear link between Investors are also paying more
shared in PwC’s June 2022 Global Consumer what people do every day and attention to the ESG risks and
Insights Pulse Survey25: societal purpose is a powerful opportunities facing the companies
way to nurture meaning for they invest in, and are ready to take
• Around half of global respondents say employees. Unfortunately, PwC action. In a new research by PwC27:
ESG concerns influence their shopping Asia Pacific Workforce Hopes
behaviours. and Fears Survey 202226 • Nearly 80% said ESG is
shows a growing dissatisfaction an important factor in their
• When it comes to buying decisions among investment decision-making
among employees in Asia
the Vietnamese, governance (59%) and
Pacific companies.
social (51%) outweigh a company’s • About 50% express willingness
environmental commitment (46%) • 73% say they lack support to divest from companies that
for minimising their do not take sufficient action on
• Interestingly, Vietnam’s results are higher ESG issues.
company’s impact on the
compared to the global average.
environment.
Businesses prioritise “G” over Environmental
and Social
ESG typically brings to mind environmental issues like climate change and resource scarcity, particularly
post COP26. However, in reality our survey reveals that this may not be the case in Vietnam. When
asked to rank the three ESG elements in terms of importance:
62%
While environmental and social factors follow with 22% and
16%, respectively.
The disparate survey findings highlight that companies in Vietnam
are clearly committed to conducting themselves responsibly. It also
suggests that the focus on Governance most likely stems from
the companies’ belief that stronger governance will lead to better
decision-making in both the environmental and social dimensions.
Rank Governance as But is ESG enough if only the “G” is a priority?
the top priority on the
executive agenda.
Q: Rank by order of importance the following factors to

the organisation’s strategy (Top priority)
A combination of E, S and
G G factors produces better
Governance long-term results.
Energy, Utilities & Technology, Media & 62%

Resources sectors Telecommunications
are more likely to are more likely to MSCI’s recent paper28 shows
prioritise this factor prioritise this factor that while the governance
in ESG has more impact on
companies’ performance
over the short term (one
year), over the longer time
E periods all three factors are
Environmental critical to outperformance.
S Using data over a 13-year
Social span, this research found
22%
an overall ESG score that
16% aggregated industry-specific
weighting of all three E, S and
G dimensions has better long-
term results than any of the
individual indicators.
Industrial manufacturing is present across all 3 dimensions

Part
The ESG action gap:

More to do

As with almost everything, taking the first
steps along the ESG journey is daunting,
but it will surely be a rewarding one.
Being successful is not just about finance,
disclosure, climate change or diversity. It
is about embedding all of these principles
and more in your strategy and activities
including risk management.
Nguyen Hoang Nam

Partner, ESG Leader
Assurance services
PwC Vietnam
Ready to take giant steps on ESG?

Here are three imperatives: reinvent your strategy,
reimagine your reporting and transform your
business practices.
Watch 2-min video from PwC’s Leadership Agenda

Taking specific steps to realise your
ESG commitments
Most businesses in Vietnam
are just starting out on the At a glance:
ESG journey. How businesses with explicit or planned
ESG commitments are translating intent
Vietnamese businesses are stepping up in their ESG into action across these six areas:
journey but is the ESG adoption up to the mark?
While ESG commitment is at a commendable level,
the results also highlight gaps between ambition
and action.
66%
Have some ESG
This section shares insights into the perception of programme in place
organisations here when it comes to handling ESG
matters. To better understand the level of ESG
maturity in Vietnam and identify areas where there
are gaps, our survey looked at different actions
24%
taken across six areas covering: Possess clear
governing structure
1 ESG programme 35% Have active Board

involvement on
ESG matters
2 Governing structure
3 Leadership
28% Have strong ESG
risk metrics to
monitor progress
4 Targets and metrics

