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- The Formation of the ESG Legal Framework in Vietnam
In recent years, ESG (Environmental – Social – Governance) has shifted from a recommended governance trend to an increasingly mandatory requirement in the global business environment. In particular, in the context of Vietnam’s commitment at COP26 to achieve net-zero emissions by 2050, the completion of a legal framework for sustainable development and ESG has become an inevitable necessity.
In Vietnam, although there is not yet an independent “ESG Law,” the current system of legal normative documents has gradually established a relatively comprehensive legal foundation regulating the core components of ESG through environmental law, labor law, corporate governance, green finance, and information disclosure regulations.
One of the key guiding documents is Circular No. 13/2023/TT-BKHĐT, which promulgates a framework for assessing sustainable business models, including the circular economy model, inclusive business model, and ESG model.
- ESG and Sustainable Development from a Legal Perspective
2.1. ESG – A Tool for Measuring Sustainable Development
ESG is a system of criteria used to assess enterprises based on three pillars:
- Environmental: emission control, resource management, climate change adaptation, biodiversity conservation;
- Social: labor standards, occupational health and safety, equality, community responsibility;
- Governance: transparency, internal control, governance structure, prevention of conflicts of interest.
Meanwhile, according to the United Nations, sustainable development is development that meets present needs without compromising the ability of future generations to meet their own needs. ESG serves as a governance tool that enables enterprises to measure the extent to which this objective is realized.
2.2. Three Sustainable Business Models under Vietnamese Law
Pursuant to Circular No. 13/2023/TT-BKHĐT, the current legal framework establishes three primary models:
- Circular Economy Model
Focuses on optimizing resource use, recycling and reuse, and reducing emissions and waste. - Inclusive Business Model
Aims to create opportunities for low-income groups to participate in the value chain. - ESG Business Model
Integrates all three pillars—environmental, social, and governance—into a comprehensive and long-term approach.
The codification of these three models demonstrates that the State has formally transitioned ESG from a theoretical concept into a governance instrument grounded in legal principles.
- The Legal System Laying the Foundation for ESG in Vietnam
In addition to Circular No. 13/2023/TT-BKHĐT, Vietnam’s ESG legal framework is shaped by several important legal instruments:
3.1. Environmental Legal Documents
- Law on Environmental Protection 2020
- Decrees guiding waste management and greenhouse gas inventory
- Regulations on Environmental Impact Assessment (EIA)
These documents form the direct legal foundation for the “E” pillar of ESG.
3.2. Labor and Social Legal Documents
- Labor Code 2019
- Regulations on occupational safety and hygiene
- Regulations on gender equality and social insurance
These documents constitute the legal foundation for the “S” pillar.
3.3. Corporate Governance and Transparency Legal Documents
- Law on Enterprises 2020
- Law on Securities 2019
- Regulations on information disclosure applicable to public companies
These serve as the legal pillar for “G” – governance and transparency.
3.4. Green Finance and Carbon Market Regulations
- Regulations on greenhouse gas inventory
- Roadmap for the operation of the domestic carbon market
- Green credit policies issued by the State Bank of Vietnam
This framework facilitates the integration of ESG with capital flows and financial mechanisms.
- ESG Business Model Assessment Toolkit under Circular No. 13/2023/TT-BKHĐT
Article 7 of Circular No. 13/2023/TT-BKHĐT establishes an ESG assessment toolkit based on quantitative methodology (scoring scales and weightings), ensuring transparency and comparability.
4.1. Environmental Assessment
- Compliance with environmental laws
- Resource and energy management
- Control of emissions, wastewater, and waste
- Application of environmental standards to suppliers
4.2. Social Assessment
- Fair labor policies
- Occupational health and safety
- Training and human resource development
- Management of social impacts within the supply chain
4.3. Governance Assessment
- Transparent governance structure
- Clear separation between management and executive functions
- Internal control mechanisms
- Protection of shareholders’ rights
Notably, this toolkit is adaptable to small and medium-sized enterprises, consistent with the structure of the Vietnamese economy.
- Challenges in ESG Implementation
Although the legal framework is gradually being completed, ESG implementation in Vietnamese enterprises still faces numerous challenges:
- Limitations in governance capacity and internal control systems;
- High investment costs for green technologies;
- Difficulties in measuring and reporting social impacts;
- Lack of experience in integrating ESG into corporate strategy.
Compared to ASEAN countries such as Singapore and Malaysia—where ESG reporting systems are mandatory for listed companies—Vietnam remains in a transitional phase from encouragement to standardization.
ACAC’s Orientation
ACAC identifies ESG not as a standalone service, but as an integral component within a comprehensive advisory ecosystem, including:
- Audit and review services;
- Tax and financial advisory;
- Legal and investment advisory;
- Governance and internal control consulting;
- Sustainable development strategy and ESG reporting advisory.
We believe that only when ESG is integrated into corporate governance structures and business strategies can enterprises truly create long-term value, rather than merely satisfying short-term compliance requirements.
As Vietnam progressively standardizes its ESG legal framework, early and proactive preparation will enable enterprises to mitigate transition risks and strengthen sustainable competitive advantages.