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Vietnam ESG reporting: what firms and investors expect

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Vietnam ESG reporting means telling investors, banks and customers how a company affects the environment and people, and how it is run. Public companies already have a legal duty to include some of this in their annual reports. Smaller firms face the same questions from the large buyers and lenders they work with. This guide explains both sides in plain terms.

Sources: Wikipedia, Environmental, social, and corporate governance (definition and typical report content).

What ESG reporting covers

ESG stands for environmental, social and governance. A report on these topics shows how a company handles risks that do not appear in a normal profit table.

Environmental topics include greenhouse gas emissions, energy use, water, waste and pollution. Social topics include worker safety, working conditions, pay and treatment of staff. Governance topics include bribery rules, board structure and data privacy. Most investors want numbers where numbers exist, and a short plain explanation where they do not.

Reporting standards help companies stay consistent. The Global Reporting Initiative, known as GRI, publishes widely used standards. Its Universal Standards were published in October 2021 and apply to reports from January 2023. Many firms use them as a checklist even when no law forces them to.

Sources: Wikipedia, Environmental, social, and corporate governance; Wikipedia, Global Reporting Initiative.

What public companies must disclose

Vietnam sets disclosure rules for public companies through its securities laws. Decree 155/2020/ND-CP guides the Law on Securities 2019. Circular 96/2020/TT-BTC from the Ministry of Finance then sets out how companies disclose information on the securities market.

Under these rules, the annual report of a public company includes a section on its impact on the environment and society. In practice, that section asks a company to describe its use of materials, energy and water, its compliance with environmental law, its policies for employees, and its work with the local community. The rules apply to public companies, so a private family business is not bound by them.

Treat the circular's own text as the final word. Companies should read the current annual report forms and check them against their own business each year, because wording and templates can be updated.

Sources: Circular 96/2020/TT-BTC of the Ministry of Finance on information disclosure on the securities market; Decree 155/2020/ND-CP on the Law on Securities.

The climate and environment backdrop

Investors read these disclosures against a national climate goal. Vietnam announced at the COP26 climate summit in 2021 that it aims for net zero emissions by 2050. It also said it would phase out unabated coal power in the 2040s, or as soon as possible after.

That goal is not easy. Coal supplied about 65 percent of the country's primary energy in 2021, and about 47 percent of its electricity. For a company, this means energy use and emissions are the topics buyers and lenders ask about first.

The law is moving in the same direction. Vietnam legalised carbon pricing in 2020, in the form of a carbon market, as part of its updated environmental rules. The Environmental Protection Law 2020 is the base law for these duties. Firms with large emissions should expect to count and report them more closely over time.

Sources: Wikipedia, Climate change in Vietnam; Law on Environmental Protection 2020 of Vietnam.

What investors and buyers ask for

Investors and banks want the same few things from a company. They look for clear data, year-on-year comparison, named responsibility inside the company, and honest statements about gaps.

Large buyers ask for ESG information from their suppliers too. This often arrives as a questionnaire. It may ask about energy use, waste handling, safety records, child labour and forced labour rules, and anti-bribery policy. The UN Guiding Principles on Business and Human Rights are one major framework behind questions on supply chains.

Investors prefer a short, honest answer over a polished one that cannot be backed up. A company that says "we do not yet measure this, and we will start next year" is easier to trust than one that guesses.

Sources: Wikipedia, Environmental, social, and corporate governance.

How smaller firms can prepare

A smaller firm does not need a full report to answer a supplier questionnaire. It needs a small set of facts that it can find quickly. Start with this list.

  • Collect twelve months of electricity and water bills, and note the totals.
  • Record how waste is sorted and who collects it.
  • Keep the environmental permits and inspection papers your business holds.
  • Write down your staff numbers, working hours, safety rules and any workplace accidents.
  • Put anti-bribery and conflict-of-interest rules in one short written policy.
  • Name one person who answers ESG questions, so answers stay consistent.

Next, save one master set of answers. Each time a buyer sends a new questionnaire, update the master set instead of starting again. Check every figure against a bill, a payslip or a permit before you send it.

Last, choose one or two improvements you can actually deliver, such as cutting energy use or writing a supplier code of conduct. Report progress against them each year. Steady, small and true beats large and vague.

Sources: Editors' practical guidance, drawn from the typical report topics listed by Wikipedia, Environmental, social, and corporate governance.

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