71% Lack understanding
of data required
5 Data for reporting
Reporting and
6
70%
Have none or very
disclosures limited ESG reporting
36% Use external parties

to validate their
ESG disclosures

ESG programme 66%
Have some ESG
As companies set their sights on achieving their ESG programme in place
ambition, tangible actions must be taken. The statistics
here and in the following pages highlight that companies
here are on the right track. In some areas, Vietnamese
businesses have made progress while showing room for
improvement in others.
Insight #1: Businesses in Vietnam recognise the value of an implemented

ESG programme.
ESG programmes help shape the company’s ESG purpose and set goals in line with stakeholder
expectations. An ESG programme needs to consider all relevant stakeholders’ expectations, one
of which is the regulators. At a minimum, businesses are required to understand and comply with
government standards for ESG.
In our analysis, of the 66% companies which have implemented some form of ESG programme,
with 22% saying they have a comprehensive programme covering all three aspects.
Q: What is the status of the organisation’s ESG programme?
66% Have some ESG programme in place
35% 16% 28% 22%
No ESG Limited plan Solid ESG Comprehensive

programme with only some programme across ESG programme
selected aspects some elements covering all areas of
of E, S and G. E, S and G.
Maturity level
Building your ESG programme with structured and manageable

sub-elements
As a start, organisations can think through the three elements of ESG separately, rather
than as a whole, and do so at the next level down – i.e., the five or six sub-elements
of E, S and G. From there, organisations will be able to decide what actions to take.
Some sample framework for references 29.

Governing structure
Insight #2: Companies may Although 49% report they have a formal structure on
ESG matters within their company, more can be done
fall short in achieving their
from this starting point. Closer inspection shows that
ESG goals without a strong businesses here are equally dispersed across the
governance framework in place. maturity spectrum. On the one hand, only 24% state
they currently possess a clear governance structure with
defined ESG commitments and obligations, roles and
responsibilities as well as KPIs etc. Meanwhile, about the
same portion report that their companies do not have
any ESG governance structure.
24%
The governing structure integrates critical material
factors into all aspects of business strategy, operations
and decision-making when it comes to addressing the
company’s ESG risks and how it capitalises on ESG
opportunities. The structure relies on cross-functional
collaboration in assigning authority to make ESG-related
decisions. Put simply, the ESG governance structure
Possess clear governing structure
outlines how decisions are made, backed by data, and
how businesses are held accountable for those decisions
with board and management oversight.
Q: Choose statement that best describes the organisation’s ESG governance structure
49% formal structure
23% 28% 25% 24%
No ESG Informal Formal governance Clear governance

governance governance structure, focusing structure with
structure. structure, not on conventional ESG charter.
formalised. ESG topics. Includes roles,
responsibilities,
KPIs etc.
Maturity level

Leadership 35%
Boards are actively
Insight #3: Businesses have yet to fully involved in ESG matters
leverage on senior leadership to drive
their ESG commitments.
The greatest impact in ensuring ESG is a priority is at the

Board level where Boards can help guide management
in the allocation of appropriate resources and attention. Our survey in Vietnam looked at two
There are some leading practices30 that have emerged, different leadership categories: Boards
listing questions that boards should consider when and CSO in an attempt to understand
determining the most appropriate governance structure the “tone from the top” approach of
to oversee ESG matters given the company’s industry, Vietnam on ESG. It shows that 35% of
size, growth trajectory, and strategy. respondents stated that there is active
involvement and leadership on the ESG
There has also been a rise in demand for leadership agenda. And in which, it’s no surprise that
roles such as the ESG Leader or Chief Sustainability the well established firm such as large
Officer (CSO) to help drive and implement ESG initiatives. size companies have more leadership
Evidence shows that empowered CSOs can make a involvement (40%) than the mid and
meaningful difference due to their ability to understand smaller size firms (25%). Besides, only
the interconnections of all ESG issues while not losing 22% reported that they have dedicated
sight of the organisation’s sustainability mission. ESG leaders in the organisation.
Q: How is the
Board involved in
ESG matters? 32% 33% 35%
No Some involvement (eg. Board Active involvement and

involvement delegate/ Sub-committee) leadership on ESG agenda
Maturity level
Q: Which statement
best describes the
current status of
38% 40% 22%
your organisation’s
ESG leader?
No ESG ESG leader but distributed ESG leader with clear KPIs and
leader role/ limited authority authority to drive ESG programme.
Reports to the Board
Empowered CSOs can make meaningful difference
PwC Research Analyst31 noted that companies with CSOs earn higher ESG ratings.
The same report also found that globally, eight in ten companies have designated an
executive with at least some responsibility for sustainability.

