Why do many companies delay adopting ESG practices, sometimes taking two to four years from planning to implementation?
PwC’s surveys, along with findings from international organisations, show that ESG has become a critical driver in shaping sustainable development strategies. However, the maturity levels of businesses vary greatly, resulting in uneven implementation timelines.
Some companies have been proactive, moving straight into execution. Others remain in the preparatory stage of research and planning, and still others require two to four additional years to be ready. This is not necessarily a negative signal, but rather an accurate reflection of reality: each business model has its own characteristics, levels of access, and context-specific needs, meaning ESG implementation must be tailored accordingly.
The first barrier is awareness. Many companies, particularly small and medium-sized enterprises (SMEs), still lack a clear understanding of what ESG entails and how it impacts long-term business performance. In numerous instances, boards of directors and senior management have yet to treat ESG as a strategic priority, resulting in limited commitment to execution. This indicates that ESG is not merely the responsibility of a designated department, but requires buy-in from the highest levels of leadership to create momentum.
The second barrier concerns resources. Many firms lack personnel with the expertise to implement ESG in a structured manner. Outsourcing to external consultants can be costly, while internal teams are often insufficient to sustain the effort, creating operational gaps. Financial constraints also pose a major challenge. SMEs often find it difficult to access green financing, sustainable capital, or concessional funds from international institutions. Implementing ESG requires significant upfront investment, from management systems and reporting frameworks to staff training, leading many businesses to hesitate.
The third barrier lies in data infrastructure. ESG reporting requires complete, accurate, and transparent datasets, yet most Vietnamese firms lack this foundation. Information is fragmented and unstandardised, complicating reporting processes. At the same time, data reliability and accuracy are essential to building investor and stakeholder trust.
These combined factors explain why many companies delay ESG implementation, and why those that have already started continue to face difficulties in providing comprehensive data to customers and partners.
Should startups and growing private companies embed ESG practices from the very beginning of their development?
The answer is unequivocally yes. ESG is not merely a set of reporting criteria, nor is it a tool to embellish company profiles. It is fundamentally part of a company’s business strategy. For startups, integrating ESG from the outset helps establish a sustainable foundation and builds trust among investors, customers, and employees.
A new product or service designed with ESG principles in mind will find it easier to enter international markets, where environmental and social demands are increasingly stringent. From a governance perspective, early ESG adoption offers an advantage in talent attraction, as today’s younger workforce places high value on sustainability. Financially, investment funds and credit institutions are also showing a growing preference for companies with clear ESG strategies.
Of course, no startup can achieve a high level of ESG maturity within just a few years. What matters is choosing an approach suited to their context, setting realistic goals, and advancing progressively over time. This early integration will ultimately become a long-term competitive edge.
With transparency in ESG reporting becoming increasingly important, how can companies avoid greenwashing and ensure credibility?
Transparency is fundamental. Once businesses are required to disclose data, the risk of greenwashing diminishes, as any misleading information can be quickly identified. However, this requires a clear regulatory framework in Vietnam.
Globally, several standards are widely adopted. The Global Reporting Initiative framework is the most common for sustainability reporting. For climate-related disclosures, firms can follow the Task Force on Climate-related Financial Disclosures. More recently, the International Sustainability Standards Board introduced standards S1 and S2, setting specific requirements for sustainability and climate reporting. These international frameworks provide valuable references for Vietnamese companies seeking to develop their reporting systems.
However, having a framework is not enough. Vietnamese businesses still lack implementation capacity, technical expertise, and adequate training. Therefore, capacity-building programmes, advisory services, and technical support are essential for effective adoption and execution. Only when international standards are combined with transparent data systems and internal capabilities can Vietnam build a healthy ESG ecosystem, curb greenwashing, and foster lasting trust in the market.
With Vietnam moving to develop international financial centres (IFCs), how do you see ESG shaping their implementation and growth?
If Vietnam aims to establish an IFC, ESG must be a core pillar. IFCs worldwide are built on transparency, international standards, and global trust. For Vietnam to integrate, it must develop a comprehensive legal framework, not just for financial reporting under International Financial Reporting Standards but also for non-financial reporting aligned with international sustainability standards.
International investors will only choose financial centres that meet the highest standards of transparency and governance. ESG serves as Vietnam’s passport to assert credibility, attract capital, and compete with other regional centres. This means regulators as well as businesses operating within IFCs must comply with ESG requirements.
Eventually, ESG will not remain a secondary factor but will become a prerequisite for Vietnam to position itself on the global financial map. If executed well, ESG will be a competitive advantage in Vietnam’s race to entice international capital.
Hazy Tran