The role of the board of directors regarding
ESG issues is that of oversight. The board
is a central player in overseeing and
integrating ESG risks and opportunities
in their organization. There is no “one-
size-fits-all” approach for allocating ESG
oversight responsibilities among the board
and its committees, and delegation of
responsibilities may change over time.
Board members should be prepared to
discuss and address emerging ESG issues
in the boardroom
Dr. Dinh Toan Trung

Strategy Director
VIOD Academic Advisory Council
As sustainability and social issues become central to

strategy, executive compensation will be an important
performance motivator.
Watch 2-min video from PwC’s Leadership Agenda

ESG targets and metrics 28%
Have comprehensive
Insight #4: Businesses need both ESG metrics to monitor progress
targets and metrics in order to produce
the desired outcomes.
Consumers, investors and governments seek to
understand and incentivise businesses that perform
well on ESG. However, traditional financial metrics
can tell only part of a company’s story. Organisations
today need to demonstrate how environmental, social,
and other trends impact their strategy, operations,
and long-term prospects. Because strategy and risk assessment
When we asked businesses about their overall ESG go hand in hand, it is vital for
targets and metrics, a large majority (87%) revealed companies to clearly understand ESG
they have relevant ESG targets in place. However, risks and how these risks can impact
the follow up question on the progress of risk-metric the business. Although ESG may be a
development highlights that less than one third new dimension to risk management,
(28%) say they have a set of comprehensive risk figuring out how to integrate ESG risks
metrics. The struggle could be due to the lack of into a Risk Management Framework
knowledge for companies to properly develop risk will lay a solid foundation for further
mitigation plans or the infinite number of metrics sustainable development.
available to demonstrate a company’s commitment in
addressing ESG risks.
Q: Choose 87% have identified ESG targets

statement that
best describes the
organisation’s ESG
13% 54% 33%
Targets & Metrics
No targets in Some ESG targets Have comprehensive targets

relation to ESG but these are not well with deadlines. These, including
commitments. organised and not KPIs, have been communicated
comprehensive internally and externally.
Maturity level
Q: What stage is
the organisation
at in developing
41% 31% 28%
ESG risk metrics?
Not yet In the process of Have defined metrics

begun defining metrics to monitor progress

Data
Insight #5: Data is a key barrier for

71%
Lack understanding of the
companies operating in Vietnam data required for reporting
With the growing demand from different

stakeholder groups to assess the impact on a
wider range of ESG topics, companies need
accurate and timely data. In order to do this, Unfortunately, our survey findings reveal that the
businesses must, firstly, have a good grasp of majority of companies in Vietnam (71%) have either not
what data they need to collect, analyse and started or are just beginning to understand the ESG
then report. data needed.
Q: What stage is the organisation at in PROCESSING the ESG data?
71% Lack understanding of the data required

for reporting
34% 37% 9% 20%
No action from Just starting to Good understanding Already determined data needs and
Management understand the ESG of data needed and is has put in place data management
in determining data requirements gathering data. and are reporting regularly.
data needs
Maturity level
Q: What stage is the organisation at in ASSESSING the data needed for external reporting?
47% Lack understanding of the data required

for reporting
15% 32% 28% 25%
Do not know what Limited understanding of data Good understanding of Have assessed external
data is required for requirements. Data gathered data requirements and reporting requirements (NFRD,
external reporting. and reporting is limited. reporting accordingly. GRI, TCFD etc). Publish external
reports according to standards.
For those already collecting ESG data, 47% say that their respective businesses have not started or have
limited understanding of the external reporting requirements needed. Even more telling is that less than one
third (28%) feel confident with their understanding about data requirements for external reporting

Reporting / disclosure 70%
Have none or very limited
Insight #6: There is a strong call for external reporting
government guidance on ESG reporting.
Stakeholders today see ESG factors as a window

into a company’s future and important indicators of a
company’s overall health. ESG reporting can lay the
foundation for a compelling story about the impact your
company is making on the world. However, identifying
what is material in ESG reporting is a challenge. Without
a doubt, data and reporting are extremely intertwined. This, once again, highlights the crucial role
regulators can play in spurring action within
Our research indicates that there is a disconnect between
the Vietnam business community.
data assessment and the actual reporting. To illustrate,
while more than half (53%) of the Vietnamese business
respondents indicate they have assessed the data
required for external reporting (see previous page), only
30% have actioned on the ESG reporting / disclosure.
Q: What stage is the organisation at in PROGRESSING ESG reporting / disclosure?
70% Use external parties to verify their ESG

disclosures
48% 22% 15% 15%
No external Very limited external Starting to report using Comprehensive external

reporting done reporting on ESG reporting framework like reporting that complies with
TCFD and GRI. country specific as well as
other global frameworks
TCFD and GRI.
Maturity level

Reporting/ disclosure
(continued) 36%
Use external parties to verify their
Insight #7: Vietnamese companies
ESG disclosures
lag behind global counterparts in
seeking independent assurance on
ESG disclosures
Independent assurance in ESG reporting helps
organisations build trust. This is crucial for
effective stakeholder engagement, especially
with the investment community. More so when Vietnam falls short in this area when compared to its
the verification is against a recognised standard. global counterparts. According to a July 2022 Global
In terms of ESG reporting, we list here some sustainability assurance benchmarking study35, half of
recognised ESG standards - Global Reporting global companies (58%) obtain independent assurance
Initiative (GRI32), International Sustainability on their ESG information. On the other hand, only 36%
Standards Board (ISSB33) and Sustainability confirmed in our Vietnam report that their ESG reporting
Accounting Standards Board (SASB34). is audited or verified by external independent parties.
Q: How is the organisation dealing with independent assurance in ESG reporting?
36% Use external parties to verify their

ESG disclosures
43% 20% 11% 25%
No independent Considering use of External ESG reporting Public ESG communication

external validation, external auditors to verified/ audited by an and reporting reviewed
or no published validate published external auditor. and verified by an external
information. information. specialised company.
Maturity level

Part
Taking ESG
forward

ESG issues will continue to influence
government policy and corporate direction.
To make ESG impactful in Vietnam, a two-
pronged approach is required.
First, businesses must do everything in
their power to deliver on ESG issues.
Second, government bodies and regulators
must develop clear policies and regulations
to assist companies in integrating ESG into
their businesses.
Dinh Hong Hanh

Partner, ESG Leader
Risk Consulting Services
PwC Vietnam

Bridging the knowledge
gap across enterprises 60%
of respondents yet to make
ESG commitments are SMEs.
A way to ensure that all businesses in Vietnam are on

board with the ESG journey is to address the remaining
20% of companies yet to make ESG commitments.
What is holding these organisations back? Does company size matter

in this scenario?
Of the remaining 20%, SMEs (defined in Vietnam as having less than 200 employees) make up a majority of
this group. Lack of knowledge is cited as the main reason why companies (mainly SMEs, in our survey pool)
have yet to make plans for any ESG-related commitment. Perhaps this is due to the lack of clarity and too
much ESG information which give rise to the sentiment. This finding indicates a strong need for (pro)active
dialogue between the Vietnamese government and the SME group which is facing this challenge.
Q: What barriers prevent the organisation from committing to ESG? (Choose many)
* This question only applies to respondents that answered “no plan to make commitments in 2-4 years” in the question “Choose
statement that best describes the current status of your organisation’s ESG commitment”
Lack of
knowledge 61%
Vietnam is not
alone. According
to a recent PwC
Financial
capability 48% survey36, global
peers also chose
confusion around
ESG standards and
Company size 46% regulations as one of
the top challenges
that hinder their ESG
Lack of reporting progress.
transparency 28%
ESG data Our survey highlight
both SMEs
(54%) and larger
companies (46%)
share this angst
quite equally

Strong call for more guidance and policies on ESG
Our survey shows that more than half (67%)

admitted difficulties due to absence of
67%
transparent regulations. Clear guidelines, a
holistic country roadmap and a level playing field
for industries are needed for businesses here to
advance their ESG strategies.
While the government has made progress
in developing green energy, environmental
protection, corporate governance and addressing
social issues, more can be done. For instance, Rank absence of
many are waiting for Vietnam’s regulatory and transparent regulations as
policy makers to offer clarity around the country’s the top challenge.
green finance rules and target areas.
Q: What are the top 3 challenges in relation to the requirements to include ESG factors in the
enterprise’s risk framework?
Absence of final,
transparent 67%
regulations Areas in
which better
Difficulty in and clearer
embedding ESG in regulations
existing enterprise 61%
are useful
framework
Lack of knowledge
and competences in 57%
the enterprise
Low quality of
disclosures and 52%
counterparty awareness
of ESG factors
Regulations help drive the ESG agenda
By taking the lead in policy, strategy and enforcement, governments can create a sense of
urgency for companies in Vietnam to act. The issuance and enforcement of Circular No.
96/2020/TT-BTC which sets out certain ESG reporting requirements for public and listed
companies is an example.

New needs. New skills.
29%
Only
The stark reality in Vietnam

Our findings show there is a need to upskill Boards
on ESG matters, yet companies in Vietnam are
not prioritising the training needed to increase the
confidence levels. Of respondents who said that
there are board involvement in
Without a doubt, Boards who view ESG as a priority ESG are confident in their Board’s
help drive an impactful ESG strategy within the capabilities on ESG matters
business. Thus, it is crucial for Boards to have strong
capabilities on ESG topics in order to discharge
their governance and oversight duties. In our survey,
nearly a third of respondents that said there is board
43%
involvement in ESG (29%) have confidence in their Yet
Board’s ESG capabilities.
The graph below further breaks down how
respondents by positions view the capabilities of
their respective Boards on ESG matters. Of interest
is that 35% of respondents at the Leadership level
themselves report the same confidence level. Alas, Have yet to consider
this number is less than the 45% of global CEOs37 establishing training on
who reported positively on the ESG capabilities of ESG matters.
their respective organisations.
Q: What are the Board’s capabilities in ESG matters? (Views of respondents by positions)
* This chart only covers the sub-sample of respondents who said their Board has some or active involvement in ESG matters.
Strong and growing expertise Growing expertise Limited Experience No access
50%
47%
45% 45%
40% 43%
35%
30% 33%
29%
20% 22%
20%
17% 17%
14% 15%
10%
8% 9%
0% 2%
Boards / Owners / Manager Below Manager Grand Total

C-Suites

New needs. New skills. (continued)
In terms of capabilities, the results show that However, training is not top of mind
the respondents believe Boards fall between for companies here as 43% of our
“limited ESG experience” and “has growing respondents say that they have yet
ESG expertise”. These findings underscore to consider establishing training their
the need for the business community in workforce. Furthermore, when it
Vietnam to continually upskill knowledge and comes to training at the board level,
execution on ESG especially for the senior the occurrence is even more rare
leadership team. with only 26% saying that training is
being planned or implemented.
Q: How has or will the organisation upskill the current staff force to have the necessary
knowledge and expertise in ESG? (Choose many)
Yet to be considered 43%
Internal training
programmes have 42%
been established
Board-level trainning
is being planned/has 26%
been conducted
ESG subject-matter
specialists have been 20%
recruited

Recommendations for
businesses in Vietnam

Four paths to fulfilling the ESG ambition
for businesses
Organisations operating in Vietnam differ greatly when it comes to shaping the pace and direction on
how they approach ESG.
Our recommendations on what’s next is based on the four ESG paths38 to

maturity and ambition which set out some concrete actions businesses can
take today.
For those unsure of your ESG starting point, below are some Scan QR code
questions to get you going. Alternatively you can take a more for ESG Self-
detailed quiz which looks at 21 key features of ESG programme Assessment
Pragmatist
• Are you predominantly focused on the ESG

Beginner risk aspects?
• Do you provide some public reporting
without science based targets?
• Are you just beginning on your ESG journey?
• Are your ESG activities and reporting
Questions to ask
• Do you view ESG as a compliance issue? segregated?

• Does your company have limited or no public • Does the responsibility for ESG fall below the
reporting? C-Suite?
• Research how your business is impacted by ESG • Consider hiring a Chief Sustainability Officer
regulations to clearly define your goals and targets
Consider adopting these
• Create a governance structure and define clear • Communicate often and report back to the
concrete actions
targets and goals Board on progress.

• Establish a reporting roadmap around ESG • Understand your obligations for internal
matters and external reporting - this could include
creating a carbon footprint reduction plan.
• Set an ESG strategy that will drive key • Look beyond ESG primarily as a reporting or
Capture key opportunities
performance indicators (KPIs) and determine what risk management exercise

you do with your business. • Be vigilant in identifying opportunities
• Get insights into which ESG initiatives to start on how ESG can play a role in business
with in order to drive the greatest impact on cash strategy.
flows, operations and balance sheets. • Greening or diversifying the supply chain can
help improve cash flow?
• Lower carbon emissions to attract different
customers?

Integrating ESG on corporate governance
Another resource for companies keen on demonstrating their environmental, social and
corporate governance is IFC Corporate Governance Progression Matrix (Integrating ESG
issues)39. While the focus is on listed companies, this reference can be adapted to all types
of organisations.
Champion
• Is ESG core to the purpose, strategy and

Strategist services/products of your organisation?
• Are you reporting financial and non-financial ESG
aligned metrics?
• Do you see both opportunities and risks in
• Is ESG integrated across the organisation?
ESG?
• Is the ESG responsibility embedded across the
• Do you provide non-financial disclosure and
organisation with the CEO driving the agenda?
reporting with science based targets?
• Are you proactive in promoting ESG within your
• Is ESG integrated with business and
industry/ network?
finance?
• Does the ESG responsibility fall at the
C-Suite level?
• Does your company have ESG differentiated
products/ services?
• Dedicate a Chief Sustainability Officer to • Monitor potential pressure points in your ESG
establish a comprehensive plan and set of ecosystem.
deadlines to achieve your targets. • Advocate for and participate in the development
• Establish a subcommittee of your Board to of standards and regulatory frameworks.
provide guidance and oversight.
• Increase your internal and external
communication to demonstrate your
commitment to these efforts.
• Creating new products/ changing • Mitigate risk or create new value by keeping on
business and operating models as basis of top of the evolving regulations and standards.
differentiated ESG performance. • Continuously map and measure the overall
• If you have maturity in this space, you value you are delivering to stakeholders and
can focus on integrating ESG across your shareholders.
operations to gain competitive advantage.

About the survey

Methodology and Respondent profiles
The ESG Readiness survey is a public survey conducted between May and August 2022 among the
business community in Vietnam. The goal of the survey is to get an understanding of how businesses in
Vietnam approach ESG. The survey was conducted online in collaboration with the Vietnam Institute of
Director (VIOD) where 234 participants were asked about their commitment, plans, capabilities and activities
with regards to ESG.
Note:
• Not all figures add up to 100% as a result of rounding percentages
• The industry and firm level figures are based on unweighted data
By industries By company types

Others Total
Others Total 1.7%
FDI Total
Government/ Public Financial Services State Enterprise
Total
5.1%
Real Estate, 6%
Engineering & 6.4% 21.8% Listed Total
Construction
8.5%
23.5% 40.6%
Technology, Media &
Telecommunications 9.0% Industrial
manufacturing
16.2%
9.8%
29.1%
Business services Total 11.1% 11.1%
Retail & Private/ Family
Consumer
Energy, Utilities & Resources
By company size By respondents’ positions
Managers Below
Large (More than 200) Managers
Small (Less than 100)
24.8%
31.2% 35%
9.8% 65.4%
Medium (100-200)
21.4% 12.4%
C-Suites/ Director Board/ Owners

References
Footnote Link
1 Global Reporting Initiative - ESG standards, frameworks and everything in between
2 Thuvienphapluat - Decree 06/2022/ND-CP regulations on reduction of greenhouse gas emissions and protection of the ozone layer
3 vietnamcirculareconomy.vn - Global Reporting Initiative - ESG standards, frameworks and everything in between
4 Duane Morris - Vietnam Energy Future – Power Development Plan 8 – How to get deals done
5 Thuvienphapluat - Decision 896/QD-TTg regulations on reduction of greenhouse gas emissions and protection of the ozone layer
6 vietnamcirculareconomy.vn - Decision No. 687/QD-TTg on approving the scheme for circular economy development in Vietnam
7 Thuvienphapluat - Decision 450/QD-TTg Approving the National Strategy for Environmental Protection to 2030, with a Vision to 2050
8 Thuvienphapluat - Law on environment protection 2020
9 PwC Vietnam - Extended Producer Responsibility (“EPR”) Regulations under the New Decree on Environmental Protection
10 baochinhphu.vn - Draft Circular on Environmental Risk Management in Lending Activities
11 Thuvienphapluat - Viet Nam Labour Code 2019
12 PwC Vietnam - Some developments relating to the draft Personal Data Protection Decree
13 baochinhphu.vn - National Steering Committee on climate change commitment realization set up
14 luatvietnam.vn - Circular 96/2020/TT-BTC guiding information disclosure on the stock market
15 Thuvienphapluat - Law on Investment 2020
16 Thuvienphapluat - Consumer Protection Law 2011
17 Thuvienphapluat - Draft revised Consumer Protection Law
18 Thuvienphapluat - Law on Credit Institutions
19 luatvietnam.vn - Law on Securities 2019
20 english.luatvietnam.vn - Decree No. 155/2020/ND-CP guiding the Law on Securities
21 hsx.vn - Vietnam Sustainability Index (VNSI)
22 Thuvienphapluat - Law on Enterprises
23 VIOD - Vietnam-CG-Code-of-Best-practices
24 PwC Vietnam - PwC’s Global NextGen Survey 2022 - Today and beyond: Vietnam’s Nextgen in focus
25 PwC - June 2022 Global Consumer Insights Pulse Survey
26 PwC Asia Pacific - Hopes and Fears Survey 2022
27 PwC - 2021 Global investor survey
28 MSCI - Deconstructing ESG Ratings Performance: Risk and Return for E, S And G by Time Horizon, Sector and Weighting
29 Strategy& - ESG and growth: a new way of thinking
30 PwC - ESG oversight: The corporate director’s guide
31 Strategy& - Positioning your chief sustainability officer for success
32 Global Reporting Initiative (GRI)
33 International Sustainability Standards Board (ISSB)
34 Sustainability Accounting Standards Board (SASB)
35 AICPA, CIMA and IFAC - Global benchmarking study: State of Play in Sustainability Assurance
36 PwC - Beyond compliance: Consumers and employees want business to do more on ESG
37 PwC - 25th Annual Global CEO Survey
38 PwC Central and Eastern Europe - ESG Self-Assessment
39 IFC - Corporate Governance Progression Matrix for Listed Companies

Get in touch
PwC Vietnam
Dinh Thi Quynh Van Bee Han Theng

General Director | Partner Chairman | Partner
Tax and Legal services Assurance & Capital Markets
[email protected] [email protected]
Tiong Hooi Ong Dinh Hong Hanh

Partner Financial Services Leader | Partner
Deals, Transaction services Risk Consulting services
Nguyen Hoang Nam

Partner
Assurance services
[email protected]
Vietnam Institute of Directors
Phan Le Thanh Long Tran Thu Huong
Chief Executive Officer ESG Specialist


PwC Vietnam www.pwc.com/vn
Ho Chi Minh city Ha Noi

8th Floor, Saigon Tower 16th Floor Keangnam Landmark 72
29 Le Duan Street, District 1, Pham Hung Road, Nam Tu Liem District,
Ho Chi Minh City, Viet Nam Hanoi, Viet Nam
T: +84 28 3823 0796 T: +84 24 3946 2246

Vietnam Institute of Directors www.viod.vn/en-us
Ho Chi Minh city Ha Noi

Level 21, Vietcombank Tower, No.5 Room C1 Floor 12, Hong Ha Center Building
Me Linh Square, District 1, Ho Chi 25 Ly Thuong Kiet Street, Hoan Kiem District,
Minh City, Viet Nam Hanoi, Vietnam
T: +84 28 3827 1957

This content is for general information purposes only, and should not be used as a substitute for consultation
with professional advisors.
©2022 PwC (Vietnam) Limited. All rights reserved. PwC refers to the Vietnam member firm, and may
sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.
com/structure for further details.
©2022 Vietnam Institute of Directors (VIOD) is a pioneering and leading professional organization which
promotes corporate governance standards and best practices in Vietnam. Please visit www.viod.vn for
further information.

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IN COLLABORATION WITH

ESG is a set of environmental, social and governance standards*

2 Vietnam ESG readiness report 2022

What’s What’s What’s

Climate Employee Business practices

Pollution Hiring & advancement

Other Supply chain management

ESG terminology as per Global Reporting Initiative1:

Vietnam ESG readiness report 2022 3

Dinh Thi Quynh Van Phan Le Thanh Long

4 Vietnam ESG readiness report 2022

Vietnam ESG readiness report 2022 5

What do companies operating in

13 ESG commitment levels are high

18 The ESG action gap: More to do

29 Taking ESG forward

Recommendations for businesses

38 About the survey

Vietnam ESG readiness report 2022 7

8 Vietnam ESG readiness report 2022

Vietnam’s commitments to tackle climate change

Net-zero carbon Phase out coal-fueled Stop

Between 9% (with domestic

Vietnam: Boosting resilience to climate change, accelerating transition to a low

Vietnam ESG readiness report 2022 9

National Strategy5 Extended Producer

Approved scheme6 Vietnam Established

10 Vietnam ESG readiness report 2022

• 80% have made ESG commitments or plans to do so soon.

• There is value in an implemented ESG programme.

Vietnam ESG readiness report 2022 11

12 Vietnam ESG readiness report 2022

Vietnam ESG readiness report 2022 13

Making real progress on ESG issues require

14 Vietnam ESG readiness report 2022

Talk is cheap. Action is golden.

When we looked deeper by company types, the findings on:

Breakdown by company types

Private/ Private/Family businesses

Vietnam ESG readiness report 2022 15

Q: Rank by order of importance the following factors to

Energy, Utilities & Technology, Media & 62%

Vietnam ESG readiness report 2022 17

The ESG action gap:

18 Vietnam ESG readiness report 2022

Nguyen Hoang Nam

Ready to take giant steps on ESG?

Vietnam ESG readiness report 2022 19

1 ESG programme 35% Have active Board

4 Targets and metrics

36% Use external parties

20 Vietnam ESG readiness report 2022

Insight #1: Businesses in Vietnam recognise the value of an implemented

Q: What is the status of the organisation’s ESG programme?

66% Have some ESG programme in place

35% 16% 28% 22%

No ESG Limited plan Solid ESG Comprehensive

Building your ESG programme with structured and manageable

Vietnam ESG readiness report 2022 21